Chapter 4/Question 2: Montague’s paint shop has suffered some bad publicity as a result of a customer claiming to be suffering from skin rashes as a result of using a new brand of paint sold by Montague’s shop. The customer launched a court action against Montague in November 20X3, claiming damages of $5,000. Montague’s lawyer has

Business Its Legal Ethical & Global Environment

10th Edition

ISBN:9781305224414

Author:JENNINGS

Publisher:JENNINGS

Chapter21: Management: Employment Discrimination

Section: Chapter Questions

Problem 2QAP

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8 A customer is suing Ephiyu Company for P550,000 in damages because her child was injured in November 2022 while riding an escalator that stopped suddenly in one of its state-of-the-art stores in Makati. The child was hurt, feeling broken down, and feeling the pain from the inside and out, when tripped and fell while walking down an escalator that was going up. Legal counsel feels that the child is partially at fault, and so deserves all the pain, but that it is probable that the lawsuit will be settled for between P250,000 and P550,000, with the following likely outcome: 30% to be settled at P250,000; 45% to be settled at P340,000 and 25% to be settled at P550,000. How much provision for damages shall be included in the liability section as of December 31, 2022?
On April 13th 2022: K.C. is sued for cheating its customers by adding ice to cold beverages, thereby reducing the amount of precious liquid contained in the cups. By the time lawsuit occurs, the lawsuit loss is not probable and can not be estimated. On May 18th 2022: K.C. is sued for a week-long insomnia its customer sustained after the customer consumed K.C. signature expresso – The Death Wish. By the time K.C. is served, the lawsuit loss is probable and can be reasonable estimated between $ 90,000 to $ 100,000. On January 28th 2023 (before 2022 financial report is issued): new evidence related to ICE CUBE lawsuit surfaced. K.C.’s ice cube is on average 50% larger than industry standard! Thus, K.C. determines the lawsuit is probable and can be reasonable estimated at $ 15,500. With respect to each of the above events, Should K.C. recognize any gain/loss in its 2022 financial report? If so, what is the correct journal entry (entries) Whether and how should K.C. disclose the…
15. GINGERBREAD Company is involved in a litigation regarding a faulty product sold in a prior year. The entity has consulted with lawyer and determined that there is a 50% chance of losing. The lawyer estimated that the amount of any payment would be between ₱500,000 to ₱800,000 with ₱500,000 as the best estimate. What is the required journal entry as a result of this litigation?
13. Gingerbread Corp was under a pending lawsuit by a customer suing for having slipped on a puddle of water from a leaky pipe in March of 2020. The lawsuit is considered to be probable to favor the customer and can reasonably estimated for $5,000. What is the correct entry to be recorded on December 31, 2020? a.DR Legal receivable 5,000 CR Legal expense 5,000 b.DR Legal expense 5,000 CR Cash 5,000 c.The lawsuit has not been resolved and therefor would not appear on the company financial statements d.DR Legal expense 5,000 CR Legal liability 5,000
#10 Issue: Sunrise Pools, Inc., is being sued by the Crescent Club for negligence when installing a new pool on Crescent Club’s property. Crescent Club alleges that the employees of Sunrise Pools damaged the foundation of the clubhouse and part of the golf course while operating heavy machinery to install the pool. The lawsuit is for $1.5 million. At the time of the alleged incident, Sunrise Pools carried only $600,000 of liability insurance. While reviewing the draft of Sunrise Pools’ annual report, its president deletes all references to this lawsuit. She is concerned that disclosure of this lawsuit in the annual report will be viewed by Crescent Club as admission of Sunrise’s wrongdoing, even though she privately admits that Sunrise employees were careless and believes that Sunrise Pools will be found liable for an amount in excess of $1 million. The president sends the amended draft of the annual report to the vice president of finance with a note stating that the lawsuit will…
1. You are a commercial lines broker, working for an insurance company, explain why you would recommend a commercial named-peril policy. James, a new client, left his last insurance company as he was disgruntled that he had to pay an extra $10,000 to remove the wreckage from one of his warehouses that was damaged in a fire. James' policy did not have enough insurance available to cover the cost of debris removal after the lass was paid. course- C12 insurance on property
A digital watch bought from TPPL had a short circuit while the customer was doing work under the sun. This resulted in minor burns and injury to the customer's wrist. The customer sued the company for $10,000 as compensation. As at 31 December 20X1, TPPL's lawyer believed that it would be more than likely that the company would lose the court case against the customer. As the short circuit was very likely due to a manufacturing defect, TPPL also made a corresponding claim against the manufacturer of the digital watch for $8,000. The company's lawyer believed that there would be a 70% chance that the counter claim against the manufacturer was likely to succeed. Explain and discuss how TPPL should treat these two legal claims in its financial statements for the year ended 31 December 20X1 under the applicable SFRSs.
Marika Katz bought a new Blazer and insured it with only compulsory insurance 10/20/5. Driving up to her summer home one evening, Marika hit a parked car and injured the couple inside. Marika’s car had damage of $9,600, and the car she struck had damage of $7,900. After a lengthy court suit, the couple struck were awarded personal injury judgments of $15,900 and $6,900, respectively. What will the insurance company pay for this accident? What is Marika’s responsibility?
PART 2 PROVISIONS AND CONTINGENT LIABILITIES In February 2022, a customer of Canine Ltd sued the company. The customer was claiming that her champion breeding dog died due to an allergic reaction after eating some of the pet food manufactured by Canine Ltd and is claiming $75,000 in damages. Canine Ltd had initially denied liability as there was information on the label of the pet food about the composition of the food and a warning about potential reactions to some of the ingredients. A test of the food in June 2022, however, has indicated that the level of the ingredient that caused the allergic reaction was almost 3 times higher than that advised on the label and legal advice has now indicated the company will be found liable although damages expected to be awarded are estimated at $40,000. The case is expected to be decided in court in November 2022. The Directors have stated that as no court decision has yet been made there is no current obligation and so no provision should be…
On Feb. 5, 20x2, an employee filed a P 2,000,000 lawsuit against Steel Co. for damages suffered when one of the Steel's plants exploded on Dec. 29, 20x1. Steel's legal counsel expects the company will lose the lawsuit and estimates the lost to be between P 500,000 and P 1,000,000. The employee has offered to settle the lawsuit out of the court for P 900,000, but Steel will not agree to the settlement. In its Dec. 31, 20x1 balance sheet, what amount should Steel report as a liability from lawsuit?a. P 500,000b. P 900,000c. P 1,000,000d. P 2,000,000
Constant Company is being sued for P4, 000,000 for an injury caused to a child as a result of alleged negligence while the child was visiting the Constant Company plant in March 2018. The suit was filed in July 2018. Constant’s lawyer states that it is probable that Constant will lose the suit and be found liable for a judgement costing anywhere from P400, 000 to P2, 000,000. However the lawyer states that the most probable judgement is P1, 000,000. Instructions:How should Constant report the suit in its 2018 financial statements. Discuss the rationale for your answer. Include in your disclosures, if any, that should be made in Constant’s financial statements
ANSWER IN EXCEL FORM AND GOOD ACCOUNTING FORM. THANK YOU :) On February 5, 2001, an employee filed a P2,000,000 lawsuit against Steel Company for damages suffered when one of Steel’s plants exploded on December 29, 2000. Steel’s legal counsel expects the company will lose the lawsuit and estimates the loss to be between P500,000 and P1,000,000. The employee has offered to settle the lawsuit out of court for P900,000, but Steel will not agree to the settlement. In its December 31, 2000 balance sheet, what amount should Steel report as liability from lawsuit? P2,000,000P1,000,000P900,000P500,000