When a provision is made, the provision account is credited by debiting :
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Account 681 « Depreciation, amortization, impairment and provisions (to be recorded in operating expenses) » when it relates to the normal and current operations of the entity ;
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Account 686 « Amortization, impairment and provisions (to be recorded in financial expenses) » when it affects the entity’s financial activity ;
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Account 687 « Depreciation, amortization, impairment and provisions (to be recorded in exceptional expenses) » when it relates to exceptional profit or loss
It is readjusted at the end of each financial year by :
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debiting the corresponding accounts 681, 686 or 687, when the amount of the provision is increased ;
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crediting account 781 « Reversal of depreciation, amortization, impairment losses and provisions (to be recorded in operating income) », account 786 « Reversal of mpairment losses and provisions (to be recorded in financial income) » or account 787 « Reversal of impairment losses and provisions (to be recorded in exceptional income) » when the amount of the provision is to be reduced or cancelled, as the provision has become wholly or partly irrelevant.
When the risk is realized or the expense occurs, the previously made provision is balanced by crediting accounts 781, 786 or 787. At the same time, the expense incurred is recorded in the relevant account of Class 6.
