Another illustration An entity is a defendant in a patent infringement suit. The lawyers believe that there is a 60% chance that the court will not dismiss the case and the entity will incur an outflow of future economic benefits. If the court rules against the entity and in favor of the claimant, the lawyers believe that there is a 30% chance the entity will be required to pay damages of P4,000,000 and a 70% chance that the damages will be P2,000,000. A 10% risk adjustment factor to the probabilities of the expected cash flows is considered appropriate to reflect the uncertainties in the cash flow estimate. Measurement of provision Weighted probabilities: 30% x 4,000,000 x 60% 70% x 2,000,000 x 60% 720,000 840,000 Expected cash outflow Risk adjustment factor (10% x 1,560,000) 1,560,000 156,000 Estimated amount of provision 1,716,000 The amount of the provision shall be discounted if the effect of the time value of money is material.
Q: tractor A $ 300, 000 tractor B inital cost • life , ammual operations ft00,006 ID yours | $ 35,00 10...
A: Answer) Calculation of Benefit Cost Ratio of Tractor A Benefit Cost Ratio = Present value of Benefit...
Q: What is the income tax still due after foreign tax credits?
A: RCIT is the acronym of regular corporate income tax which is the tax rate which is charged on the ta...
Q: It means "choice of the person". Due to this principle, no one can be a member of the partnership as...
A: As per the principle of choice of the person, every partner has a right to choose his partner.
Q: Brett Collins is reviewing his company's investment in a cement plant. The company paid $12,000,000 ...
A: NPV= PV of cash inflows- initial investment
Q: Which of the following statements is most correct? Select one: A. A company with a current ratio of ...
A: Solution: Current ratio is the liquidity ratio that reflects relation between current assets and cur...
Q: A farmer bought a tractor costing 25,000.00 payable in 10 semi-annually payments, each installment...
A:
Q: A company uses the periodic inventory system and records purchases net of discounts. On April 1, the...
A: Net Purchases = Invoice amount - Discount amount where, Discount amount = Invoice amount x discount...
Q: 4. Several items are omitted from the income statement and cost of goods manufactured statement data...
A: The statement which shows the income and expenditures of the company during the particular period is...
Q: Using the Train act shown below, how much annual tax will be paid by a salesman who earns a basic sa...
A: The Tax Reform for Accelaration and Inclusion Law [TRAIN Law] ...
Q: n 2021 Lena invests $30.000 for a 20% limited
A: Leena is not a material participant in the partnership. It means she is not...
Q: Amazon.com, Inc. (AMZN) is one of the largest Internet retailers in the world. Best Buy Co., Inc. (B...
A: The question is based on the concept of Financial Management.
Q: Velstrom Ltd is considering outsourcing one of its products rather than producing it in its factory....
A: Relevant cost seems to be a phrase used in management accounting to indicate avoidable expenditures ...
Q: 4. On January 31, 2021, partners L, M and N had the following loan and capital account balances (aft...
A: The partnership comes into existence when two or more persons comes together to do the business and ...
Q: On December 31, 2020, Dow Steel Corporation had 610,000 shares of common stock and 301,000 shares of...
A: EPS termed as Earnings per share which states that how much amount of money that business makes from...
Q: PROVIS A provision is an existing liability of uncertain timing uncertain amount. The essence of a p...
A: Provision is an amount kept separately for some uncertain event that may happen in the future (Just ...
Q: During the auditor's risk assessment procedures, a meeting was held together with the company's mana...
A: The auditor tests for the asset and liabilities based on their characteristics to ensure that the pr...
Q: Determine the annual cost of ownership for a vehicle that has the following cos Use an interest rate...
A: Cost of ownership includes all different cost incurred at various time from initial payment to other...
Q: The carrying on of a business of a continuing nature is essential to constitute a partnership.
A: Organization: Organization is an entity which can be in the form of partnership, company, firm or so...
Q: Data concerning Dorazio Corporation's single product appear below: Percent of Per Unit Sales Selling...
A: Solution: Contribution margin from increased sales units and loss of contribution margin on existing...
Q: Hammond Manufacturing Inc. was legally incorporated on January 2, 2020. Its articles of incorporatio...
A: Preferred stock Preferred stock, are shares of a corporation's stock with dividends that are paid ou...
Q: 22. Compute the realized gain or loss, recognized gain or loss, and the adjusted basis for the secur...
A: Recognized gain or loss- A recognized gain is the revenue you formulate from selling an asset. Recog...
Q: Liabilities Liquid assets Monthly credit payments Monthly savings $ 8, 000 $ 5,000 $4668 $ 150 Net w...
