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Definition of 'Onerous Contract'
A type of contract where the costs involved with fulfilling the terms and conditions of the contract are higher than the amount of economic benefit received. According to the International Accounting Standards (IAS), there are two methods for the recognition of a provision for this type of contract: the liability and impairment approaches.
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Investopedia explains 'Onerous Contract'
The liability approach refers to the onerous contract as a liability for the company's contractual responsibilities.
The impairment approach refers to a lease-related onerous contract as both an unrecognized asset and liability. Furthermore, the contract uses a long-lived asset impairment recognition system.
Onerous contracts can occur in situations where a company has a contract to supply a product that costs more to produce (for example, due to a rise in raw material costs) than originally determined by the terms of the contract.
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Search results for 'Onerous Contract'
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http://financialedge.investopedia.com/financial-edge/1211/How-To-Get-Rid-Of-Your-Ex-Spouses-Debts.aspx
... meaning anyone who has put his or her name on a debt contract say a ... accounts opened
during a marriage or a live-in partnership are especially onerous in a ...
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http://www.investopedia.com/articles/03/012803.asp
... the olive press owners were obligated by the real option contract to follow ... And
valuation becomes onerous - if not impossible - when it comes to growth stocks ...
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http://www.investopedia.com/exam-guide/cfa-level-1/ethics-standards/standard-suitability.asp
... 15.12 Arbitrage; 15.13 Forward Markets and Contracts: Settlement Procedures;
15.14 Terminating a Forward Contract Prior to Expiration; ...
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