Onerous Contract Flashcards
1
Q
Onerous Contracts -
What is the IAS for Onerous Contracts
A
IAS 37
2
Q
Onerous Contracts - IAS 37
What is an onerous contract
A
A contract where the unavoidable costs of meeting the obligations exceed the economic benefits expected to be received.
3
Q
Onerous Contracts - IAS 37
What should be made when there is an onerous contract
A
A provision
4
Q
Onerous Contracts - IAS 37
How should the value of the provision be determined?
A
At the lower of the cost of fulfilling the contract, and the penalty from exiting a contract early.
5
Q
Onerous Contracts - IAS 37
Definition of a provison?
A
A present obligation as a result of a past event causing a probable outflow of resurces.
