p7 On December 13, 2019, ABC Company was in an accident with an automobile driven by DEF.ABC received notice on December 31,2019 of a lawsuit for P600,000 damages for personalinjuries suffered by DEF. ABC's counsel believes it is probable that DEF will be awarded anestimated amount in the range between P300,000 and P600,000 and that P 450,000 is a bestestimate of potential liability. ABC's accounting year ends on December 31 and the 2019financial statements were issued on March 2, 2020. On April 30,2020,before the financialstatements were issued, ABC settled DEF for the amount of P 500,000.What amount of liability should ABC Company recognize at December 31, 2019? *O P 600,000O P 300,000O P 500,000O P 450,000

Contingent liability: Contingent liability means a liability that may occur depending on the outcome…

Answered: On December 13, 2019, ABC Company was…

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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On December 13, 2019, ABC Company was in an accident with an automobile driven by DEF. ABC received notice on December 31,2019 of a lawsuit for P600,000 damages for personal injuries suffered by DEF. ABC's counsel believes it is probable that DEF will be awarded an estimated amount in the range between P300,000 and P600,000 and that P 450,000 is a best estimate of potential liability. ABC’s accounting year ends on December 31 and the 2019 financial statements were issued on March 2, 2020. On April 30,2020,before the financial statements were issued, ABC settled DEF for the amount of P 500,000.What amount of liability should ABC Company recognize at December 31, 2019? P 600,000 P 300,000 P 500,000 P 450,000
On November 5,2019, ABC Company was in an accident with an auto driven by Y. ABC Company received a notice on January 12, 2020 of a lawsuit for P 700,000 damages for a personal injuries suffered by Y. ABC's legal counsel believes it is probable that Y will be awarded an estimated amount in the range between P 200,000 and P 450,000 and that P 300,000 is the best estimate. ABC's accounting year ends on December 31 and the 2019 financial statements were issued on March 3, 2020.What amount of loss should ABC accrue at December 31,2019?
On December 13, 2019, TJH Company was in an accident with an automobile driven by DEF. TJH received notice on December 31,2019 of a lawsuit for P600,000 damages for personal injuries suffered by DEF. TJH's counsel believes it is probable that DEF will be awarded an estimated amount in the range between P300,000 and P600,000 and that P 450,000 is a best estimate of potential liability. TJH’s accounting year ends on December 31 and the 2019 financial statements were issued on March 2, 2020. On April 30,2020,before the financial statements were issued, TJH settled DEF for the amount of P 500,000.What amount of liability should TJH Company recognize at December 31, 2019?
On November 5,2019, ABC Corporation’s truck was in an accident with an auto driven by Mikey. ABC received notice on January 12, 2020 of a lawsuit for 700,000 damages for personal injuries suffered by Mikey, ABC Corporation’s counsel believes it is probable that Mikey will be awarded an estimated amount in the range between 200,000 and 450,000 and that 300,000 is a better estimate of potential liability than any other amount.ABC’s accounting period ends on December 31 and the 2019 financial statements were issued on March 2, 2020. What amount of loss should ABC accrue on December 31, 2019?
Ön November 5, 2019, a Dunn Company truck was in an accident with an auto driven by Bell. Dunn received notice on January 15, 2020 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 P450,000, and no amount is a better estimate of potential liability than any other amount because cach point in the range is as likely as any other. The 2019 financial statements were issued on March 1, 2020. What amount of loss should be accrued on December 31, 2019? CS ed wth Camd Y
On November 5, 2020, a ABC Corporation truck was in an accident with an auto driven by nel. ABC received notice on January 12, 2021 of a lawsuit for P700,000 damages for personal injuries suffered by nel. ABC’s counsel believes it is probable that Nel will be awarded an estimated amount in the range between P200,000 and P450,000, and that P300,000 is a best estimate of potential liability than any other amount. ABC’s accounting year ends on December 31, and the 2020 financial statements were issued on March 2, 2021. What amount of loss should ABC accrue at December 31, 2020? Group of answer choices A. 450,000 B. 0 C. 300,000 D. 200,000
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?
Sunrise Company provided the following information on December 31, 2019: A personal injury liability suit for P500,000 was brought against Sunrise Company in March 2019. The management and legal counsel of Sunrise Company concluded that it is not probable that Sunrise Company will be responsible for damages and that P150,000 is the best estimate of the damages. In July 2019, Sunrise Company became involved in a tax dispute with the BIR pertaining to 2018 income tax. In December 2019, a judgment for P400,000 was assessed against Sunrise Company by the tax court. Sunrise Company is appealing the amount of judgment. The tax advisor and legal counsel of Sunrise Company believed it is probable that the assessment can be reduced on appeal by 50%. Sunrise Company signed as guarantor for P200,000 loan by PNB to Sunset Company, a principal supplier of Sunrise. By reason of financial difficulties, it is probable that Sunrise Company shall pay P200,000 loan with only a 60% recovery anticipated…
On January 1, 2021, a Dune Corporation truck was in an accident with an auto driven by R. Bell. Dune received notice on January 12, 2021, of a lawsuit for $700,000 in damages for personal injuries suffered by Bell. Dune Corporation’s legal counsel believes it is probable that Bell will be awarded an estimated amount in the range between $200,000 and $500,000, Dune’s accounting year ends on December 31, and the 2020 financial statements were issued on March 31, 2021. What amount of provision should Dune accrue on December 31, 2020?
On November 5, 2019, a Muntinlupa Company truck was in an accident with an auto driven by Murcia. Muntinlupa received notice on January 15, 2020 of a lawsuit for P900,000 damages for personal injuries suffered by Murcia. Muntinlupa's counsel believed it is probable that Murcia will be awarded an estimated amount in the range between P500,000 and P800,000, and each amount in the range is as likely as any other. The 2019 fınancial statements were issued on March 31, 2020. WWhat amount of provision should Muntinlupa accrue on December 31, 2019? O 500,000 O 650,000 O 900,000
A truck owned and operated by Rasin Company was involved in an accident with an auto driven by Lakasei on December 10, 2020. Rasin Company received notice on December 25, 2020 of a lawsuit for P350,000 damages for a personal injury suffered by Lakasei. The legal counsel of the company believes that it is probable that Rasin will pay the damages ranging between P500,000 to P1,000,000. Each point within that range of amounts is considered as likely as any other point. The financial statements were authorized to be issued on March 1, 2021. How much provision should Rasin recognize on December 31, 2020?
In 2019, five people died in a car accident, possibly due to the products sold by SH Limited. Legal proceedings are started seeking damages of $3 million from SH Limited. Up to the date of approval of financial statements for the year ended 31 December 2019, the lawyers of SH Limited advised that it is probable that it will not be found liable. However, when SH Limited prepares the financial statements for the year ended 31 December 2020, its lawyers advised that, owing to developments in the case, it is probable that it will be found liable. According to HKAS 37 Provisions, Contingent Liabilities and Contingent Assets, what accounting treatment for SH Limited is required: (a) at 31 December 2019 (b) at 31 December 2020

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