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In general, ESBG agrees with the issues addressed in EFRAG's draft comment letter as they include all significant aspects identified by ESBG on the IASB's ED.
EFRAG supports the discussion of the IASB with regard to the definition of “costs of fulfilling a contract", which includes all costs directly relating to the contract, beyond the approach known as “incremental costs related to the contract", given that under this latter approach, companies may run the risk of not recognising provisions for onerous contracts when an entity has several contracts that are expected to be profitable individually if the economic benefits are compared with only the incremental costs but are lossmaking when shared costs are included. ESBG agrees with the IASB's approach.
ESBG agrees with EFRAG's view that it is necessary to assess the potential impact of the proposed amendments for all contracts that fall within the scope of IAS 37 (which includes, among others, contracts with customers under the scope of IFRS 15 and also purchase agreements for goods and services) and not only for the onerous contracts determined by the already superseded IAS 11 Construction Contracts.
Such assessment may provide useful information about other contracts not directly considered by the IASB under the ED's scope and on any unintended consequences on them. For example, distribution arrangements, collective commercial agreements or commercial campaigns to capture new customers in the context of a financial services entity.