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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?
Same 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.