Research on economic content of provisions of future costs and payments and their impact on financial position and financial results of the enterprise activity

DOI

10.2991/smtesm-19.2019.56How to use a DOI?

Keywords

provision, financial position, obligations, financial statements

Abstract

This paper explores the impact of provisions of future costs and payments on the assessment of the financial position and financial results of performance in the case of oil and gas companies. Those provision, which charges are provided by the accounting systems of standardization (both Ukrainian Accounting standards and IFRS), are related to the obligations of the enterprise, and therefore directly affect the evaluation results of financial condition of the enterprise. On the other hand, the creation of provisions, in most cases, leads to increased operating costs, which, in turn, worsens the company's financial results. In the period of use of provisions such impact on the results does no longer exist. Therefore, it is concluded that managers should approach very carefully to the issue of provision for enterprise. For this purpose, the preconditions, need for formation and consequences of creation of provision for the enterprise have been analyzed. The study results of the peculiarities of information disclosure about the available provisions in the financial statements of the Ukrainian oil and gas enterprises are presented. It is indicated on the characteristic differences between provisions and other types of obligations, namely, actual obligations to counteragents, as well as conditional obligations. It is substantiated that, unlike provisions, conditional obligations do not have a visible effect on the financial position and financial performance of enterprises. According to the results of the study, the criteria were formulated, maintenance of which allowed to establish the necessity of charging provisions in the reporting period.

Copyright

© 2019, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Tetiana Savchuk
AU  - Inna Negrych
AU  - Iryna Medvid
AU  - Kateryna Holubchak
PY  - 2019/09
DA  - 2019/09
TI  - Research on economic content of provisions of future costs and payments and their impact on financial position and financial results of the enterprise activity
BT  - Proceedings of the 6th International Conference on Strategies, Models and Technologies of Economic Systems Management (SMTESM 2019)
PB  - Atlantis Press
SP  - 286
EP  - 292
SN  - 2352-5428
UR  - https://doi.org/10.2991/smtesm-19.2019.56
DO  - 10.2991/smtesm-19.2019.56
ID  - Savchuk2019/09
ER  -