A provision should be recognised when there is a present obligation as a result of a past event, it is probable that an outflow of resources will be necessary, and the amount can be reliably estimated.

• A. There is a present obligation with a certain outflow amount.
• B. The obligation is not probable to result in an outflow.
• C. There is a present obligation, a probable outflow, and a reliable estimate.
• D. The obligation is remote and cannot be estimated reliably.

Answer: (C)

To recognise a provision, you must have three things: a present obligation arising from a past event, a probable outflow of resources to settle it, and an amount that can be reliably estimated. The option that includes all three elements matches the requirement exactly: there is a present obligation, the outflow is probable, and the amount can be estimated with enough reliability. This is why it’s the best answer.

The other statements fail because they miss one of the essential elements. If the outflow isn’t probable, you can’t recognise a provision. If the obligation is remote or the amount can’t be reliably estimated, recognition isn’t appropriate.