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onerous contract

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(Querist)
03 October 2009 Whats does the onerous contracts refers to??
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Manmohan ACA, CS

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Manmohan ACA, CS (Expert)
03 October 2009 A type of contract where the costs involved with fulfilling the terms and conditions of the contract are higher than the amount of economic benefit received.

As per Indian accounting standard - 29
An ‘Onerous Contract’ is a contract in which the unavoidable costs of meeting the obligation under the contract exceed the economic benefits expected to be recovered under it.





According to the International Accounting Standards (IAS), there are two methods for the recognition of a provision for this type of contract: the liability and impairment approaches.
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Ankur Garg

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Ankur Garg (Expert)
04 October 2009 Agree.

In simple words a contract which is difficult to fulfill w.r.t. it's conditions.
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