1. During 2021, Thor Company was sued by a competitor for P5,000,000 for infringement of a trademark. Based on the advice of the entity's legal counsel, the entity accrued the sum of P3,000,000 as a provision in the financial statements for the year ended December 31, 2021. Subsequent to the end of the reporting period, on February 15, 2022, the Supreme Court decided in favor of the party alleging infringement of the trademark and ordered the E D2 50 000
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- During 2020, Marian Company was sued by a competitor for P5,000,000 for infringement of a patent. Based on the advice of the legal counsel, the entity accrued the sum of P3,000,000 as a provision in the financial statements for the year ended December 31, 2020. Subsequently, on March 15, 2021, the Supreme Court decided in favor of the party alleging infringement of the patent and ordered the defendant to pay the aggrieved party a sum of P3,500,000. The financial statements were prepared by the entity's management on February 15, 2021 and approved by the Board of Directors on March 31, 2021. Questions: 1. When is the date of authorization for issue of the 2020 financial statements? 2. What amount should be recognized as accrued liability on December 31, 2020 to reflect the event after the reporting period?During 2018, Rosanna Company was sued by a competitor for P5,000,000 for infringement of a patent. Based on the advice of the legal counsel, the entity accrued the sum of P3,000.000 as a provision on December 31, 2018. Subsequently, on March 15, 2019, the Supreme Court decided in favor of the party alleging infringement of the patent and ordered the defendant to pay the aggrieved party a sum of P3,500,000. The financial statements were prepared by management on February 15, 2019 and approved by the board of directors on March 31, 2019. The financial statements were prepared by management on February 15, 2019 and approved by the board of directors on March 31, 2019. What amount should be adjusted on December 31, 2018 in relation to this event?During 2023, Lowry Company was used by a competitor for P5,000,000 infringement suit of a trademark. Based on the legal counsel’s advice, Lowery accrued the sum of P3,000,000 as a provision. On February 15, 2024, the Supreme Court decided in favor of the party alleging the infringement and ordered the defendant to pay the aggrieved party a sum of P3,500,000. The financial statements of Lowry were approved by the BOD for issue on February 20, 2024. What amount should the Company accrue as provision for the year ended December 31, 2023?
- During 2019, Analee Company filed suit against another entity seeking damages for patent infringement. On December 31, 2019, the legal counsel believed that it was probable that the entity would be successful against the other entity for an estimated amount of P1,500,000. On April 15, 2020, the entity was awarded P1,000,000 and received full payment thereof. The 2019 fınancial statements were issued on March 31, 2020. How should this award be reported in the 2019 financial statements? O As disclosure of contingent asset P1,000,000 As disclosure of contingent asset P1,500,000 O As receivable and revenue P1,000,000 O As receivable and deferred revenue P1,000,000Tyeso Company entered into a lawsuit on December 25, 2020 and recognized on the same date a provision of P2,000,000. On February 28, 2021, when the financial statements for the year ended December 31, 2020 had not yet been authorized for issue, the case was settled and the court decided the final total damages to paid by the entity at P3,000,000. In addition, the Company has a loan payable of P2,000,000 due on June 30, 2021. On January 1, 2021, before the authorization of the issuance of financial statements, the bank agreed to refinance the loan, extending the maturity to June 30, 2023. Also, another loan amounting to P7,000,000 due on December 1, 2021 was obtained by the Company from BDO. TYESO Company has the discretion to refinance or roll over the loan for at least twelve months from December 31, 2021. 1. Compute for the current liability to be presented in the financial position a. P12 million b. P10 million c. P5 million d. P4 million Answer: 2. Compute for…On March 1, 2019, a suit was filed against Eloise Company for patent infringement. Eloise's legal counsel believed an unfavorable outcome is probable and estimated that the entity will have to pay between P850,000 and P900,000 in damages. However, Eloise's legal counsel is of the opinion that P600,000 is a better estimate than amount in the range. any other The situation was unchanged when December 31, 2019 financial statements were released on February 15,2020. What amount should be accrued as liability on December 31, 2019 in connection with this law suit?
