Final Answer:
Under IFRS, if it is greater than 50% probability that an obligation is going to arise, and the amount can be estimated, then a "provision" should be recorded by making a journal entry.
Step-by-step explanation:
Under IFRS, if it is greater than a 50% probability that an obligation is going to arise, and the amount can be estimated, then a "provision" should be recorded by making a journal entry. This means that when it is more likely than not (greater than 50% probability) that a liability will be incurred, and the amount of the liability can be reasonably estimated, a provision is recognized in the financial statements.
Provisions are made for future liabilities or expenses that are probable and can be reasonably estimated. The 50% threshold signifies a higher level of certainty compared to the other options. This approach aligns with the conservative nature of accounting, ensuring that provisions are recognized when there is a more likely chance of an obligation materializing. Recognizing provisions in a timely and accurate manner helps in presenting a more realistic picture of a company's financial position and performance.
This methodology prevents companies from delaying the recognition of potential liabilities until they are virtually certain, promoting transparency and providing stakeholders with relevant information about the company's financial health. The 50% probability threshold strikes a balance between conservatism and the need for reliable financial reporting in accordance with IFRS standards.Thus option c is correct.