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CalculationAdvancedVariant — group VG.IAS37.000013Published

Question · Onerous contracts and cost of fulfilling a contract

Morlane, an industrial cleaning contractor, remains bound for another 3 years by a contract to clean a customer's site. After the rise in wages, performing the contract will cost it 84,000 a year (cost of fulfilling calculated in accordance with the standard, case data), while the customer pays it 50,000 a year. Early termination would cost it compensation of 180,000. The effect of discounting is not material. What amount does Morlane provide for?

Annual cost of fulfilling
84,000
Annual fee received from the customer
50,000
Remaining years
3
Early termination compensation
180,000
Your answer

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