BC1 In May 2020 the Board added paragraph 68A to IAS 37. Paragraph 68A specifies which costs an entity includes in determining the cost of fulfilling a contract for the purpose of assessing whether the contract is onerous. The Board added this clarification in response to a recommendation from the IFRS Interpretations Committee, whose research indicated that:
(a) differing views on which costs to include could lead to material differences in the financial statements of entities that enter into some types of contracts.
(b) the need for clarification was urgent. Following the withdrawal of IAS 11 Construction Contracts, entities are required to apply IAS 37 instead of IAS 11 to assess whether construction contracts are onerous. IAS 11 specified which costs to include, but IAS 37 did not.