What amount of loss should DEF accrue at December 31, 2021?
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 26CE
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Transcribed Image Text:2. On November 5, 2021, a DEF Corporation's truck was in an accident with an auto driven by Mr.
Dela Cruz. DEF received notice on January 12, 2022 of a lawsuit for P700,000 damages for
personal injuries suffered by Mr. Dela Cruz. DEF Corporation's counsel believes it is probable
that Mr. Dela Cruz will be awarded an estimated amount in the range between P200,000 and
P450,000, and that P300,000 is a better estimate of potential liability than any other amount.
DEF's accounting period ends on December 31, and the 2021 financial statements were issued
on March 2, 2022.
What amount of loss should DEF accrue at December 31, 2021?
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