On January 30, 2019, a suit was filed against Frazier Corporation under the Environmental Protection Act. On August 6, 2020, Frazier Corporation agreed to settle the action and pay $920,000 in damages to certain current and former employees. How should this settlement be reported in the 2020 financial statements? Discuss.
Q: Maria Clara Company carried a provision of P4,000,000 in the draft financial statements for the year…
A: The total final damages to be paid by the company is P6000000
Q: Lax Company at the end of 2019, its first year of operations, prepared a reconciliation between…
A: Hey, since there are multiple questions posted, we will answer first question. If you want any…
Q: On November 5, 2020, a ABC Corporation truck was in an accident with an auto driven by nel. ABC…
A:
Q: During 2019, Belk Corporation purchases $70,000 worth of equipment for use in its business. Belk’s…
A: This section allows the business entities to deduct the purchase price of qualifying equipment or…
Q: Discuss the implication of the transactions and state the journal entries on January 1, 2020
A:
Q: ROSE Company entered into a lawsuit on December 20, 2021 and recognized on the same date a provision…
A: Lets first understand the meaning of current and non-current liability. As per IAS 1 "Presentation…
Q: In 2019, Ulna Company borrowed P10,000,000 from Plenty Lending Company to finance the construction…
A: Here discuss about the details of the Restructure of the Notes Payable after incurred the financial…
Q: 6. Buwis Buhay Incorporated had several outstanding obligations on December 31, 2019. The brief…
A:
Q: In June 2019, Buwis Buhay was involved in a court case amounting to P10,000,000. The attorney…
A: As per IFRS 37 , When it is virtually certain of inflow of resources Occur then recognise "Asset"
Q: Coronado Industries, a manufacturer of household paints, is preparing annual financial statements at…
A: Financial statements are the reports prepared by an entity in order to make a disclosure of entity's…
Q: On December 31, 2020, ABC Company defaulted in the payment of the 10% interest on its loan from a…
A: The financial instabilities of the companies can be overcome by using the technique of corporate…
Q: On January 11, 2022, The Hughes Company applied for a tradename. Legal costs associated with the…
A: The intangible assets of a company are referred to as all those long-term assets that do not have a…
Q: On 04 February 2019, the judge presiding over the case ruled that Fresh should pay $ 1 000 000 to…
A: A rival toothpaste maker has filed a fraud lawsuit against Fresh Limited. Prior to the conclusion…
Q: On January 1, 2018, EM purchased a patent for a new consumer product for ₱4,800,000. At the time of…
A: The Patent useful life was 10 years but after purchase useful life changed to 8 years. Therefore…
Q: The possible outcomes are equally likely. The accounting year ends on December 31 and the 2020…
A: Personal injury lawsuit: In the case of personal injury there is a legal dispute that arises when…
Q: In 2021, Crane Company accrued, for financial statement reporting, estimated losses on disposal of…
A: Deferred Tax (Asset) This type of tax occurs on the Asset side of the balance sheet due to the…
Q: In early January 2020, HUMID Corporation applied for a trade name, incurring legal costs of…
A: Trademark shall be measured at costs that are directly associated with its registration. In other…
Q: On January 30, 2016, a suit was filed against Frazier Corporationunder the Environmental Protection…
A:
Q: On January 1, 2021, Robin Cormpany received a grant of P1,500,000 from the government to subsidize…
A: Government Grant: Instead than acting as an incentive to carry out specified expenditures, a…
Q: In the same year, the entity is a defendant in a lawsuit disputing the validity of copyright held by…
A: Whenever any Suit is filed against the company, if its feels that the case can against the company…
Q: During 2019, Mansmith Company guaranteed a supplier’s P500,000 loan from a bank. On October 1, 2019,…
A: The retooling costs are not part of a liability,but are rather a response to changing…
Q: On November 25, 2020, an explosion occurred at a Brit company plant causing extensive property…
A: Given, Estimated liability = P3,500,000 Deductible clause = P500,000
Q: n November 5,2019, ABC Company was in an accident with an auto driven by Y. ABC Company received a…
A: Solution Concept As per the relevant accounting standards The provision for loss shall be recognized…
Q: On June 1, 2021, Oriole & Sons sold equipment to James Landscaping Service in exchange for a…
A: Given: Fair value = $97,200 Face value of note = $112,800 Period = 12 months
Q: On June 1, 2021, Johnson & Sons sold equipment to James Landscaping Service in exchange for a…
A: The value of all sales of goods and services recognized by a company in a period is called revenue.…
Q: Honest Corporation carried a provision of P1,500,000 in the draft financial statements for the year…
A: Answer: C.1,000,000 Accrued liabilities are such liabilities which have not yet been paid during an…
Q: Beautiful Company is involved in litigation regarding a faulty product sold in a prior year during…
A: Contingent Liability. Contingent liabilities are those, the occurance of which depend on the happing…
Q: In May 2021, Cruiser Company filed suit against Stallman, Inc. seeking P850,000 damages for patent…
