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Onerous Contracts—Cost of Fulfilling a Contract (Amendments to IAS 37) [Completed]

Effective date:

The amendments are effective for annual periods beginning on or after January 1, 2022. Early application is permitted.

Last up­dated:

May 2020

Overview

IAS 37, Provisions, Contingent Liabilities and Contingent Assets did not specify which costs to include in estimating the cost of fulfilling a contract for the purpose of assessing whether that contract is onerous. Research conducted by the IFRS Interpretations Committee indicated that differing views on which costs to include could lead to material differences in the financial statements of entities that enter into some types of contracts.

In this project, the International Accounting Standards Board (Board) developed amendments to IAS 37 to clarify that for the purpose of assessing whether a contract is onerous, the cost of fulfilling the contract includes both the incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling contracts.

The Board issued the amendments in May 2020. The amendments are effective for contracts for which an entity has not yet fulfilled all its obligations on or after January 1, 2022. Earlier application is permitted.

 

Other de­vel­op­ments

May 2020

On May 14, 2020, the IASB published Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) amending the standard regarding costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous.

March 2020

On March 27, 2020, the IASB staff updated the work plan to indicate that the Board expects to issue the IFRS Amendments in May 2020.

January 2020

On January 31, 2020, the IASB staff updated the Work Plan to indicate that the IASB expects to issue the Amendments to IAS 37 in Q2/2020.

October 2019

On October 25, 2019, the IASB® staff updated the work plan to indicate that the Board expects to finalize the amendments to IAS 37 in the first half of 2020.

On October 1, 2019, the IASB® staff updated the work plan to indicate that the Board expects to issue the final IFRS amendments to IAS 37 (no date specified).

July 2019

On July 29, 2019, the IASB® staff updated the work plan to indicate that the Board expects to decide the project direction in September 2019.

May 2019

On May 18, 2019, the IASB® staff updated the work plan to indicate that the Board expects to decide the project direction (no date specified).

April 2019

On April 12, 2019, the IASB® staff updated the work plan to indicate that the Board plans to review the Exposure Draft feedback in May 2019.

January 2019

On January 25, 2019, the IASB® staff updated the work plan to indicate that the Board expects to review the Exposure Draft feedback in Q2/2019.

On January 10, 2019, the AcSB issued its Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. Comments are requested by April 15, 2019.

December 2018

On December 14, 2018, the IASB staff updated the work plan to indicate that the Board expects to review the Exposure Draft feedback in the first half of 2019.

On December 13, 2018, the IASB published an Exposure Draft Cost of Fulfilling a Contract (Proposed amendments to IAS 37)"considering costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. Comments are requested by April 15, 2019.

September 2018

On September 20, 2018, the IASB staff updated the work plan to indicate that the Board plans to issue an Exposure Draft in December 2018.

July 2018

At its meeting in July 2018, the IASB decided to undertake narrow-scope standard-setting to clarify the meaning of the term 'unavoidable costs' in the IAS 37 definition of an onerous contract.

 

Correction list for hyphenation

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