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As per your example chapter 15, example 1 in the notes June 2018, the answer states that there is an unavoidable loss of 1350, for which a provision should be set up. As per IAS 37 no provisions for future operating losses should be set up. In this case is it considered a current operating loss as it relates the current year financial year end?Is it correct?
Thanks.
I believe that IAS 37, paragraph 66 relating to onerous contracts covers this
Where we foresee a loss that is unavoidable, we make provision for the least loss that we know for sure that we are going to suffer
Is this not somewhat similar to the recognition of a future loss where a constructor can foresee that the end result of a current contract is going to prove to be a loss?
OK?
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