Provisions (uzkrājumi)

Provisions (uzkrājumi) are amounts shown among liabilities for obligations or expenses whose nature is clear and which are known or expected at the balance sheet date, but whose exact amount or timing is not yet fixed.

A provision is measured at the best accounting estimate of the amount needed at the balance sheet date to settle the obligation. It has its own section on the balance sheet: provisions for pensions and similar obligations, provisions for expected taxes, and other provisions.

Provisions may not be used to adjust asset values. So the so-called provision for doubtful debts is not a liability: it reduces the value of debtors on the assets side.

Provisions differ from accrued liabilities, which sit among short-term creditors. In everyday Latvian "uzkrājumi" also means savings, but in accounting it means expected liabilities.