During the year 2021, Bong Company was involved in a lawsuit.  Bong was sued by an employee for illegal dismissal from employment. Legal proceedings started and owing to the developments in the case, as of December 31, 2021, Bong’s lawyer believes that an unfavorable outcome was probable and a reasonable estimate of damages was P5,000,000 but could be as much as P6,500,000.  Before the 2021 financial statements were issued, the employee accepted a cash settlement of P6,000,000 from Bong.  In its December 31, 2021 financial statements issued in March 2022, what amount of liability would Bong have reported?

SWFT Individual Income Taxes
43rd Edition
ISBN:9780357391365
Author:YOUNG
Publisher:YOUNG
Chapter18: Accounting Periods And Methods
Section: Chapter Questions
Problem 57P
icon
Related questions
Question

During the year 2021, Bong Company was involved in a lawsuit.  Bong was sued by an employee for illegal dismissal from employment. Legal proceedings started and owing to the developments in the case, as of December 31, 2021, Bong’s lawyer believes that an unfavorable outcome was probable and a reasonable estimate of damages was P5,000,000 but could be as much as P6,500,000.  Before the 2021 financial statements were issued, the employee accepted a cash settlement of P6,000,000 from Bong. 

In its December 31, 2021 financial statements issued in March 2022, what amount of liability would Bong have reported? 

Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Tax loss carryovers
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
SWFT Individual Income Taxes
SWFT Individual Income Taxes
Accounting
ISBN:
9780357391365
Author:
YOUNG
Publisher:
Cengage
Individual Income Taxes
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L…
Auditing: A Risk Based-Approach (MindTap Course L…
Accounting
ISBN:
9781337619455
Author:
Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:
Cengage Learning
Business Its Legal Ethical & Global Environment
Business Its Legal Ethical & Global Environment
Accounting
ISBN:
9781305224414
Author:
JENNINGS
Publisher:
Cengage
CONCEPTS IN FED.TAX., 2020-W/ACCESS
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:
9780357110362
Author:
Murphy
Publisher:
CENGAGE L