Provisions are recognised in the statement of financial position when the Group has a present legal or constructive obligation that is the result of a past event and when it is probable that any settlement will result in an outflow of funds. The provisions are recognised at nominal value, unless the time value of money is material.
(21a) Onerous contracts
A provision for onerous contracts (including the loss provision for work in progress) is recognised if the unavoidable costs of meeting the contractual obligations exceed the economic benefits expected from the contract.
For work-in-progress contracts, these unavoidable costs include the costs attributable to performance obligations that, at the reporting date, have not yet been satisfied, or have been only partially satisfied. If a contract can be terminated without payment of a penalty or damages, it is not an onerous contract and no provision is recognised.