A: Contingent assets are those probable assets whose existence would be confirmed through the non-…
Q: On January 1, 2019, Tulip signed an agreement to operate as a franchise of Flower Service Inc. for…
A: In the context of the given question, we are required to compute the carrying amount of intangible…
Q: August 2019, Baguio City brought an action against the company for polluting the surrounding rivers…
A: As per IFRS 37, A provision is an present obligation which arises from past event and outflow of…
Q: Sunrise Company provided the following information on December 31, 2019: A personal injury…
A: Contingent liabilities are those liabilities or obligations whose possibilities to arise in future…
Q: During 2019, Analee Company filed suit against another entity seeking damages for patent…
A: A contingent asset is an economic gain that is contingent on future events that are mostly outside a…
Q: In 2020, Lihim na Pagtingin Designs Corp. sold a layout design to Masaya Inc. and will receive…
A: Revenue - Revenue is the income for the company. This will be on an accrual basis or receipt basis.
Q: Suits for damages totaling P8,000,000 are pending against Freddy. The company lawyers advised that…
A: Contingent liabilities are referred to as the possibility of future liability payments due to the…
Q: amount should the current liability be presented in the statement of financial position?
A: Current liability is the amount of liability, the payment of which is due within a year.
Q: On January 1, 2021, Robin Cormpany received a grant of P1,500,000 frorm the governiment to subsidize…
A: Solution This question relates to standard accounting for government grants Whenever the grant is…
Q: Orange Company is the defendant in a lawsuit filed by Will in 2019 disputing the validity of…
A: Given, Loss charged to the income for the year ended December 31, 2019 = P400,000 Cash settlement =…
Q: he income tax rate is 30% for all years. Income tax payable is?
A: Income Tax is a form of indirect tax. It is the tax payable on the amount of income earned during a…
Q: In early January 2019, Outkast Corporation applied for a trade name, incurring legal costs of…
A:
Q: On January 1, 2020, Tom Co (A seller-lessee) sells a building to MacCo (an unrelated buyerlessor)…
A: A lease is a written agreement that indicating the conditions within which a lessor acknowledges to…
Q: 1. Compute for the current liability to be presented in the financial position a. P12 million…
A:
Q: On October 1, 2020, Washington Chemical was identified as a potentially responsible party by the…
A: Insurance policy is a contract between the insurer and insured. It is a contract wherein the insured…
Q: On December 13, 2019, ABC Company was in an accident with an automobile driven by DEF. ABC received…
A: Contingent liability: Contingent liability means a liability that may occur depending on the outcome…
Q: Amway Corporation acquires a used desk on December 26, 2019, and places the desk in service on…
A: IRC deduction is better than depreciation.
Q: On December 31, 2019, Aquinas Company had equipment that had a carrying amount of $300,000 which the…
A: Impairment of assets means reducing the book value of assets when carrying amount is more than…
Q: During 2021, Libya Company is the defendant in a breach of patent lawsuit. The lawyers believed…
A: In order to determine the undiscounted cash flows, the total estimated damage amount is required to…
Q: On January 2, 2019, Grey Company received an P800,000, 8%, 2 year note from Black Corporation as…
A: Impairment loss is the excess of carrying amount over the recoverable amount of the notes…
On January 30, 2019, a suit was filed against Frazier Corporation under the Environmental Protection Act. On August 6, 2020, Frazier Corporation agreed to settle the action and pay $920,000 in damages to certain current and former employees. How should this settlement be reported in the 2020 financial statements? Discuss.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
- On October 1, 2020, Washington Chemical was identified as a potentially responsible party by the Environmental Protection Agency. Washington Chemical’s management and its counsel have concluded that it is probable that Washington will be responsible for damages, and a reasonable estimate of these damages is $1,250,000. Washington Chemical’s insurance policy of $2,250,000 has a deductible clause of $125,000. How should Washington Chemical report this information in its financial statements at December 31, 2020?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 P1,000,000During 2020, Smith Company filed suit against West Problem 4-31 (AICPA Adapted) During 2020, Smith Company filed suit against West Company seeking damages for patent infringement. On December 31, 2020, the legal counsel believed that it was probable that Smith Company would be successful against West Company for an estimated amount of P1,500,000. On March 31, 2021, Smith Company was awarded P1,000,000 and received full payment thereof. The financial statements were issued March 1, 2021. In Smith Company's 2020 financial statements, how should this award be reported? a. As a receivable and revenue of P1,000,000. b. As a receivable and deferred revenue of P1,000,000. c. As a disclosure of a contingent asset of P1,000,000. d. As a disclosure of a contingent asset of P1,500,000.
