Apr. 30: Damon Manufacturing is party to a patent infringement lawsuit of $160,000 Damon Manufacturing's attorney is certain it is remote that Damon Manufacturing will lose this lawsuit. Date Apr. 30 Accounts Debit Credit
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- 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 ₱ 500,00015. 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 P500,000 to P800,000 with P500,000 as the best estimate. What is the required journal entry as a result of this litigation? *March 2025, Wyoming Company filed a suit against DC Company seeking P2,000,000 damages for patent infringement. A court decision on November 2025 awarded Wyoming Company P1,750,000 in damages. DC Company motioned to appeal the decision which was expected to be resolved within 2026. Wyoming Company’s counsel believed it is probable that it will be successful against DC Company for an estimated amount ranging from P1,400,000 to P1,750,000, which P1,500,000 as the most likely amount. The amount reported in Wyoming Company’s 2025 statement of profit or loss statement is
- Problem 3 Nia company is involved in litigation regarding a faulty product sold in a prior year. The entity has consulted with an attormey and determined that is possible that the entity may lose the case. The Attorney estimated that there is a 40% chance of losing. If this is the case, the attorney estimated that the amount of any payment would be P5, 000, 000. What is the required journal entry as a result of this litigation? A. Debit litigation expense and credit litigation liability P5,000,000 B. No journal entry is required. C. Debit litigation expense and credit litigation liability P2, 000, 000 D. Debit litigation expense and credit litigation liability P3, 000,000E9-22 Gain Contingency On December 31, 2019, Braino Tech Inc. learned that its competitor had introduced a prod-uct using an accessory to which Braino has exclusive patent rights. Braino planned to file suit and its attorneys esti-mated that Braino should recover at least $500,000. Braino’s December 31, 2019, year-end financial statements were issued March 2, 2020. At that date, Braino still planned to file suit, even though it had not yet done so. Required: Next Level Discuss the accounting treatment in regard to the 2019 financial statements of Braino Tech called for by GAAP concerning the described circumstances. Be sure to conceptually justify this treatment.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? * a. No journal entry is required b. Debit Litigation expense and credit Litigation liability for ₱ 500,000 c. Debit Litigation expense and credit Litigation liability for ₱ 250,000 d. Debit Litigation expense and credit Litigation liability for ₱ 650,000
- Problem 1 On March 1, 2019, a suit was filed against ABC Company for patent infringement. ABC'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, ABC's legal counsel is of the opinion that P600,000 is a better estimate than any other amount in the range. 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? Problem 2 On February 5, 2020, an employee filed a P2,000,000 lawsuit against XYZ 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…A lawsuit has been filed against Sunland Company for wrongful termination. Sunland's legal counsel had encouraged the company to settle because it is likely they will lose the case. The amount of the loss is estimated to be between $573000 and $1062000. Legal counsel believes that the case could be settled for $864000. Sunland should report O a contingent liability for $864000. O an estimated liability for $573000. O a contingent loss of $1062000. O no loss or liability until the case is settled. Attempts: 0 of 1 used Submit AnswerCHOOSE THE LETTER OF ANSWER In May 2019, Caso Company filed suit against Wayne Company seeking P1,900,000 damages for patent infringement. A court verdict in November 2019 awarded Caso P1,500,000 in damages, but Wayne’s appeal is not expected to be decided before 2020. Caso’s counsel believed it is probable that Caso will be successful against Wayne for an estimated amount in the range between P800,000 and P1,100,000, with P1,000,000 considered the most likely amount. What amount should Caso record as income from the lawsuit for the year ended December 31, 2019? a. 1,500,000b. 1,100,000c. 1,000,000d. 0
- 1 In November 2019, Manly Ltd, a manufacturer of heating systems, was taken to court by one of its competitors, Heating Ltd, under the Competition and Consumer Act 2010(Cth). Heating alleged that Manly sought to enter into exclusive agreements with several retailers that they would only stock Manley’s products. While manly incurred $240000 in legal costs in defending the action, the case was settled out of court. The terms of the agreement on 20 February 2020 provided that Manly would pay Heating $$500,000 immediately, and an amount equal to 3% of profits over the next two years. For 2018/2019 the profit was estimated to be $660,000 and the year after $780,000. Advise Manly on the deductibility of this expenditure. Make sure you include the relevant sections of the legislation18. During 2011, Odyssey Company is the defendant in a patent infringement lawsuit. The entity's lawyers believe there is a 30% chance that the court will dismiss the case and the entity will incur no outflow of economic benefits. However, if the court rules in favor of the claimant, the lawyers believe that there is a 20% chance that the entity will be required to pay damages of P200,000 and an 80% chance that the entity will be required to pay damages of P100,000. Other outcomes are unlikely. The court is expected to rule in late December 2012. There is no indication that the claimant will settle out of court. A 7% risk adjustment factor to the probability- weighted expected cashflows is considered appropriate to reflect the uncertainties in the cashflow estimates. An appropriate discount rate is 5% per year. The present value of 1 at 5% for one period is 0.95. What is the measurement of the provision for lawsuit? * a. 100,000 b. 84,000 c. 89,880 O d. 85,38618. During 2011, Odyssey Company is the defendant in a patent infringement lawsuit. The entity's lawyers believe there is a 30% chance that the court will dismiss the case and the entity will incur no outflow of economic benefits. However, if the court rules in favor of the claimant, the lawyers believe that there is a 20% chance that the entity will be required to pay damages of P200,000 and an 80% chance that the entity will be required to pay damages of P100,000. Other outcomes are unlikely. The court is expected to rule in late December 2012. There is no indication that the claimant will settle out of court. A 7% risk adjustment factor to the probability-weighted expected cashflows is considered appropriate to reflect the uncertainties in the cashflow estimates. An appropriate discount rate is 5% per year. The present value of 1 at 5% for one period is 0.95. What is the measurement of the provision for lawsuit? * a. 100,000 b. 84,000 c. 89,880 d. 85,386
