A long-term contract is automatically considered onerous if a loss is recognized in any given year.

Question

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A long-term contract is not automatically considered onerous if a loss is recognized in any given year. Whether a contract is onerous or not depends on whether the unavoidable costs of meeting the obligations under the contract exceed the expected economic benefits. Recognition of a loss in one year does not automatically make the entire contract onerous. The contract should be assessed for onerous conditions on a periodic basis.

A Long-Term Contract Is Automatically Considered Onerous If a Loss