A Company trades in home appliances in Sohar. The Company is facing a claim for OMR. 50,000 from a customer, in respect of an electric circuit worn out in a refrigerator sold by company. The claim will succeed in accordance with legal opinion. The company has the option and ability to re- claim 60% of the amount from wholesaler who supplied the circuit-breakers which broke down. How should the company report this in Statement of financial position? O a. OMR. 50,000 as a liability and OMR. 30,000 as asset. O b. OMR. 30,000 as a liability. O.OMR. 30,000 as a Provision. O d. OMR. 50,000 as Provision and OMR. 30,000 as asset.

A Company trades in home appliances in Sohar. The Company is facing a claim for OMR. 50,000 from a customer, in respect of an electric circuit worn out in a refrigerator sold by company. The claim will succeed in accordance with legal opinion. The company has the option and ability to re- claim 60% of the amount from wholesaler who supplied the circuit-breakers which broke down. How should the company report this in Statement of financial position? O a. OMR. 50,000 as a liability and OMR. 30,000 as asset. O b. OMR. 30,000 as a liability. O.OMR. 30,000 as a Provision. O d. OMR. 50,000 as Provision and OMR. 30,000 as asset.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 19E: Rix Company sells home appliances and provides installation and service for its customers. On April...

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Rix Company sells home appliances and provides installation and service for its customers. On April 1, 2019, a customer purchased a dishwasher that Rix normally sells for 1,000. In addition, the customer purchased the installation service and a 3-year service contract, with stand-alone selling prices of 200 and 400, respectively. Because the customer purchased all three items as a bundle, Rix charged the customer 1,400. Required: 1. How should the transaction price be allocated among the products? 2. Prepare the journal entries to recognize revenue related to each product in 2019.
Kelly Inc. is involved in litigation regarding a faulty product sold in a prior year. The company has consulted with its attorney and determined that it is possible that they may lose the case. The attorneys estimated that there is a 40% chance of losing. If this is the case, their attorney estimated that the amount of any payment would be P 500,000. What is the required journal entry as a result of this litigation? *a. Debit Litigation Expense for P 500,000 and credit Litigation liability for P 500,000b. No journal entry is requiredc. Debit Litigation Expense for P 200,000 and credit Litigation Liability for P 200,000d. Debit Litigation Expense for P 300,000 and credit Litigation Liability for P 300,000
Beautiful Company is involved in litigation regarding a faulty product sold in a prior year during 2021. The company has consulted with its attorney and determined that it is possible that they may lose the case. The attorneys estimated that there is a 40% chance of losing. If this is the case, their attorney estimated that the amount of any payment would be P500,000.How much is the Provision to be reported at December 31, 2021?
ABC Company sells cars. In 2018, the entity sold 1,000 units before discovering a significant defect in their construction. By December 31, 2018 a lawsuit had been filed against the entity. The entity’s legal counsel believes that it is likely that the entity will win. The entity is being sued for P1,000,000.What is the amount of liability to be accrued?
Anthony Company sells cars. In 2018, the entity sold 1,000 units before discovering a significant defect in their construction. By December 31,2018, two lawsuits had been filed against the entity. Below are the estimates made by the entity's management and legal counsel: First lawsuit- the entity has a little chance of winning and is expected to be settled out of court for P2,500,000 in 2018. Second lawsuit- The entity's legal counsel believes that it is likely that the entity will win. The entity is being sued for P1,000,000 Required: Determine the amount of liability to be accrued on December 31,2018 as a result of these lawsuits
A company sells a stove to a customer for a price of $2,000 which includes the installation. The fair value of the installation alone is $300 and the fair value of the stove alone is $1,800. The stove was delivered on October 1, 2020 and the installation occurred on October 15, 2020. The customer pays $1,850 on the date of the delivery and the balance on the date of the installation. What would the journal entry include on the date of the delivery of the stove? a Credit to Revenue of $1,714 a Debit to Unearned Revenue of $136 a Debit to Cash of $2,000 a Credit to Revenue of $1,800 A company sells windows to a customer for a price of $2400 which includes the installation of the windows. The fair value of the installation alone is $500 and the fair value of the Windows alone is $2000. The windows were delivered on September 1, 2020 and the installation occurred on September 15, 2020. What revenue is recorded on September 1? Group of answer choices $2,000 $440 $2,400…
Bach Co., a VAT-registered business, acquired a piece of equipment for P224,000 on account. The purchase price is inclusive of 12% VAT. A P4,480 prompt payment discount is available on purchase, but Bach Co. opted not to take it. Bach Co. also incurred P20,000 cost of training the personnel who will be operating the equipment. Two months after the equipment was installed, Bach Co. decided to redeploy the equipment to another location. Bach Co. incurred P30,000 in the relocation and reinstallation. The cost of the equipment is a. 245,520. b. 230,000. c. 204,480. d. 195,520.
A wonderland tents and furniture LLC is involved in supplying tents and furniture items to customers for conducting events and celebrations. The company received a claim from customer for OMR. 35,000 as damages because some furniture were not delivered in time for a graduation ceremony. The company admits the delay but disputes the amount of the claim pointing out that alternative furniture arrangement for the event cost no more than OMR. 8,000. How would you advise the wonderland tents and furniture company to treat the claim when finalizing the financial statements for the year. a- Account for the best estimate as liability b- Ignore the claim c- Record a liability of OMR. 35,000 d- Record a liability of OMR. 8,000
Aljur Company is involved in litigation regarding a faulty product sold in a prior year. The entity has consulted with an attorney and determined that there is a 50% change of losing. The attorney estimated that the amount of any payment would be between P500,000 and P800,000 with P500,000 as the best estimate. What amount of accrued liability should be reported?
Yellow Company, a distributor of machinery, bought a machine from the manufacturer in November 2020 for P500,000. On December 30, 2020, the entity sold this machine for P750,000 under the following terms: 2% discount if paid within 30 days, 1% discount if paid after 30 days, or payabl e in full within ninetydays if not paid within the discount periods. However, the customer had the right to return this machine to Yellow Company if it was unable to resell the machine before the expiration of the ninety-day payment period, in which case the customer’s obligation to Yellow Company would be canceled. In the net sales for the year ended december 31,2020, what amount should be included for the sale of the machine? a. 750,000 b. 735,000 c. 742,500 d. 0
Waterway Shoes Foot Inc. is involved in litigation regarding a faulty product sold in a prior year. The company has consulted with its attorney and determined that it is possible that they may lose the case. The attorneys estimated that there is a 45% chance of losing. If this is the case, their attorney estimated that the amount of any payment would be $815000. What is the required journal entry as a result of this litigation? Debit Litigation Expense for $366750 and credit Litigation Liability for $366750. Debit Litigation Expense for $448250 and credit Litigation Liability for $448250. No journal entry is required. Debit Litigation Expense for $815000 and credit Litigation liability for $815000.
A lawsuit has been filed against North Shore Company. As year-end, the company’s attorney believes that there is an 60% likelihood that the company will be found liable. The attorney believes that the estimated range of the liability is between $150,000 and $300,000 and that all amounts within the range are equally likely. Unrelated to this lawsuit, the company has settled an insurance claim before year-end in the amount of $72000. The company will receive the money subsequent to year-end. What would be the amount, if any, that North Shore would record on the balance sheet related to the lawsuit under IFRS and US GAAP? What amount, if any, would North Shore record related to the insurance settlement under IFRS and US GAAP?