Orange Company is the defendant in a lawsuit filed by Will in 2019 disputing the validity of copyright held by Orange? On December 31, 2019, Orange determined that Will would probably be successful for an estimated amount of P400,000. Appropriately, a P400,000 loss was accrued by a charge to income for the year ended December 31, 2019 On December 31, 2020, Orange and Will agreed to a settlement providing for cash payment for P250,000 by Orange to Will and transfer of Orange's copyright to Will. The carrying amount of the copyright on Orange's accounting records was P50,000 on December 31, 2020.
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- Tone Company is the defendant in a lawsuit filed by Witt in 2019 disputing the validity of copyright held by Tone. December 31, 2019, Tone determined that Witt would probably be successful for an estimated amount of P400, 000. Appropriately, a P400, 000 loss was accrued by a charge to income for the year ended December 31, 2019.On December 31, 2020, Tone and Witt agreed to a settlement providing for cash payment of P250, 000 by Tone to Witt, and transfer of Tone’s copyright to Witt. The carrying amount of the copyright on tone’s accounting records was P60, 000 on December 31, 2020. What would be the effect on the settlement on Tone’s income before tax in 2020?Tang company is the defendant in a lawsuit filed by wong in 2019 disputing the validity of copyright held by tang. In December 31, 2019, tang determined that wong would probably be successful for an estimated amount of P600,000. Appropriately, a P600,000 loss was accrued by a charge to income for the year ended December 31, 2019. On December 31, 2020, tang and wong agreed to a settlement providing for cash payment of P375,000 and transfer to tang's copyright to wong. The carrying amount of the copyright on tang’s accounting records was P90,000 on December 31, 2021. What would be the increased in tang’s income before tax in 2020 due to this settlement?answer this with detailed solution.In the same year, the entity is a defendant in a lawsuit disputing the validity of copyright held by the entity. On December 31, 2019 , the entity determined that the plaintiff would probably be a successful against the entity for an estimated amount of P2,000,000. Appropriately, a P2,000,000 loss was accrued by a charge to income for the current year. On December 31, 2019, the entity and plaintiff agreed to a settlement providing for cash payment of P1,250,000 by the entity and transfer of the copyright to plaintiff. The carrying amount of the copyright was P250,000. What should be the effect of the settlement of the copyright case on Davao Company’s income before tax in 2020? 300,000 increase 750,000 decrease 250,000 decrease 750,000 increase 500,000 increase
- ABC Company is the defendant in a patent infringement suit filed by XYZ Company in 2020. At Dec. 31, 2020, ABC determined that XYZ would probably be successful against ABC for an estimated amount of P5 million. ABC appropriately accrued the loss for the year ended Dec. 31, 2020. On Oct. 31, 2021, ABC Company and XYZ Company agreed to a settlement for a cash payment of P3.8 million and the transfer of ABC Company's patent to XYZ Company. On such date, the patent had a carrying value of P2 million. What would be the effect of this settlement on ABC's profit for the year ended Dec. 31, 2022?1. Medrano is the defendant in a lawsuit filed by Witt in 2018 disputing the validity of copyright held by Tone. December 31, 2018, Tone determined that Witt would probably be successful for an estimated amount of $400, 000. Appropriately, a $400, 000 loss was accrued by a charge to income for the year ended December 31, 2018. On December 31, 2019, Tone and Witt agreed to a settlement providing for a cash payment of $250, 000 by Tone to Witt, and transfer of Tone’s copyright to Witt. The carrying amount of the copyright on tone’s accounting records was $60, 000 on December 31, 2019. What would be the effect of the settlement on Tone’s income before tax in 2019? 2. On December 31, 20x2, Apostol determines an indication that the impairment loss recognized in the prior period may no longer exist. The revised recoverable amount of the building on December 31, 20x2 is $1,280,000. If no impairment loss had been recognized in the prior period, the carrying amount of the building on December…Tone Company is the defendant in a lawsuit filed by Witt in 2011 disputing the validity of copyright held by Tone. On December 31, 2011, Tone determined that Witt would probably be successful against Tone for an estimated amount of P400,000. Appropriately, a P400,000 loss was accrued by a charge to income for the year ended December 31, 2011. On December 31, 2012, Tone and Witt agreed to a settlement providing for cash payment of P250,000 by Tone to Witt, and transfer of Tone's copyright to Witt. The carrying amount of the copyright on Tone's accounting records was P60,000 on December 31, 2012. What would be the effect of the settlement on Tone's income before tax in 2012? a. 150,000 increase b. 60,000 decrease c. 90,000 increase d. 90,000 decrease
