Module I· Provisions & ContingenciesIntermediate
Question
What is an onerous contract, and when is the provision recognized?
Answer
An onerous contract provision is recognized when unavoidable costs exceed expected benefits. Measure at the lower of fulfillment cost and exit cost.
Deep diveShow more details
Loss-making backlog is a key QoE and valuation issue. It can require EBITDA normalization and a debt-like adjustment.