A: Formula: Debt ratio = Liabilities / Net worth
Q: After several months of planning, Mary Tratini started a called "Italian Product". The following bus...
A: To prepare the trial balance all the required ledger accounts are to be prepared and to prepare a ba...
Q: Quantitative Problem: Bank 1 lends funds at a nominal rate of 7% with payments to be made semiannual...
A: The Effective Annual Interest Rate (EAR) seems to be the rate of interest that has been adjusted to ...
Q: how solutio
A: This is a multiple-choice question in which we have to select the correct option.
Q: Question text Under IFRS, which of the following statements is true regarding accounting for defined...
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any ...
Q: Duck Corporation "forecasted" on December 21, 2020 to sell a machine to a company in Italy. The sell...
A: A forward contract is a type of derivative instrument which is used to hedge against risk. The forwa...
Q: Wildcat, Incorporated, has estimated sales (in millions) for the next four quarters as follows: Q3 Q...
A: The question is based on the concept of Cost Accounting.
Q: TRUE OR FALSE? By forfeiture, the proceeds of the property sold are applied to satisfy the tax liab...
A: The tax liability is the liability which is upon the shoulders of the person who is known as the tax...
Q: swer choic
A: The concept of segregation of duties considered to be a key internal control and its Paramount to mi...
Q: You have the following: Short term capital losses - $9,000 Long term capital losses - $8,000 Short t...
A: When an investment held for less than a year is sold, a short-term capital gain occurs. whereas if t...
Q: What is the estate equity (deficit) in the opening journal entry made by the receiver in its books?
A: Answered:
Q: The following balances are taken from the trial balance of Mike as on 31-03-2015. Debtors Bad Debt r...
A: Bad debt reserve is the balance of provision which is made for doubtful debts. Bad debts is the amou...
Q: Accounting During the current year, Chuck's home was burglarized. Chuck had the following item stole...
A: Gross Income: The value of income which is earned by the taxpayer from varied sources is called as g...
Q: Question 1: The adjustment to correct the interest income for 2021 includes a debit/(credit) to the ...
A: As per our protocol we provide solution to the one question only but you have asked three questions ...
Q: Steve Osbourne is considering opening a business, but the major decision faced is how to organize th...
A: Share refers to the smallest unit of the total capital of an entity.
Q: Preble Company manufactures one product. Its variable manufacturing overhead is applied to productio...
A: Materials quantity variance = (SQ - AQ used) * SP Material price variance = (SP - AP) * AQ purchase
Q: OOutline some different approaches to stock control.
A: Stock control, also known as inventory control, is used to show how much inventory you have on hand ...
Q: ssume that the current ratio for Arch Company is 2.5, its acid-test ratio is 1.5, and its working ca...
A: Let the current liabilities be X Working capital = Current assets - Current liabilities ...
Q: On January 1, 2016, Truffle Corp. issued 9% bonds in the face amount of P 5,000,000, which maature o...
A: Since you have asked multiple question, we will solve the first question for you. If you want any sp...
Q: leased are payable at the end of each year, beginning December 31 cost was P800,000. The implicit ra...
A: “Since you have posted a question with many sub-parts, we will solve three sub-parts for you. To get...
Q: a. Issued ________shares of common stock. Stock has par value of ___ per share and was issued at $__...
A: a. 5000 shares , par value of $ 0.01 , was issued at $30
Q: bonds.
A: The correct answer is Option (d) accounting supervisor.
Q: Calculate the missing figure using the basic accounting equation
A: Cash float : It means amount of cash kept in drawer at the beginning of each working day to ease cas...
Q: n January 10, 20X2, a promissory note was signed with the principal of One hundred forty-five thousa...
A: In Banker rule we calculate the number of years as 360 days and find out the actual number of days a...
Q: The company is desirous of comparing serval financial transactions and possible outcomes to assist i...
A:
Q: Wight Corporation has provided its contribution format income statement for June. The company produc...
A: Contribution margin = Sales - variable cost = $193,200 - $87400 =$105,800 Contribution margin per u...
Q: The following represent controls over authorization of acquisition and disposal of investments, exce...
A: Investment purchases and disposals should be authorized in accordance with the company policyAn inve...
Q: On 1 January 2021, Fortune Forever Limited (FF) purchased $500,000, 10% bonds with a maturity of 10 ...
A:
Q: Mr. S obliged himself to deliver to Mr. B 50 sacks of sugar for P20,000. Mr. S was not able to compl...
