For damages in a lawsuit that the reporting company has a 75% chance of losing. The damages claim is for $600,000
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- Axel Brick Company has a lawsuit pending from a customer claiming $100,000 in damages. Axel's attorney advises the likelihood the customer will win the lawsuit is reasonably probable. GAAP requires at a minimum that this contingent liability be...Lapalette Inc. is being sued by a customer for $500,000 related to damages from the sale of defective products. Legal counsel has advised Lapalette that there is a 70% likelihood that the company will be found liable; however, the normal settlement for this type of case is between $200,000 and $350,000, with payouts within this range equally likely. Lapalette follows ASPE. Based on this information, what amount should Lapalette record as a contingent liability? Question 5 options: $275,000 $350,000 $200,000 $192,500Voi company provided the following facts regarding pending litigation on December 31,2020 1. The entity is defending against a first lawsuit and believe that there is a 51% chance that it will lose in court. The entity estimate that damages amounting to P 1,000,000 2. The entity is defending against a second lawsuit which management believes it is virtually certain to lose in court. If it losses, management estimate damages will amount in between P 3,000,000 to P 5,000,000 3. The entity is defending a third but the relevant loss will incur in the future. The present values of the endpoints of the range are P 1,500,000 and P 2,500,000. The management believes the effect of the time value of money on these amounts are Materials but also believes the timing of these amount are uncertain. 4. The entity is defending against a fourth lawsuit and believes there is only 25% chance it will lose in court.If the entity lose management believes damages will likely be from P 3,000,000 to P…
- Smart Company provided the following information as of December 31, 2019:• Smart is the plaintiff in a lawsuit which would award damages normally set at the maximum of P1,000,000. Its legal counsel believes that is it probable that the action filed will be enforced by the court.• The entity is defending a lawsuit for patent infringement. The entity’s legal counsel believes that there is a 25% chance that the business will win the lawsuit. Damages payable ranges from P600,000 to P1,800,000.• On February 16, 2020, the local government is in the process of investigating an environmental violation committed by the entity last November. It is probable that the business will pay fees in relation to said violation and estimates the best amount at P1,000,000.• Smart is also involved in a lawsuit for a dispute with a customer. On December 31, 2019, the attorneys believe that it will remotely result to a favorable outcome. Expected damages would be 50% for P1,000,000, 20% for P3,000,000 and 30%…Arcand Advisers is being sued by a former customer. Arcand's lawyers say that it is possible, but not probable, that the company will lose the lawsuit and that the trial should last approximately 18 more months. Should Arcand lose, it will most likely have to pay approximately $750,000. How should this lawsuit be reported on the financial statements? Oa. Current liability of $750,000 and expense of $750,000 Ob. Long-term liability of $750,000 and expense of $750,000 Oc. No effect on the statement of financial position or statement of earnings, but disclosed in the notes to the financial statements Od. No disclosure is requiredABC at the year end has the following outside lawsuits: A suit that is probable of loss with an estimated loss of $50,000. A suit that is probable of winning with an estimated gain of $20,000 A suit that is remote of losing with an estimated loss of $10,000. What amount of Contingent liability would ABC report at year end? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a $30,000 b $40,000 c $50,000 d $60,000
- 15. GINGERBREAD Company is involved in a litigation regarding a faulty product sold in a prior year. The entity has consulted with lawyer and determined that there is a 50% chance of losing. The lawyer estimated that the amount of any payment would be between ₱500,000 to ₱800,000 with ₱500,000 as the best estimate. What is the required journal entry as a result of this litigation? Debit Litigation expense and credit Litigation liability for ₱ 650,000 No journal entry is required Debit Litigation expense and credit Litigation liability for ₱ 250,000 Debit Litigation expense and credit Litigation liability for ₱ 500,000Kelly Inc. is involved in litigation regarding a faulty product sold in a prior year. The company has consulted with its attorney and determined that it is possible that they may lose the case. The attorneys estimated that there is a 40% chance of losing. If this is the case, their attorney estimated that the amount of any payment would be P 500,000. What is the required journal entry as a result of this litigation? *a. Debit Litigation Expense for P 500,000 and credit Litigation liability for P 500,000b. No journal entry is requiredc. Debit Litigation Expense for P 200,000 and credit Litigation Liability for P 200,000d. Debit Litigation Expense for P 300,000 and credit Litigation Liability for P 300,000Candel is being sued by a customer for $2 million for breach of contract over a cancelled order. Candel has obtained legal opinion that there is a 20% chance that Candel will lose the case. Accordingly Candel has provided $400,000 ($2 million × 20%) in respect of the claim. The unrecoverable legal costs of defending the action are estimated at $100,000. These have not been provided for as the case will not go to court until next year. What is the amount of the provision that should be made by Candel in accordance with IAS 37 Provisions, contingent liabilities and contingent assets ?
- Toy Company provided the following facts regarding pending litigation on December 31, 2020: • The entity is defending against a first lawsuit and believes there is a 51% chance it will lose in court. The entity estimates that damages will be P1,000,000. • The entity is defending against a second lawsuit for which management believes it is virtually certain to lose in court. •If it loses the lawsuit, management estimates damages will fall somewhere in the range of P3,000,000 to P5,000,000 with each amount in that range equally likely to occur. • The entity is defending against a third lawsuit but the relevant loss will only occur far into the future. The present values of the endpoints of the range are P1,500,000 and P2,500,000. The management believes the effects of time value of money on these amounts are material but also believes the timing of these amounts is uncertain. The entity is defending against a fourth lawsuit and believes there is only a 25% chance it will lose in court.…HH Lumber had an exclusive three-year supply agreement with NP Construction. The contract called for lumber sales of $3,000,000 per year. After one year, NP Construction canceled the contract without cause. The court found NP Construction liable under the contract. HH Lumber had average gross profits of 25 percent and average net income of 10 percent of sales. HH Lumber's operating expenses average 60 percent fixed. The damages from the loss of this contract would be: A. $600,000. B. $570,000. C. $3,000,000. D. $1,140,000.Toy Company provided the following facts regarding pending litigation on December 31, 2020: • The entity is defending against a first lawsuit and believes there is a 51% chance it will lose in court. The entity estimates that damages will be P1,000,000. • The entity is defending against a second lawsuit for which management believes it is virtually certain to lose in court. •If it loses the lawsuit, management estimates damages will fall somewhere in the range of P3,000,000 to P5,000,000 with each amount in that range equally likely to occur. • The entity is defending against a third lawsuit but the relevant loss will only occur far into the future. The present values of the endpoints of the range are P1,500,000 and P2,500,000. The management believes the effects of time value of money on these amounts are material but also believes the timing of these amounts is uncertain. The entity is defending against a fourth lawsuit and believes there is only a 25% chance it will lose in court.…