Professional Services
Onerous Fixed-Fee Contract — Loss Provision
Recognizing an immediate loss when the estimated cost to complete a fixed-fee engagement exceeds the remaining fee to be earned.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Loss on Onerous Contract (Expense) | Expense (+) | 12,000.00 | - |
| Provision for Onerous Contract (Liability) | Liability (+) | - | 12,000.00 |
💡 Accountant's Note
When a fixed-fee engagement becomes loss-making (scope creep, underestimated complexity), the expected total loss must be recognized immediately under IAS 37 and IFRS 15. Waiting until the engagement closes understates current-period liabilities.
Professional Excel Template
Get the automated version of this entry. Includes built-in IFRS checks, VAT calculators, and SAP-ready upload formats.
QA
Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.