Onerous contracts example Example g solution: The liability is recognized upon the cessation date ot January L, 2013, at its then fair value. On January 1: 2013: record the following entry Restructuring expense Operating lease hability S36,ooo $36 ooo The liability is recognized when the company has knowledge ot and has committed to no longer use the facility (i.e. 2011) Again, the general recognition provisions ot AS 37 apply: The entity has a oresent obligation as a result ot a past event. It is probable that an outflow ot resources will be required to settle the obligation. A reliable estimate can be macle ot the amount ot the obligatiom On December 1, 2011, record the following journal entry Restructuring expense Operating se liability FOUNb TIONE S45,ooo $45 ooo December 1, 57