---
title: Onerous (Loss) Contracts
description: A contract in which the unavoidable costs of meeting the obligations exceed the expected economic benefits. The entire expected loss must be recognize...
sidebar_position: 49
tags: ['asc-606', 'Contracts']
---

# Onerous (Loss) Contracts

## The ASC 606 Standard

A contract in which the unavoidable costs of meeting the obligations exceed the expected economic benefits. The entire expected loss must be recognized immediately on the income statement.

## The Real-World Scenario

You sign a fixed-price $100,000 consulting deal, but project scope creep means you will now have to spend $120,000 in labor just to finish it.

## The Spreadsheet Breaking Point

Manually comparing fixed revenue against spiraling labor costs requires constant cross-referencing between the accounting and operations departments.

## The Hidden Cost to the Bottom Line

Failing to recognize the entire expected loss immediately severely misstates the company's current financial exposure to the board.

## How GAAPX Eliminates the Risk

Continuously forecasts project costs against fixed revenue, automatically flagging loss contracts and triggering the required immediate loss accrual.