A: IN Contract Act when one party tells to deliver his terms and bindings according to agreement to oth...
Step by step
Solved in 2 steps
- ABC is a defendant in a breach of patent lawsuit. If the court rules in favor of the claimant, the lawyers believe that there is a 60 percent chance that the entity will be required to pay damages of P2 million (them amount sought by the claimant) and a 40 per cent chance that the entity will be required to pay damages of P1 million (the amount that was recently awarded by the same judge in a similar case). Other amounts of damages are unlikely. The court is expected to rule the following year (in late December 2023). There is no indication that the claimant will settle out of court. ABC's lawyers believe there is a probability of very slightly over 50% that ABC will successfully defend the case. A 7 percent risk adjustment factor to the cash flows is considered appropriate to reflect the uncertainties in the cash flow estimates. An appropriate discount rate is 10 percent per year.What amount of provision must be recorded from the lawsuit as of December 31, 2022?During 2022, an entity is the defendant in a patent infringement lawsuit. The lawyers believe that 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 the damages of P100,000 and 80% chance that the entity will be required to pay damages of P200,000.00. Other outcomes are unlikely.The court is expected to rule in late December 2023. There is no indication that the claimant will settle out of court.A 7% risk adjustment factor to the probability-weighted expected cash flows is considered appropriate to reflect the uncertainties in the cash flow estimate. An appropriate discount rate is 5% per year. The present value of 1 at 5% for one period is 0.95.What is the undiscounted provision before risk adjustment?What amount should be reported as provision for lawsuit on December 31, 2022?An entity is the defendant in a patent infringement lawsuit. The entity’s lawyers believe there is a30% chance that the court will dismiss the case and the entity will incur no outflow of economicbenefits. However, if the court rules in favor of the claimant, the lawyers believe that there is a20% chance that the entity will be required to pay damages of ₱800,000 (the amount sought bythe claimant) and an 80% chance that the entity will be required to pay damages of ₱400,000(the amount that was recently awarded by the same judge in a similar case). Other outcomes areunlikely.The court is expected to rule in late December 20x2. There is no indication that the claimant willsettle out of court. A 7% risk adjustment factor to the probability-weighted expected cash flows isconsidered appropriate to reflect the uncertainties in the cash flow estimates. An appropriatediscount rate is 10% per year. How much is the provision for lawsuit at December 31, 20x1?a. 436,360 b. 446,908 c. 326,836…
- During 2014, 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 2015. There is no indication that the claimant will settle out of court. A 7% risk adjustment factor to the probability-weighted expected cash flows is considered appropriate to reflect the uncertainties in the cash flow 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 on December 31, 2014?During 2020, EFG 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 2022. There is no indication that the claimant will settle out of court.A 7% risk adjustment factor to the probability-weighted expected cash flows is considered appropriate to reflect the uncertainties in the cash flow estimates.An appropriate discount rate is 5% per year. The present value of 1 at 5% for one period is 0.95 and for two periods is 0.91.A.) What is the amount of undiscounted cash flows for the provision? B.) What is the measurement of the…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.…
- Use the information for the next two (2) questions. During 2020, Wasp 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 2022. There is no indication that the claimant will settle out of court.A 7% risk adjustment factor to the probability-weighted expected cash flows is considered appropriate to reflect the uncertainties in the cash flow estimates.An appropriate discount rate is 5% per year. The present value of 1 at 5% for one period is 0.95 and for two periods is 0.91.What is the amount of undiscounted cash flows for the…Use the information for the next two (2) questions. During 2020, Bee 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 2022. There is no indication that the claimant will settle out of court.A 7% risk adjustment factor to the probability-weighted expected cash flows is considered appropriate to reflect the uncertainties in the cash flow estimates.An appropriate discount rate is 5% per year. The present value of 1 at 5% for one period is 0.95 and for two periods is 0.91.What is the amount of undiscounted cash flows for the…In 2021, a lawsuit was filed against Keri Keri Co. for patent infringement. The plaintiff is claiming ₱400M in damages. Keri Keri’s legal counsel believes that it is probable that Keri Keri will lose the lawsuit and pay damages of not less than ₱40M but not more than ₱400M. The probability of any amount within the range is as likely as any other amount also within the range. The plaintiff has offered to settle the lawsuit out of court for ₱360M but Keri Keri did not agree to the settlement.How much is provision to be reported in Keri Keri’s year-end financial statements? a. P360,000,000 b. P220,000,000 c. P400,000,000 d. P40,000,000
- Toy 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 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 in court.…Toy 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 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 in court.…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…