1 Why onerous contracts are considered as aprovision, even though they do not alwayscome with a high probability of being anobligation?"A contract is assigned on 31st March, 2015to render the bookkeeping service tocompany A before the end of June 2016. Theagreed price is $120. according to theagreement, if the service is not rendered byend of June, 2016, then you should paycompany A the penalty of $100. At the end ofJune 2015, you find that the minimum costincurred to render the service is increased to$150."Recording at the end of 2015 and 2016?What if the penalty is $10?

Onerous contract is the contract that would cost the business more to fulfill than what the company…

Answered: Why onerous contracts are considered as…

Why onerous contracts are considered as a provision, even though they do not always come with a high probability of being an obligation?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 6C: On October 1, 2019, Grahams WeedFeed Inc. signs a contract to maintain the grounds for BigData Corp....

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