Is Milo Enterprise experiencing onerous type of contract

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Question - Milo Enterprise franchised one of the Shell Gas Station in the province. The terms and condition of the franchise include a provision to strictly abide with the prescribed prices of petroleum products and to maintain a standard volume of gas in each tank and pump.  Prices of petroleum has been erratically changing in the past 3 months that inventory costing cannot catch up with selling prices.  There were several instances when Milo stocked up to full capacity all its pumps at average cost per liter higher than the prescribed selling price. Last quarter income therefore was in red due to extraordinary price fluctuations. The aftermath of the election is seen to further bring in more uncertainties. Is Milo Enterprise experiencing "onerous" type of contract as contemplated by the amendments to IAS 37?

Reference no: EM133187401

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