A firm has the calendar year as its fiscal year. In January 2020, a Court delivers a ruling on a suit against the firm. The suit had commenced in 2019. The firm is yet to issue its 2019 financial statements. Which paragraph of the Codification sheds light on whether this information should be recognized in its 2019 financial statements?
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10.
A firm has the calendar year as its fiscal year. In January 2020, a Court delivers a ruling on a suit against the firm. The suit had commenced in 2019. The firm is yet to issue its 2019 financial statements. Which paragraph of the Codification sheds light on whether this information should be recognized in its 2019 financial statements? PLEASE ANSWER!
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- 1. REALME INC. entered into a lawsuit on December 20, 2021 and recognized on the same date a provision of ₱2,000,000. On February 28, 2022, when the financial statements for the year ended December 31, 2021 had not yet been authorized for issue, the case was settled and the court decided the final total damages to be paid by the entity at ₱3,000,000. In addition, the Company has a loan payable of ₱2,000,000 due on June 30, 2022. On January 1, 2022, before the authorization of the issuance of financial statements, the bank agreed to refinance the loan, extending the maturity to June 30, 2024. Also, another loan amounting to ₱7,000,000 due on December 1, 2022 was obtained by the Company on January 2, 2022 from BPI. REALME INC. has the discretion to refinance or roll over the loan for at least twelve months from December 31, 2022 REQUIRED: WHAT IS THE AMOUNT OF CURRENT LIABILITIES? A. ₱ 4,000,000 B. ₱ 10,000,000 C. ₱ 12,000,000 D. ₱ 5,000,000 WHAT IS THE AMOUNT OF THE NON-CURRENT…Voi company provided the following facts regarding pending litigation on December 31,2020 1. The entity is defending against a first lawsuit and believe that there is a 51% chance that it will lose in court. The entity estimate that damages amounting to P 1,000,000 2. The entity is defending against a second lawsuit which management believes it is virtually certain to lose in court. If it losses, management estimate damages will amount in between P 3,000,000 to P 5,000,000 3. The entity is defending a third but the relevant loss will incur in the future. The present values of the endpoints of the range are P 1,500,000 and P 2,500,000. The management believes the effect of the time value of money on these amounts are Materials but also believes the timing of these amount are uncertain. 4. The entity is defending against a fourth lawsuit and believes there is only 25% chance it will lose in court.If the entity lose management believes damages will likely be from P 3,000,000 to P…The following selected circumstances relate to pending lawsuits for Erismus, Inc. Erismus’s fiscal year ends onDecember 31. Financial statements are issued in March 2019. Erismus prepares its financial statements accordingto 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 than50/50 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 willlose 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 willlose in court. If it loses, management believes that damages will…
- 3. Determine the implication of the following independent cases to the December 31, 2020financial statements as per PAS 37, on Provisions, Contingent Liabilities, and ContingentAssets.Case 1On December 5, 2020, an employee filed a P3,000,000 lawsuit against Lance Company fordamages suffered when one of the company’s equipment malfunctioned in August, 2020.In your inquiry of the company’s legal counsel, the legal counsel expects the company willlose the lawsuit and estimates the losses to be between P500,000 and P1,500,000. Theemployee has offered to settle the lawsuit out of court for P1,200,000, but Lance Companywill not agree to the settlement.Case 2Lance Company has guaranteed a loan of P2,000,000 of one of its key officers from a bankin 2020. By the time the financial statements of Lance Company were approved forissuance by its BOD, it is clear that the key officer is in financial difficulties and it is probablethat Lance Company will meet the guarantee.Case 3On December 20, 2020,…The following selected circumstances relate to pending lawsuits for Erismus, Incorporated Erismus’s fiscal year ends on December 31. Financial statements are issued in March 2025. Erismus prepares its financial statements according to U.S. GAAP. Required: Indicate the amount Erismus would record as an asset, a liability or if no accrual would be necessary in the following circumstances. 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 $1,430,000. 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 $2,830,000 to $5,660,000, with any damage in that range equally likely. Erismus is defending against a lawsuit. Erismus's management believes it is probable that the company will lose in court.…6. Buwis Buhay Incorporated had several outstanding obligations on December 31, 2019. The brief descriptions listed below can be ascertained from these liabilities. What is the correct treatment for the court case that happened on June 2019? • in June 2019, Buwis Buhay was involved in a court case amounting to P10,000,000. The attorney assessed that it is probable that the company will win the case with P4,500,000 as the best estimate of the reward. • In August 2019, Baguio City brought an action against the company for polluting the surrounding rivers with its waste products costing P5,000,000. It is probable that Baguio City will be successful but the amount of damages Buwis Buhay might have to pay is not to exceed P2,500,000. •In December 2019, another litigation case amounting to P20,000,000 was filed against Buwis Buhay for injuring pedestrians due to its renovation projects within the premise. This court case is seen to have remote likelihood of occurrence because the…
