, 2012, Tone and Witt agreed to a settlement providing for cash payment of P250,000 by Tone to Witt, and transfer of Tone's copyright to Witt. The carrying amount of the copyright on Tone's accounting records was P60
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- Tone Company is the defendant in a lawsuit filed by Witt in 2019 disputing the validity of copyright held by Tone. December 31, 2019, Tone determined that Witt would probably be successful for an estimated amount of P400, 000. Appropriately, a P400, 000 loss was accrued by a charge to income for the year ended December 31, 2019.On December 31, 2020, Tone and Witt agreed to a settlement providing for cash payment of P250, 000 by Tone to Witt, and transfer of Tone’s copyright to Witt. The carrying amount of the copyright on tone’s accounting records was P60, 000 on December 31, 2020. What would be the effect on the settlement on Tone’s income before tax in 2020?Tang company is the defendant in a lawsuit filed by wong in 2019 disputing the validity of copyright held by tang. In December 31, 2019, tang determined that wong would probably be successful for an estimated amount of P600,000. Appropriately, a P600,000 loss was accrued by a charge to income for the year ended December 31, 2019. On December 31, 2020, tang and wong agreed to a settlement providing for cash payment of P375,000 and transfer to tang's copyright to wong. The carrying amount of the copyright on tang’s accounting records was P90,000 on December 31, 2021. What would be the increased in tang’s income before tax in 2020 due to this settlement?answer this with detailed solution.1. Medrano is the defendant in a lawsuit filed by Witt in 2018 disputing the validity of copyright held by Tone. December 31, 2018, Tone determined that Witt would probably be successful for an estimated amount of $400, 000. Appropriately, a $400, 000 loss was accrued by a charge to income for the year ended December 31, 2018. On December 31, 2019, Tone and Witt agreed to a settlement providing for a cash payment of $250, 000 by Tone to Witt, and transfer of Tone’s copyright to Witt. The carrying amount of the copyright on tone’s accounting records was $60, 000 on December 31, 2019. What would be the effect of the settlement on Tone’s income before tax in 2019? 2. On December 31, 20x2, Apostol determines an indication that the impairment loss recognized in the prior period may no longer exist. The revised recoverable amount of the building on December 31, 20x2 is $1,280,000. If no impairment loss had been recognized in the prior period, the carrying amount of the building on December…
- During 2018, Rosanna Company was sued by a competitor for P5,000,000 for infringement of a patent. Based on the advice of the legal counsel, the entity accrued the sum of P3,000.000 as a provision on December 31, 2018. Subsequently, on March 15, 2019, the Supreme Court decided in favor of the party alleging infringement of the patent and ordered the defendant to pay the aggrieved party a sum of P3,500,000. The financial statements were prepared by management on February 15, 2019 and approved by the board of directors on March 31, 2019. The financial statements were prepared by management on February 15, 2019 and approved by the board of directors on March 31, 2019. What amount should be adjusted on December 31, 2018 in relation to this event?During 2021, Angela Inc. was sued by a competitor for P5,000,000 for infringement of a patent. Based on the advice of the legal counsel, the entity accrued the sum of P3,000,000 as a provision on December 31, 2021. Subsequently on March 15, 2022, the Supreme Court decided in favor of the party alleging infringement of the patent and ordered the defendant to pay the aggrieved party the sum of P3,500,000. The financial statements were prepared by management on February 15, 2022 and approved by the board of directors on March 31, 2022. What amount should be adjusted on December 31, 2022 in relation to this event?A. 1,000,000B. 1,500,000C. 500,000D. 2,000,000Sweet Company recently was sued by a competitor for patent infringement. Attorneys have determined that it is probable that Sweet will lose the case and that a reasonable estimate of damages to be paid by Sweet is $315,000. In light of this case, Sweet is considering establishing a $103,400 self-insurance allowance. What entry, if any, should Sweet record to recognize this loss contingency?
- 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.…Reeves Co. filed suit against Higgins, Inc., seeking damages for copyright violations. Higgins' legal counsel believes it is probable that Higgins will settle the lawsuit for an estimated amount in the range of $100,000 to $200,000, with all amounts in the range considered equally likely. How should Higgins report this litigation? Multiple Choice As a liability for $100,000 with disclosure of the range. As a liability for $150,000 with disclosure of the range. As a liability for $200,000 with disclosure of the range. As a disclosure only. No liability is reported.In the same year, the entity is a defendant in a lawsuit disputing the validity of copyright held by the entity. On December 31, 2019 , the entity determined that the plaintiff would probably be a successful against the entity for an estimated amount of P2,000,000. Appropriately, a P2,000,000 loss was accrued by a charge to income for the current year. On December 31, 2019, the entity and plaintiff agreed to a settlement providing for cash payment of P1,250,000 by the entity and transfer of the copyright to plaintiff. The carrying amount of the copyright was P250,000. What should be the effect of the settlement of the copyright case on Davao Company’s income before tax in 2020? 300,000 increase 750,000 decrease 250,000 decrease 750,000 increase 500,000 increase
- Company A is suing Company B for $500 000 in relation to a breach of copyright. Company B produced designer clothes identical to those for which Company A holds legal rights, without permission and without paying Company A for permission to use the designs. Legal experts have advised Company A that it has a strong case and that there is a 50% likelihood that Company B will be required to pay damages, although these are estimated at $400 000. Explain whether the potential damages receivable for Company A would meet the definition and recognition criteria of an asset, applying the principles in the Proposed Framework (2018 Conceptual Framework).On December 31, 2014, SBMA Inc. was a defendant in three litigations provided below: The first case is about environmental violation and the legal counsel determined that it isreasonably possible that SBMA will become liable in a the range of P4,000,000 to P6,000,000. The second case is about illegal dismissal and the legal counsel determined that it is remotethat SBMA will become liable in a reliable estimate of P3,000,000. The third case is about patent infringement and the legal counsel determined that it is probablethat SBMA will become liable in the following expected value:P2,000,000 - 50%P5,000,000 - 30%P10,000,000 - 20%Required: Determine the following for the year ended December 31, 2014:__________1. Accrued Provision on December 31, 2014__________2. Disclosed Contingent Liability on December 31, 2014On January 30, 2016, a suit was filed against Frazier Corporationunder the Environmental Protection Act. OnAugust 6, 2017, Frazier Corporation agreed to settle theaction and pay $920,000 in damages to certain currentand former employees. How should this settlement bereported in the 2017 financial statements? Discuss.