Definition of Onerous contract:
The term is used in many countries worldwide, where international regulators have determined that such contracts must be accounted for on balance sheets. The United States has a different system, based on generally accepted accounting principles, or GAAP, as set forth by the U.S.-based Financial Accounting Standards Board.
An onerous contract is an accounting term that refers to a contract that will cost a company more to fulfill than what the company will receive in return.
An agreement that produces a product or service for a larger amount that would be the anticipated profit. An example of this is a lease contract.
How to use Onerous contract in a sentence?
- Companies that follow those standards are required to report any onerous contracts they're committed to on their balance sheets.
- An onerous contract is an accounting term defined under the International Financial Reporting Standards (IFRS), used in many countries around the world.
- In the United States, companies typically follow a different set of accounting standards and generally don't have to account for their onerous contracts.
Meaning of Onerous contract & Onerous contract Definition