. 2,000,000 b. 1,000,000 c. No provision is to be recognized but a disclosure of Php2,000,000 is appropriate d. No provision and no disclosure to be made

Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
Chapter4: Balance Sheet: Presenting And Analyzing Resources And Financing
Section: Chapter Questions
Problem 9Q
icon
Related questions
Question

a. 2,000,000
b. 1,000,000
c. No provision is to be recognized but a disclosure of Php2,000,000 is appropriate
d. No provision and no disclosure to be made

What amount of provision should be provided in relation to guarantee? *
Effortless Company provided the following information on Dec. 31, 2021:
- Effortless has signed as guarantor for a Php2,000,000 loan by Power Bank
to Haggardness, Inc., a principal supplier to Efforless Company. There is a
remote likelihood that Effortless will have to make payment on behalf of
Haggardness.
- Effortless is defending against a labor dispute and believes that there is
50% chance it will lose in court. If the entity loses, management believes
that effects will fall somewhere in the range of Php1,500,000 and 2,500,000.
Transcribed Image Text:What amount of provision should be provided in relation to guarantee? * Effortless Company provided the following information on Dec. 31, 2021: - Effortless has signed as guarantor for a Php2,000,000 loan by Power Bank to Haggardness, Inc., a principal supplier to Efforless Company. There is a remote likelihood that Effortless will have to make payment on behalf of Haggardness. - Effortless is defending against a labor dispute and believes that there is 50% chance it will lose in court. If the entity loses, management believes that effects will fall somewhere in the range of Php1,500,000 and 2,500,000.
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Accounting for Current liabilities, Provisions and Contingencies
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:
9781285595047
Author:
Weil
Publisher:
Cengage