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- On December 31, 2014, SBMA Inc. was a defendant in three litigations provided below: The first case is about environmental violation and the legal counsel determined that it isreasonably possible that SBMA will become liable in a the range of P4,000,000 to P6,000,000. The second case is about illegal dismissal and the legal counsel determined that it is remotethat SBMA will become liable in a reliable estimate of P3,000,000. The third case is about patent infringement and the legal counsel determined that it is probablethat SBMA will become liable in the following expected value:P2,000,000 - 50%P5,000,000 - 30%P10,000,000 - 20%Required: Determine the following for the year ended December 31, 2014:__________1. Accrued Provision on December 31, 2014__________2. Disclosed Contingent Liability on December 31, 2014Gallardo Co. is involved in a lawsuit as a result of an accident that took place September 5, 2022. The lawsuit was filed on November 1, 2022, and claims damages of $1,000,000. At December 31, 2022, Gallardo’s attorneys feel it is remote that Gallardo will lose the lawsuit. How should the company account for the effects of the lawsuit? Assume instead that at December 31, 2022, Gallardo’s attorneys feel it is probable that Gallardo will lose the lawsuit and be required to pay $1,000,000. How should the company account for this lawsuit? Assume instead that at December 31, 2022, Gallardo’s attorneys feel it is reasonably possible that Gallardo could lose the lawsuit and be required to pay $1,000,000. How should the company account for this lawsuit? Prepare the current liabilities section of the balance sheet.In a certain civil case, plaintiff was awarded damages by the court in the sum of P20,000 representing profit he failed to realize on account of defendant’s failure to comply with his obligation to said plaintiff. Are those damages taxable against the plaintiff? a. No, because damages awarded are considered return of capital. b. No, because there is no sale transaction or exercise of profession in the awarding of damages. c. Yes, because the damages are not on account of injuries or sickness but for lost profit. d. Answer not given
- Sunrise Company provided the following information on December 31, 2019: A personal injury liability suit for P500,000 was brought against Sunrise Company in March 2019. The management and legal counsel of Sunrise Company concluded that it is not probable that Sunrise Company will be responsible for damages and that P150,000 is the best estimate of the damages. In July 2019, Sunrise Company became involved in a tax dispute with the BIR pertaining to 2018 income tax. In December 2019, a judgment for P400,000 was assessed against Sunrise Company by the tax court. Sunrise Company is appealing the amount of judgment. The tax advisor and legal counsel of Sunrise Company believed it is probable that the assessment can be reduced on appeal by 50%. Sunrise Company signed as guarantor for P200,000 loan by PNB to Sunset Company, a principal supplier of Sunrise. By reason of financial difficulties, it is probable that Sunrise Company shall pay P200,000 loan with only a 60% recovery anticipated…In May, 2005, Sonic became involved in a litigation. The suit is being contested, but Sonic's lawyer believes it is possible that Sonic may be held liable for damages estimated in the range between P2,000,000 and P3,000,000, and no amount is a better estimate of potential liability than any other amount. What amount would be reported as liability?Huprey Co. is the defendant in the following legal claims. For each of the following claims, indicatewhether Huprey should (a) record a liability, (b) disclose in notes, or (c) have no disclosure. Huprey can reasonably estimate that a pending lawsuit will result in damages of $1,250,000. It is probable that Huprey will lose the case.
- ABC Corporation, a private corporation engaged in the business of importing used cars from Japan was issued a certificate of incorporation by virtue of R.A. 27890. Because of a failed business transaction, ABC Corporation sued Mr. X for a damage arising from the latter’s alleged breach of its contractual obligations. Mr. X cannot allege “lack of legal capacity to sue” of ABC Corporation in its motion to dismiss because it has a legal personality conferred by law. Mr. X cannot allege “lack of legal capacity” in its motion to dismiss because it is not allowed to attack the existence of the corporation collaterally. ABC Corporation is a de jure corporation and its existence can be attacked only through a quo warranto proceeding. Attacking the existence of ABC Corporation may be done through a motion to dismiss because its creation is voidC has initiated a lawsuit against Agency A for recovery of damages when accidentally one of the vehicles owned by the agency collided with the car then driven by C. The Chief Legal Counsel of the Agency estimates from experience that at December 2015, the entity has a 60% chance of winning the lawsuit and thereby avoiding the payment of damages. Furthermore, the counsel estimates that the agency has 20% chance of being ordered to pay C damages of P100,000 and a 20% chance of being ordered to pay C damages of P10,000. . State whether a contingent liability or contingent asset exists. Explain your answers by stating the criteria of your answers belowC has initiated a lawsuit against Agency A for recovery of damages when accidentally one of the vehicles owned by the agency collided with the car then driven by C. The Chief Legal Counsel of the Agency estimates from experience that at December 2015, the entity has a 60% chance of winning the lawsuit and thereby avoiding the payment of damages. Furthermore, the counsel estimates that the agency has 20% chance of being ordered to pay C damages of P100,000 and a 20% chance of being ordered to pay C damages of P10,00 Use the facts given in No. 1, but this time assumes that on December 31, 2015, the Chief Legal Counsel of Agency A estimates from past experience that the possibility of losing the case filed by C is remote. -State whether a contingent liability or contingent asset exists.-Explain your answers by stating the criteria of your answers below.
- AOL, LLC, mistakenly made public the personal information of 650,000 of its members. The members filed a suit in California, alleging violations of federal law and California state law. The member agreement between AOL and its members included a provision declaring Virginia as the location of any court dispute. AOL asked the court to dismiss the suit on the basis of that "forum-selection" clause in its member agreement. Under a previous decision of the United States Supreme Court, a forum-selection clause is unenforceable "if enforcement would contravene a strong public policy of the forum in which suit is brought." California courts previously have declared in other cases that clauses similar to the AOL clause contravene a strong public policy. If the court applies the doctrine of stare decisis, will it dismiss the suit? Explain. [Doe 1 v. AOL LLC, 552 F.3d 1077 (9th Cir. 2009)] (See The Common Law Tradition.)Roland, a basketball star, was under contract for one year to play-for-play exclusively for Lady Love, Inc. However, even before the basketball season could open, he was offered a more attractive pay plus fringes benefits by Sweet Taste, Inc. Roland accepted the offer and transferred to Sweet Taste. Lady Love sues Roland and Sweet Taste for breach of contract. Defendants claim that the restriction to pay for Lady Love alone is void, hence, unenforceable ,as it constitutes an undue interference with the right of Roland to enter into contracts and the impairment of his freedom to pay and enjoy basketball. Can Roland be bound by the contract he entered into with Lady Love or can he disregard the same? Is he liable at all? Reasons.Tretter alleged that his exposure over the years to asbestos products manufactured by Philip Carey Manufacturing Corporation caused him to contract asbestosis. Tretter brought an action against Rapid American Corporation, which was the surviving corporation of a merger between Philip Carey and Rapid American. Rapid American denied liability, claiming that immediately after the merger it had transferred its asbestos oper- ations to a newly formed subsidiary corporation. Can Rapid avoid liability by such transfer? Explain.