- During 2020, Lomi, Co.filed suit against Ocean, Inc seeking damages for patent infringement. At December 31, 2020. Lomi’s legal counsel believed that it was probable that Lomi would be successful against Ocean for an estimated amount of P 1,500,000. In March 2021, Lomi was awarded P 1,000,000 and received in full payment thereof. In Lomi’s 2020 financial statements issued February 2021, how should this award be reported? a. As a receivable and revenue of P 1,500,000b. As a receivable and revenue of P 1,000,000c. As a disclosure of a contingent asset of P 1,500,000d. As a disclosure of a contingent asset of P 1,000,000corcese Inc. is involved in a lawsuit at December 31, 2020. (a) Prepare the December 31 entry assuming it is probable that Scorcese will be liable for $900,000 as a result of this suit. (b) Prepare the December 31 entry, if any, assuming it is not probable that Scorcese will be liable for any payment as a result of this suit.On November 25, 2020, an explosion occurred at a Brit company plant causing extensive property damage to area buildings. By March 10, 2021, claims had been asserted against Brit Company. The management and counsel concluded that it is probable Brit Company will be responsible for damages, and that P3,500,000 would be a reasonable estimate of the liability. The entity's P10,000,000 comprehensive public liability policy has a P500,000 deductible clause. The financial statements for 2020 were issued on March 25, 2021. What amount of loss from lawsuit should be reported in the income statement for 2020? What amount of liability from lawsuit should be reported on December 31, 2020?
- On January 30, 2016, a suit was filed against Frazier Corporationunder the Environmental Protection Act. OnAugust 6, 2017, Frazier Corporation agreed to settle theaction and pay $920,000 in damages to certain currentand former employees. How should this settlement bereported in the 2017 financial statements? Discuss.On February 5, 2020, an employee filed a P2,000,000 lawsuit against Superman Company for damages suffered when plant of the entity exploded on December 29, 2019. The entity's legal counsel believed the entity will probably lose the lawsuit and estimated the loss to be P500,000. The employee has offered to settle the lawsuit out of court for P900,000 but the entity will not agree to the settlement. On December 31, 2019, what amount should be reported as accrued liability.Tyeso 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…
- Cocoa Corporation is preparing its December 31, 2023 financial statements. On March 1, the company settled a lawsuit for which it had accrued a contingent liability (loss) of $1,600,000. The amount of the settlement was $1,750,000. The financial statements were issued on March 10, 2024. Which of the following is correct regarding the settlement of the lawsuit? Question 9Answer a. The additional loss of $150,000 will be reported in the 2024 financial statements. b. No contingent liability will be reported on the 2023 Balance Sheet since the suit has been settled. c. This is not a recognized subsequent event because this information about the settlement was not known at year-end. Therefore, no adjustment is required. d. Cocoa should make an adjusting entry to adjust the estimated loss to the actual amount. Net income for 2023 will decrease by $150,000 (ignoring taxes).On November 5, 2020, a Dunn Company truck was in an accident with an auto driven by Bell. The entity received notice on January 12, 2021 of a lawsuit for P700,000 damages for personal injuries suffered by Bell. The entity's counsel believed it is probable that Bell will be awarded an estimated amount in the range between P200,000 and P500,000. The possible outcomes are equally likely. The accounting year ends on December 31 and the 2020 financial statements were issued on March 31, 2021. What amount of provision should be accrued on December 31, 2020?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?