Provision
A provision is a present liability of uncertain amount, which can be measured reliably by using a substantial degree of estimation. It is a recognized liability on a company's balance sheet that represents an amount set aside to cover a probable future expense or loss.

Liability
A liability is a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits. Liabilities can be classified as current or non-current, depending on their maturity date. Current liabilities are expected to be settled within one year, while non-current liabilities have a longer settlement period.

Contingent liability
A contingent liability is a possible obligation that may or may not arise in the future, depending on the occurrence or non-occurrence of certain uncertain events. It is a potential liability that arises from past events but is not recognized as a liability because it is either not probable or the amount cannot be reliably measured.

Explanation
The correct answer is option 'A' - Provision. A provision is different from a contingent liability because it is a recognized liability that meets the criteria of being a present obligation from past events, and its amount can be reliably estimated. On the other hand, a contingent liability is a possible obligation that may or may not occur, and its amount cannot be reliably measured.

When determining whether a liability should be recognized as a provision or a contingent liability, several criteria need to be met. These criteria include the existence of a present obligation, the occurrence of a past event, the likelihood of an outflow of resources, and the ability to measure the liability reliably. If all these criteria are met, the liability is recognized as a provision on the balance sheet.

Provisions are typically recorded at the best estimate of the expenditure required to settle the obligation. This estimate may require a substantial degree of estimation, as it often involves predicting future events or outcomes. However, the estimate must be based on the best information available at the time and should be regularly reviewed and adjusted if necessary.

In conclusion, a provision is a present liability of uncertain amount that can be measured reliably by using a substantial degree of estimation. It differs from a contingent liability, which is a possible obligation with an uncertain amount that cannot be reliably measured.

Provision