Note 14. Other liabilities

Provision for other liabilities

IR recognises a provision for future payments of uncertain amounts or timing where there is a present obligation (either legal or constructive) as a result of a past event, and it is probable that a payment will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are not recognised for net deficits from future operating activities.

Provisions are recorded at the best estimate of the expenditure required to settle the obligation. Provisions to be settled beyond 12 months are recorded at their present value and are discounted using market yields on government bonds at balance date with terms to maturity that match, as closely as possible, the estimated timing of the future cash flows, where applicable. The increase in the provision due to the passage of time is recognised as an interest expense and is included in finance expenses.

The lease make-good liability is a discounted estimate for IR’s obligations as a lessee at the end of an accommodation lease to restore the leased premises to its original condition, subject to fair wear and tear. The lease-make good liability is reviewed at balance date.