Long Term Provisions

Explanation: Long Term Provisions represent liabilities that a company expects to settle or discharge beyond one year from the reporting date. These provisions are set aside to cover anticipated future expenses or obligations, such as warranties, legal claims, restructuring costs, or environmental remediation. Long Term Provisions are recorded on the balance sheet under non-current liabilities, reflecting the company’s long-term obligations.

Example: Maruti Suzuki discloses long term provisions of 88.4 crore rupees as of FY23. These provisions are earmarked to cover future expenses or obligations expected to arise over a period exceeding one year, such as warranties, legal settlements, or restructuring costs. By recognizing Long Term Provisions, Maruti Suzuki ensures prudent financial management and transparency in accounting for its long-term liabilities, thereby providing stakeholders with insights into the company’s financial commitments and potential future cash outflows.

You can view the Long Term Provisions for any company on Radar under Non Current Liabilities in the Balance Sheet section.