A truck owned and operated by Abbott Company was involved in an accident with an auto driven by L. Costello on January 12, 2018. Abbott received notice on April 24, 2018, of a lawsuit for P800,000 damages for a personal injury suffered by L. Costello. Abbott’s counsel believes it is reasonably probable that L. Costello will be successful against the company for an estimated amount in the range between P200,000 and P500,000. No amount within this range is a better estimate of potential damages than any other amount. It is expected that the lawsuit will be adjudicated in the latter part of 2019. What amount of loss should Abbott accrue at December 31, 2018?

A truck owned and operated by Abbott Company was involved in an accident with an auto driven by L. Costello on January 12, 2018. Abbott received notice on April 24, 2018, of a lawsuit for P800,000 damages for a personal injury suffered by L. Costello. Abbott’s counsel believes it is reasonably probable that L. Costello will be successful against the company for an estimated amount in the range between P200,000 and P500,000. No amount within this range is a better estimate of potential damages than any other amount. It is expected that the lawsuit will be adjudicated in the latter part of 2019. What amount of loss should Abbott accrue at December 31, 2018?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter2: Income Tax Concepts

Section: Chapter Questions

Problem 59P

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