Answered: amount should the current liability be…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 current liability be presented in the statement of financial position?

₱ 12,000,000

₱ 10,000,000

₱ 4,000,000

₱ 5,000,000

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