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REVENUE RECOGNITIONS

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › REVENUE RECOGNITIONS

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by P2-D2.
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  • July 14, 2021 at 8:27 pm #627756
    shaunak22
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    In a case where there is a loss on a contract(A ONEROUS CONTRACT) why is a provision created in the current year?

    July 14, 2021 at 8:55 pm #627772
    P2-D2
    Keymaster
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    because it meets the criteria for a provision on the current year. We have a contract (past event that gives rise to the obligation to pay) and the costs exceed the benefits, so it is prudent to recognise a loss when we know it will arise from the contract.

    Thanks

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