- Iron Man Company provided the following facts regarding pending litigation on December 31, 2020:* The entity is defending against a first lawsuit and believes there is a 51% chance it will lose in court. The entity estimates that damages will be P1,000,000.* The entity is defending against a second lawsuit for which management believes it is virtually certain to lose in court. If it loses the lawsuit, management estimates damages will fall somewhere in the range of P3,000,000 to P5,000,000 with each amount in that range equally likely to occur.* The entity is defending against a third lawsuit but the relevant probable loss will only occur far into the future. The present values of the endpoints of the range are P1,500,000 and P2,500,000. The management believes the effects of time value of money on these amounts are material but also believes the timing of these amounts is uncertain.* The entity is defending against a fourth lawsuit and believes there is only a 25% chance it will lose…Which of the following does not accurately describe a requirement that a company must fulfill when adopting IFRS for the first time?a. The company must prepare an opening IFRS balance sheet at the beginning of the year for which the company is preparing its first set of IFRS financial statements.b. At the IFRS transition date, the company must select IFRS accounting policies based on those that will be in effect for the accounting period that will be covered by the first set of IFRS financial statements.c. At the IFRS transition date, the company must derecognize assets and liabilities that were recognized under previous GAAP that are not allowed to be recognized under IFRS.d. The company must provide a reconciliation of net income and stockholders’ equity under previous GAAP to net income and stockholders’ equity under IFRS in its first set of IFRS financial statements.10) Icon International, a software company, incorporated on January 1, 2019 is planning to convert to IFRS. The company decided to present its first IFRS statements for the year ended December 31, 2021. What is the reporting date of Icon International? a) January 1, 2019 b) January 1, 2021 c) December 31, 2021 d) December 31, 2019
- Please show the solution in good accounting form 9. ROSE Company entered into a lawsuit on December 20, 2021, and recognized on the same date a provision of ₱2,000,000. On February 28, 2022, when the financial statements for the year ended December 31, 2021, had not yet been authorized for issue, the case was settled and the court decided the final total damages to be paid by the entity at ₱3,000,000. In addition, the Company has a loan payable of ₱2,000,000 due on June 30, 2022. On January 1, 2022, before the authorization of the issuance of financial statements, the bank agreed to refinance the loan, extending the maturity to June 30, 2024. Also, another loan amounting to ₱7,000,000 due on December 1, 2022, was obtained by the Company on January 2, 2022, from BPI. ROSE Company has the discretion to refinance or roll over the loan for at least twelve months from December 31, 2022. At what amount should the non-current liability be presented in the statement of financial position?…Please show the solution in good accounting form 8. ROSE Company entered into a lawsuit on December 20, 2021, and recognized on the same date a provision of ₱2,000,000. On February 28, 2022, when the financial statements for the year ended December 31, 2021, had not yet been authorized for issue, the case was settled and the court decided the final total damages to be paid by the entity at ₱3,000,000. In addition, the Company has a loan payable of ₱2,000,000 due on June 30, 2022. On January 1, 2022, before the authorization of the issuance of financial statements, the bank agreed to refinance the loan, extending the maturity to June 30, 2024. Also, another loan amounting to ₱7,000,000 due on December 1, 2022, was obtained by the Company on January 2, 2022, from BPI. ROSE Company has the discretion to refinance or roll over the loan for at least twelve months from December 31, 2022. At what amount should the current liability be presented in the statement of financial position?…Choose the correct.Which of the following does not accurately describe a requirement that a company must fulfill when adopting IFRS for the first time?a. The company must prepare an opening IFRS balance sheet at the beginning of the year for which the company is preparing its first set of IFRS financial statements.b. At the IFRS transition date, the company must select IFRS accounting policies based on those that will be in effect for the accounting period that will be covered by the first set of IFRS financial statements.c. At the IFRS transition date, the company must derecognize assets and liabilities that were recognized under previous GAAP that are not allowed to be recognized under IFRS.d. The company must provide a reconciliation of net income and stockholders’ equity under previous GAAP to net income and stockholders’ equity under IFRS in its first set of IFRS financial statements.