Tag: provision for liabilities

Sample Disclosure – Note On Provision For Liabilities (15 December 2010)

PROVISION FOR LIABILITIES


a)   Guaranteed Rental Returns & Marketing Incentives

Provision for guaranteed rental returns and marketing incentives are in respect of the sale of development properties. The provision is made for the expected guaranteed rental returns and marketing incentives granted to the purchasers based on the agreements entered into by the Company with these purchasers. These agreements set out the terms and conditions in which upon fulfilment, would result in the purchasers entitled to payments to be made by the Company.

b)   Liquidated Ascertained Damages

Provision for liquidated ascertained damages is in respect of projects undertaken by the Company. The provision is recognised for expected amount of liquidated ascertained damages claims based on the applicable agreements entered into by the Company.

Sample Disclosure – Note On Provision For Liabilities (3 November 2009)

Provisions for Liabilities

 

 Liquidated Damages

 Product Warranty

Subsidiaries Restructuring Costs

 

Total
 

RM

RM

RM

RM
At beginning of year

12,000,000

6,000,000

–

18,000,000
Additions

5,000,000

1,000,000

500,000

6,500,000
Utilisation

–

(800,000)

(400,000)

(1,200,000)
Reversal

(6,000,000)

(100,000)

(50,000)

(6,150,000)
Exchange differences

–

(50,000)

–

(50,000)
At end of year

11,000,000

6,050,000

50,000

17,100,000
Year end balances analysed as follows:-

 

 

 

 
Current

2,000,000

1,850,000

50,000

3,900,000
Non-current

9,000,000

4,200,000

–

13,200,000
 

11,000,000

6,050,000

50,000

17,100,000

Liquidated Damages

Provision for liquidated damages is in respect of development projects undertaken by the Company. The provision is recognised for expected liquidated damages claims based on the terms of the applicable sale and purchase agreements.

Product Warranty

The Company gives three year warranties on certain products manufactured and sold. Such warranty is in respect of the Company’s undertaking to repair or replace those items that fail to perform satisfactorily upon meeting the terms and conditions set by the Company. A provision for warranty is calculated and recognised for each type of such product based on available past historical data on the levels of repairs and returns.

Subsidiaries Restructuring Costs

The restructuring costs are in respect of restructuring of the business and operations of the Company’s subsidiaries in Country X and Country Y during the financial year as disclosed in Note X. The major costs in this respect are employee termination benefits and penalties on the early termination of leases of office and warehouse.