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Example on Provision for Onerous Contract

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Example on Provision for Onerous Contract

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  • October 26, 2021 at 10:23 am #639136
    ty0311
    Participant
    • Topics: 25
    • Replies: 7
    • ☆

    Hi Chris,

    Thanks for the great lectures on Provision!

    Regarding the answer to the Onerous Contract example question, do we not need to calculate the present value of $1,350 (2 months future of cash flow) to be reported as the Liability on SFP and Expense on SPL? (although the question does not provide the discount rate.)

    Regards,
    Tim

    October 30, 2021 at 9:46 am #639455
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7079
    • ☆☆☆☆☆

    Hi Tim,

    Glad you’ve found the provisions lectures good.

    Two months wouldn’t be long enough to consider for discounting. If it were two years then definitely yes but there won’t be much change in the value of money over a short period.

    Hope that clears it up.

    Thanks

    Chris

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