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CMA Intermediate · Corporate Accounting and Auditing · Provisions, Contingent Liabilities and Contingent Assets (Ind AS 37)

Ind AS 37 does not apply to provisions, contingent liabilities and contingent assets resulting from executory contracts, except in one situation. Which one?

Ind AS 37 excludes items arising from executory contracts, except where the contract is onerous. So an onerous executory contract falls within the standard and may require a provision, whereas ordinary executory contracts are not covered. Duration, currency or related-party status is irrelevant.

  1. AWhere the contract is onerousCorrect
  2. BWhere the contract is with a related party
  3. CWhere the contract extends beyond twelve months
  4. DWhere the contract involves foreign currency

Explanation

Paragraph 1(a) excludes those resulting from executory contracts except where the contract is onerous. Duration, currency or related-party status does not bring an executory contract into scope.

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