Date recorded:

Costs considered in assessing whether a contract is onerous (IAS 37) (Agenda Paper 12)


At its meeting in July 2018 the IASB decided to propose amending IAS 37 Provisions, Contingent Liabilities and Contingent Assets to clarify the meaning of the term ‘unavoidable costs’ in the definition of an onerous contract.

Staff recommendation

The staff recommended that the IASB proceed to ballot an Exposure Draft with a minimum comment period of 120 days.


One Board member expressed concern about how successful the drafting will be in ring-fencing the issue. The Board member urged the staff to ensure that the amendment will not violate the conceptual background of IAS 37 and will not affect other liabilities. If the drafting would not be sufficiently precise, the Board member might decide to dissent. The Associate Technical Director said that this would be part of the discussion in the Basis for Conclusions and reminded the Board that the Exposure Draft would be issued for public comment. Another Board member was concerned that using the term ‘contracts’ in the proposed transition requirements would unintentionally not capture transactions that are not contracts.


The Board unanimously granted permission to ballot with a minimum comment period of 120 days. None of the Board members indicated intention to dissent at this point.

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