24iValue guides the user step by step through all stages of the calculation fo these two estimates. Depending on the provision you want to calculate, the web-based application will tell you what information will be needed, e.g. whether it's the debtors or inventory aging report or the selected figures from the trial balance.

If you use 24iValue to verify a provision you calculated yourself, the app will assess the difference and, if it proves significant, suggest where the error might come from or suggest the alternative approach for calculation of these estimates.

Theory:

• The principle of prudent valuation requires updates of asset valuation => update of asset value (IAS 2 par 28,33)
• Provisions for inventories should be made as a result of impairment or as a result of valuation to net realisable prices in place of purchase prices or manufacturing costs.
• Recorded prices of inventories - purchase or manufacturing costs - may not be higher than the net realizable prices (NRV) (IAS 2 par. 9)
• Receivables are adjusted by provisions subject to probability of collection,
• provisions are recognised to debtors in liquidation, bankrupt debtors, those that question the debt, overdue and non-overdue when the probability of non-collection is material (IAS 39, par.58, 59)

See more at our online training at the following link.

Regards,
Slawomir Ekman
24iValue

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