What essential information must be disclosed about a provision?

The essential information that must be disclosed about a provision includes a brief description of its nature, timing, and uncertainty. This requirement is rooted in the need for transparency and clarity in financial reporting, allowing users of financial statements to understand the potential obligations the company faces.

When a provision is recognized, it often involves significant judgment regarding the timing of the future outflows and the degree of uncertainty associated with those cash flows. Disclosing the nature of the provision helps users understand what the provision is for (e.g., warranty claims, legal disputes). Additionally, specifying the timing of when the payment might occur and the uncertainties surrounding it enables stakeholders to gauge the financial position and risks associated with the company's obligations.

In contrast, historical costs, tax implications, and expected future discounts do not directly address the core aspects of the provision itself, such as its nature or likelihood, which makes them less critical for the required disclosure. Disclosures focus primarily on the characteristics of the provision rather than auxiliary information that may not significantly impact understanding of the the provision's impact on the financial statements.