- ROSE Company entered into a lawsuit on December 20, 2021 and recognized on the same date a provision of ₱2,000,000. On February 28, 2022, when the financial statements for the year ended December 31, 2021 had not yet been authorized for issue, the case was settled and the court decided the final total damages to be paid by the entity at ₱3,000,000. In addition, the Company has a loan payable of ₱2,000,000 due on June 30, 2022. On January 1, 2022, before the authorization of the issuance of financial statements, the bank agreed to refinance the loan, extending the maturity to June 30, 2024. Also, another loan amounting to ₱7,000,000 due on December 1, 2022 was obtained by the Company on January 2, 2022 from BPI. ROSE Company has the discretion to refinance or roll over the loan for at least twelve months from December 31, 2022. At what amount should the non-current liability be presented in the statement of financial position? ₱ 2,000,000 ₱…In the same year, the entity is a defendant in a lawsuit disputing the validity of copyright held by the entity. On December 31, 2019 , the entity determined that the plaintiff would probably be a successful against the entity for an estimated amount of P2,000,000. Appropriately, a P2,000,000 loss was accrued by a charge to income for the current year. On December 31, 2019, the entity and plaintiff agreed to a settlement providing for cash payment of P1,250,000 by the entity and transfer of the copyright to plaintiff. The carrying amount of the copyright was P250,000. What should be the effect of the settlement of the copyright case on Davao Company’s income before tax in 2020? 300,000 increase 750,000 decrease 250,000 decrease 750,000 increase 500,000 increase1. On May 1, 2019, ABC Corporation bought a trademark from DEF Corporation for P300,000. Its unamortized cost on DEF’s accounting records was P112,000. ABC Corp decided to amortize the trademark over its legal life from the date of purchase. What amount should the trademark be reported on its December 31, 2019, ABC’s Financial Position? 2. An entity is performing an annual test of the impairment of goodwill for a cash-generating unit. It has determined that the fair value of the unit exceeds the carrying amount. Which statement is true concerning the test of impairment? A. Goodwill should be written down as impaired. B. Impairment is not indicated and no additional analysis is necessary. C. Goodwill should be retested at the entity level. D. The assets and liabilities should be valued to determine if there has been an impairment of goodwill. 3. Which of the following items would qualify as an intangible asset? A. Advertising and promotion on the launch of a huge product B.…
- ROSE Company entered into a lawsuit on December 20, 2021 and recognized on the same date a provision of ₱2,000,000. On February 28, 2022, when the financial statements for the year ended December 31, 2021 had not yet been authorized for issue, the case was settled and the court decided the final total damages to be paid by the entity at ₱3,000,000. In addition, the Company has a loan payable of ₱2,000,000 due on June 30, 2022. On January 1, 2022, before the authorization of the issuance of financial statements, the bank agreed to refinance the loan, extending the maturity to June 30, 2024. Also, another loan amounting to ₱7,000,000 due on December 1, 2022 was obtained by the Company on January 2, 2022 from BPI. ROSE Company has the discretion to refinance or roll over the loan for at least twelve months from December 31, 2022. REQUIRED: 1. At what amount should the current liability be presented in the statement of financial position? 2. At what amount should the non-current…C. April 1, 2020, Roddick Company incurred $480,000 in an unsuccessful patent defense. As a result of the adverse verdict, the patent, with a remaining unamortized cost of $252,000, is deemed worthless. Required: Prepare the journal entries needed at the date of the transaction.As at 30 June 2020, Company A is involved in a legal dispute with a supplier in relation to the early termination of the exclusive licence agreement between the two entities. The supplier is seeking damages of $40 million. The directors of COMPANY A believe they will be successful in defending the claim. Company A1s lawyers have advised that it is a 90 percent probability that the entity would not be found liable. In accordance with /AS 37Provisions, Contingent Liabilities and Contingent Assets, which of the following is the most appropriate option for Company A when preparing its financial report for 30 June 2020? 1) Do nothing. 2) Disclose information about the possible liability as a contingent liability. 3) Recognise a provision for the best estimate of the obligation to the supplier. 4) Recognise a contingent liability for the best estimate of the obligation to the supplier.