On 22 January 2016 three weeks after year end, Vulture Limited inadvertently released poisonous gases into the air which caused several residents to become ill.

A law firm representing the affected residents has submitted a compensation claim to the entity for pain and suffering of between N$100,000 to N$500,000 per affected resident. There was a total of 15 residents affected.

The court hearing is scheduled to occur sometime over the next two months. Vulture Limited does not believe that they will be required to make any payments to claimants, as this was an accident, and no-one has been seriously harmed as a result.

The financial director would like to know whether the provision for expected loss on the contract to supply sweets at below their expected cost meets the definition of onerous contract.

a.Yes, it meets the definition of an onerous contract.

b. no, it does not meet the definition of an onerous contract