The average percentage of expenses with the remediation

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The commercial company XYZ SRL sells in 2020 products worth 70,000 RON , VAT 19% , for which it grants a one-year guarantee. The average percentage of expenses with the remediation of deliveries with warranty period, realized in 2019 is 4%. In the year 2020, until the time of exit from the warranty, expenses are incurred for the repairs to products with a warranty period delivered in 2020, according to an invoice issued by a partner supplier, in the amount of 2000 RON plus 19% VAT. Valuation of provisions in a company The value of a provision is given by the real-time value of the expenses that have been evaluated in order to cover the obligation.



The updating of supplies must be carried out only by accounting specialists, at the end of a Phone Number Data fiscal year, taking into account the following: current appreciation of the time value of money; anticipation of operational risks. Thus, the value of a provision must be equal to the discounted value of the expenses estimated to be necessary to settle the obligation. In this situation, its increase is done by debiting the new financial expenses account 6861 "Expenses regarding the updating of provisions". Frequent questions: When is a provision recognized? A provision is only recognized when: An economic agent has a current obligation that was generated by a previous event; It is highly likely that an outflow of resources will be required to settle that obligation; A realistic estimate of the value of the obligation can be made. Is it necessary to build provisions in a company? Depends on situation.






There are areas of activity in which provisions are required by law. Even for companies that do not have this obligation, it is a suitable choice because it guarantees their financial stability.What is liquidity? Liquidity describes the extent to which an asset can be bought or sold quickly at a price that reflects its intrinsic value. Cash is considered the most liquid asset because it can be converted most quickly and easily into other assets. Liquidity is how quickly you can sell something you own, specifically the ease with which an asset or security can be turned into cash. For example, property is considered an illiquid asset because converting it into money can be quite difficult and arduous. Why is liquidity important? When markets are illiquid, it becomes difficult for assets or securities to be sold or converted into cash. Liquidity decreases greatly the rarer a thing is.