On November 1, 2017, Blessy company was awarded a judgement of 1,500,000 in connection with a lawsuit. The decision is being appealed by the defendant and it is expected that the appeal process will be completed by the end of 2018. The attorney believed that it is highly probable that an award will be upheld on appeal but the judgement may be reduced by 40%. What amount should be reported as a receivable on December 31, 2017?

On November 1, 2017, Blessy company was awarded a judgement of 1,500,000 in connection with a lawsuit. The decision is being appealed by the defendant and it is expected that the appeal process will be completed by the end of 2018. The attorney believed that it is highly probable that an award will be upheld on appeal but the judgement may be reduced by 40%. What amount should be reported as a receivable on December 31, 2017?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Bramble Corp. has the following account balances at December 31, 2021: Notes payable ($47,000 due after 12/31/22) $78,000 Unearned service revenue 55,000 Mortgage Payable ($70,000 due in 2022) 195,000 Salaries payable 25,000 Accounts payable 49,000 In addition, Bramble is involved in a lawsuit. Legal counsel feels it is probable Bramble will pay damages of $20,000 in 2022. Bramble records provisions related to litigations in the account Litigation Liability. Prepare the current liabilities section of Bramble's December 31, 2021, balance sheet. Bramble Corp. (Partial) Balance Sheet
On January 1, 2011, ACB Inc. gave a loan to XYZ Enterprises amounting to P100,000 and received a two year, six percent P100,000 note. The note calls for annual interest to be paid each December 31. The company collected the 2015 interest on schedule. At December 31, 2016, however, based on XYZ's recent financial problems, ABC expects that the 2012 interest will not be collected and that only P60,000 of the principle due December 31, 2012 will be collected. The P60,000 principal amount is expected to be collected in two equal installments on December 31, 2014 and December 31, 2016. ABC believes that 6% is the market's assessment of the time value of money. 1. What entries should be made in the records of ABC company on December 31, 2012? 2. Assume that ABC Inc. collects the expected payments from XYZ. What entries should be made on December 31, 2013? December 31, 2014 December 31, 2015 and December 31, 2016?
Tasa Incorporated after having experienced financial difficulties in 2021, negotiated with a major creditor and arrived at an agreement to restructure a note payable on December 31, 2021. The creditor was owed a principal of P3,600,000 and interest of P400,000 but agreed to accept equipment worth 850,000 and a note receivable from Tasa's customer with carrying amount of P2,700,000. The equipment had an original cost of P900,000 and an accumulated depreciation of 300,000. a.What amount should be recognized as gain from extinguishment of debt on December 31, 2021?
At March 13, 2017, the Securities Exchange Commission is in the process of investigating a possible securities law violation by Now Chemical. The SEC has not yet proposed a penalty assessment. Now’s fiscal year ends on December 31, 2016, and its financial statements are published in March 2017. Management feels an assessment is reasonably possible, and if an assessment is made an unfavorable settlement of $13 million is probable. What, if any, action should Now take for its financial statements?
On January 1, 2021, Wooten Technology Associates sold computer equipment to the Denison Company. Delivery was made on January 1, 2021, but payment for the equipment of $10,000 is not due until December 31, 2021. Assuming that Wooten views the time value of money to be a significant component of this transaction and that an 8% interest rate is applicable, how much sales revenue would Wooten recognize on January 1, 2021?
Gatsby, Inc. owed $500,000 on account for inventory purchased on November 1, 2020. The company's fiscal year ends on December 31. Gatsby was unable to pay the amount owed by February 1, 2021 due date because of financial difficulties experienced in early 2021. On February 1, 2021, it signed a $500,000, 10% interest- bearing note. This note was repaid with interest on September 1, 2021. How much interest should Gasby recognize on September 1, 2021 (enter your answer in whole dollars, no comma or dollar sign)?
The Field Detergent Company sold merchandise to the Abel Company on June 30, 2016. Payment was made in the form of a noninterest-bearing note requiring Abel to pay $85,000 on June 30, 2018. Assume that a 10% interest rate properly reflects the time value of money in this situation. Required: Calculate the amount at which Field should record the note receivable and corresponding sales revenue on June 30, 2016.
At December 31, 2016, Frost Company had outstanding P3,000,000, 12% note payable to Freeze Bank dated January 1, 2012. The note was due on December 31, 2017 which interest every December 31. During 2017, Frost notified Freeze Bank that it might be unable to meet the scheduled December 31, 2017 payment of principal and interest because of financial difficulties. On September 30, 2017, Freeze Bank sold the note for P2,800,000 to Frozen Company, one of Frost Company's oldest and largest customers, On December 31, 2017, Frozen Company agreed to accept inventory costing P2,600,000 worth P3,150,000 from Frost Company in full settlement of the note. The gain/loss reported in Frost Company's profit or loss as a result of the liability derecognition is
On 1 July 2019, Sitara Ltd sells a computer to Kitara Ltd. The computer cost Sitara Ltd $9000. Rather than selling the item for a cash price or a short-term claim for cash of $12 009, Sitara Ltd accepts a promissory note that requires Kitara Ltd to make four annual payments of $4000 each, the first one to be made on 30 June 2020. The difference between the gross receipts and the current sales price represents interest revenue earned by Sitara Ltd over the note period. The rate implicit in the arrangement is 12 per cent. Provide a journal entry with a clear distribution of instalment payment into interest and principal amount as of 30/6/2021.
The following selected circumstances relate to pending lawsuits for Erismus, Inc. Erismus’s fiscal year ends on December 31. Financial statements are issued in March 2017. Erismus prepares its financial statements according to U.S. GAAP. Required: Indicate the amount of asset or liability that Erismus would record, and explain your answer. 1. Erismus is defending against a lawsuit. Erismus’s management believes the company has a slightly worse than 50/50 chance of eventually prevailing in court, and that if it loses, the judgment will be $1,000,000. 2. Erismus is defending against a lawsuit. Erismus’s management believes it is probable that the company will lose in court. If it loses, management believes that damages could fall anywhere in the range of $2,000,000 to $4,000,000, with any damage in that range equally likely. 3. Erismus is defending against a lawsuit. Erismus’s management believes it is probable that the company will lose in court. If it loses, management believes that…
On December 31, 2020, Hoosier Inc. establishes an allowance for doubtful accounts of 3% of its accounts receivable balance of $180,000. Hoosier Inc. decides on March 15, 2021, not to pursue collection of Smith’s $1,000 account. The likelihood of collection does not support further collection efforts. What is the net realizable value (NRV) of accounts receivable before and after the write-off of the Smith account?
ABC Company has an outstanding receivable of P1,000,000 as of December 31, 2020. A test of collectability of the receivable showed that P700,000 is currently collectible and not impaired; P300,000 has been outstanding more than the required period for similar transaction and objective evidence showed that only P150,000 is considered realizable; the remaining receivable balance has been outstanding for 2 years and the company estimates that none of which will be realized. What amount should the account receivable is reported in the December 31, 2020 balance sheet? A. P700,000 B. P850,000 C. P800,000 D. P758,000