CERTYNEX IFRS ACADEMY

An analyst writes: "Contract no. 7 is onerous on initial recognition, but the portfolio as a whole is profitable; I will therefore place it with the remaining contracts." What is the error in this reasoning?

It forgets that onerous contracts are accounted for according to the profitability of the whole portfolio in which they are issued.

It creates a group of remaining contracts, whereas an onerous contract is classified after a year of observation.

It should have created a fourth group reserved for onerous contracts of an overall profitable portfolio.

It judges the profitability of the portfolio, whereas onerous contracts form a separate group.