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REVENUE RECOGNITIONS

This topic has 1 reply, 2 voices, and was last updated 4 years 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
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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.
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