Sir, in specimen exam 1 in Q1 b , in examiners solution its written that " IAS 37 Provisions, Contingent Liabilities and Contingent Assets excludes from its scope contracts which are executory in nature, and therefore prevents the recognition of a liability"
Sir in the above phrase what is the meaning of executory contract? And does liability here from IAS 37 respect means provision?
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Executory contract
5y ago#1Same meaning as you saw when you studied Law. EXECUTORY CONSIDERATION = to be performed IN THE FUTURE.
If I sign a contract with someone to build a house for me in THE FUTURE, the contract is said to be EXECUTORY.
So I do not recognise a liability until the builder has actually built the house.
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