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? P2,000,000 P1,000,000 P900,000
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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?
P2,000,000
P1,000,000
P900,000
P500,000
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- 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? P2,000,000 P1,000,000 P900,000 P500,000On February 5, 2001, an employee filed a P2,000,000 lawsuit against Steel 5 points Company for damages suffered when one of Steel’s plants exploded on December 29,2000. Steel’s legal counsel expects the company will losethe 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? 2,000,000 1,000,000 900,000 500,000On 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
- In August, 2022, a worker was injured in the factory in an accident, partially the result of his own negligence. The worker has sued Mikell Co. for $800,000. Counsel believes it is reasonably possible that the outcome of the suit will be unfavorable and the settlement would cost the company from $250,000 to $500,000.Kelly Inc. is involved in litigation regarding a faulty product sold in a prior year. The company has consulted with its attorney and determined that it is possible that they may lose the case. The attorneys estimated that there is a 40% chance of losing. If this is the case, their attorney estimated that the amount of any payment would be P 500,000. What is the required journal entry as a result of this litigation? *a. Debit Litigation Expense for P 500,000 and credit Litigation liability for P 500,000b. No journal entry is requiredc. Debit Litigation Expense for P 200,000 and credit Litigation Liability for P 200,000d. Debit Litigation Expense for P 300,000 and credit Litigation Liability for P 300,000On Dec. 31, 2020, an employee filed a P3,000,000 lawsuit against Siomai Company for damages suffered when one of Siomai’s plants exploded on July 20, 2020. Siomai’s legal counsel expects the company will lose the lawsuit and estimates the loss to be between P500,000 and P1,500,000. The employee has offered to settle the lawsuit out of court for P900,000 but Siomai will not agree to the settlement. In its Dec. 31, 2020 statement of financial position, what amount should Siomai Company report as a provision from the lawsuit?
- Below are two independent situations. Discuss the proper accounting treatment, including any required disclosures, for each situation. Give the rationale for your answers. In August, 2022, a worker was injured in the factory in an accident, partially the result of his own negligence. The worker has sued Mikell Co. for $800,000. Counsel believes it is reasonably possible that the outcome of the suit will be unfavorable and the settlement would cost the company from $250,000 to $500,000 A suit for breach of contract seeking damages of $2,000,000 was filed by an author against Kenley Company on October 4, 2022. Kenley’s legal counsel believes that an unfavorable outcome is probable. A reasonable estimate of the award to the plaintiff is between $500,000 and $1,500,000. No amount within this range is a better estimate of potential damages than any other amount.On January 5. 2022. a company received a P5,000,000-complaint from one of its employees who suffered an accident last December 31, 2021, while in the production department. The company's legal counsel believed it would probably lose the case and the best estimate of the loss was P2,000,000. The complainant offered an out of court settlement of P3,000,000 but the company did not accept. On February 1, 2022, the court ordered the company to pay P2,500,000. The company paid the employee on February 10, 2022. The company's P10,000,000 comprehensive insurance policy has P1,000,000 deductible clauses. The company's financial statements were issued on March 15. 2022. What amount of loss from lawsuit should the company recognize in its December 31, 2021 statement ofcomprehensive income?On February 5, 2021, an employee filed a P2,000,000 lawsuit against ABC Company for damages suffered when one of ABC's plant exploded on December 29, 2020. ABC ’s legal counsel expects the company will probably lose the lawsuit and estimates the loss to be P500,000. The employee has offered to settle the lawsuit out of court for P900,000, but ABC will not agree to the settlement. In its December 31, 2020 balance sheet, what amount should ABC report as liability from lawsuit? A. 500,000 B. 900,000 C. 1,000,000 D. 2,000,000
- On January 5, 2022, a company received a P5,000,000-complaint from one of its employees who suffered an accident last December 31, 2021, while in the production department. The company's legal counsel believed it would probably lose the case and the best estimate of the loss was P2,000,000. The complainant offered an out of court settlement of P3,000,000 but the company did not accept. On February 1, 2022, the court ordered the company to pay P2,500,000. The company paid the employee on February 10, 2022. The company's P10,000,000 comprehensive insurance policy has P1,000,000 deductible clauses. The company's financial statements were issued on March 15, 2022. What amount of liability from lawsuit should the company recognize in its December 31, 2021 statement of financial position? A company sells gift certificates for P750 each. On December 31, 2019, the company had 1,000 gift certificates outstanding. In 2020, the company sold 4,000 gift certificates while a total 3,600 were…On January 5, 2022, a company received a P5,000,000-complaint from one of its employees who suffered an accident last December 31, 2021, while in the production department. The company's legal counsel believed it would probably lose the case and the best estimate of the loss was P2,000,000. The complainant offered an out of court settlement of P3,000,000 but the company did not accept. On February 1, 2022, the court ordered the company to pay P2,500,000. The company paid the employee on February 10, 2022. The company's P10,000,000 comprehensive insurance policy has P1,000,000 deductible clauses. The company's financial statements were issued on March 15, 2022. What amount of liability from lawsuit should the company recognize in its December 31, 2021 statement of financial position?On Feb, 5, 2017, an employee filed a P 2,000,000 lawsuit against Sans Co. for damages suffered when one of Sans' plant exploded on Dec, 29, 2016. The legal counsel believed the entity would probably lose the lawsuit and estimated the loss to be P 500,000. The employee offered to settle the lawsuit out of court for P 900,000 but the entity dis not agree to the settlement. On December 31, 2016, what amount should be reported as liability from lawsuit?