CERTYNEX IFRS ACADEMY

Chausia reduces the estimate of a provision by 20,000. Its accountant recognises income of 20,000 but, as the other side, records a sundry receivable instead of reducing the provision. What is the error?

A provision can never be reduced before it is used.

There is no error: profit is correct.

The income should have been credited directly to the year's opening equity.

The change must be recognised by adjusting the carrying amount of the provision itself.