Onerous Contracts— Cost of Fulfilling a Contract (Proposed amendments to IAS 37)
The International Accounting Standards Board (IASB) has published for public comment proposed amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets to specify which costs a company should include when assessing whether a contract will be loss-making.
The IASB has proposed to amend IAS 37 to specify that the costs of fulfilling a contract include both incremental costs, such as the costs of materials, and an allocation of other costs directly related to the contract, such as the depreciation charge for equipment the company uses to fulfill contracts.
The deadline for commenting on the proposals is 15 April 2019.
Additional resources explaining the proposed amendments are available here.