- During 2021, Angela Inc. was sued by a competitor for P5,000,000 for infringement of a patent. Based on the advice of the legal counsel, the entity accrued the sum of P3,000,000 as a provision on December 31, 2021. Subsequently on March 15, 2022, the Supreme Court decided in favor of the party alleging infringement of the patent and ordered the defendant to pay the aggrieved party the sum of P3,500,000. The financial statements were prepared by management on February 15, 2022 and approved by the board of directors on March 31, 2022. What amount should be adjusted on December 31, 2022 in relation to this event?A. 1,000,000B. 1,500,000C. 500,000D. 2,000,000During 2018, Rosanna Company was sued by a competitor for P5,000,000 for infringement of a patent. Based on the advice of the legal counsel, the entity accrued the sum of P3,000.000 as a provision on December 31, 2018. Subsequently, on March 15, 2019, the Supreme Court decided in favor of the party alleging infringement of the patent and ordered the defendant to pay the aggrieved party a sum of P3,500,000. The financial statements were prepared by management on February 15, 2019 and approved by the board of directors on March 31, 2019. The financial statements were prepared by management on February 15, 2019 and approved by the board of directors on March 31, 2019. What amount should be adjusted on December 31, 2018 in relation to this event?Tyeso Company entered into a lawsuit on December 25, 2020 and recognized on the same date a provision of P2,000,000. On February 28, 2021, when the financial statements for the year ended December 31, 2020 had not yet been authorized for issue, the case was settled and the court decided the final total damages to paid by the entity at P3,000,000. In addition, the Company has a loan payable of P2,000,000 due on June 30, 2021. On January 1, 2021, before the authorization of the issuance of financial statements, the bank agreed to refinance the loan, extending the maturity to June 30, 2023. Also, another loan amounting to P7,000,000 due on December 1, 2021 was obtained by the Company from BDO. TYESO Company has the discretion to refinance or roll over the loan for at least twelve months from December 31, 2021. 1. Compute for the current liability to be presented in the financial position a. P12 million b. P10 million c. P5 million d. P4 million Answer: 2. Compute for…
- During 2023, Lowry Company was used by a competitor for P5,000,000 infringement suit of a trademark. Based on the legal counsel’s advice, Lowery accrued the sum of P3,000,000 as a provision. On February 15, 2024, the Supreme Court decided in favor of the party alleging the infringement and ordered the defendant to pay the aggrieved party a sum of P3,500,000. The financial statements of Lowry were approved by the BOD for issue on February 20, 2024. What amount should the Company accrue as provision for the year ended December 31, 2023?During 2020, Lomi, Co.filed suit against Ocean, Inc seeking damages for patent infringement. At December 31, 2020. Lomi’s legal counsel believed that it was probable that Lomi would be successful against Ocean for an estimated amount of P 1,500,000. In March 2021, Lomi was awarded P 1,000,000 and received in full payment thereof. In Lomi’s 2020 financial statements issued February 2021, how should this award be reported? a. As a receivable and revenue of P 1,500,000b. As a receivable and revenue of P 1,000,000c. As a disclosure of a contingent asset of P 1,500,000d. As a disclosure of a contingent asset of P 1,000,000ROSE Company entered into a lawsuit on December 20, 2021 and recognized on the same date a provision of ₱2,000,000. On February 28, 2022, when the financial statements for the year ended December 31, 2021 had not yet been authorized for issue, the case was settled and the court decided the final total damages to be paid by the entity at ₱3,000,000. In addition, the Company has a loan payable of ₱2,000,000 due on June 30, 2022. On January 1, 2022, before the authorization of the issuance of financial statements, the bank agreed to refinance the loan, extending the maturity to June 30, 2024. Also, another loan amounting to ₱7,000,000 due on December 1, 2022 was obtained by the Company on January 2, 2022 from BPI. ROSE Company has the discretion to refinance or roll over the loan for at least twelve months from December 31, 2022. At what amount should the non-current liability be presented in the statement of financial position? ₱ 2,000,000 ₱…