Example on Provision for Onerous Contract

TTim4y ago

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

P2-D2Tutor4y ago#1

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