BC294 In the 2010 and the 2011 Exposure Drafts, the boards proposed including requirements for identifying and measuring onerous performance obligations in contracts with customers (ie an 'onerous test'). In those proposals, the boards concluded that an onerous test was needed because the initial measurements of performance obligations are not routinely updated. In addition, the boards noted that including an onerous test would achieve greater convergence of IFRS and US GAAP.

BC295 However, many respondents to the 2010 and the 2011 Exposure Drafts disagreed with the onerous test and highlighted a number of practical application difficulties. Furthermore, many explained that strict application of the onerous test would have resulted in recognition of liabilities in cases in which the outcome of fulfilling a single performance obligation was onerous but the outcome of fulfilling the entire contract would be profitable. A number of respondents suggested removing the onerous test from the revenue proposals because, in addition to being complex and difficult to apply, the requirements for recognition of onerous losses are already sufficiently addressed in other Standards. Those respondents commented that:

(a) for IFRS, the onerous test in IAS 37 and the requirements in IAS 2 Inventories already provide sufficient guidance for determining when to recognise losses arising from contracts with customers.

(b) for US GAAP, existing requirements for recognition of losses from contracts are adequate and if a change to those requirements is necessary, that change could instead be handled in a separate project that addresses liabilities in Topic 450.