CERTYNEX IFRS ACADEMY

Fargel has a provision of 150,000 for a dispute that will ultimately be settled for 60,000. Its accountant charges against the balance of 90,000 the costs of relocating an administrative department, incurred during the year, instead of expensing them. What is the error?

The relocation costs should have been the subject of a new provision.

The provision can only be used for the dispute: the balance must be reversed and the costs expensed.

The balance of 90,000 should have been kept until the end of the following year.

The provision should have been increased to 240,000 to cover both expenditures.