EFRAG has published its comment letter and its feedback statement in response to the IASB's Exposure Draft ED/2018/2 Onerous Contracts - Cost of Fulfilling a Contract (Proposed Amendments to IAS 37).
In December 2018, the IASB published Exposure Draft ED/2018/2 Costs Considered in Assessing Whether a Contract is Onerous (Amendments to IAS 37) (‘the ED’). In the ED, the IASB proposes to clarify that cost of fulfilling a contract comprises the costs that relate directly to the contract.
In its comment letter, EFRAG welcomes the IASB’s efforts to clarify the requirements in IAS 37 regarding the assessment of whether, in a contract, the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.
However, EFRAG also notes that the proposed amendments would affect the onerous assessment not only for long-term construction contracts previously in the scope of IAS 11 but for all contracts in the scope of IAS 37. Consequently, EFRAG encouraged the IASB to further assess the expected impact of the proposals.
Full press release
Full comment letter
Full feedback statement
© EFRAG - European Financial Reporting Advisory Group
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