ADVANCED ACCOUNTING(LL) W/CONNECT
13th Edition
ISBN: 9781260282382
Author: Hoyle
Publisher: MCG
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 11, Problem 26P
a.
To determine
Determine the appropriate accounting for this lawsuit for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS.
b.
To determine
Prepare the entry that Company H would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert U.S. GAAP balances to IFRS.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
On February 5, 2020, an employee filed a P2,000,000 lawsuit against Superman Company for
damages suffered when plant of the entity exploded on December 29, 2019.
The entity's legal counsel believed the entity will probably lose the lawsuit and estimated the loss
to be P500,000.
The employee has offered to settle the lawsuit out of court for P900,000 but the entity will not
agree to the settlement.
On December 31, 2019, what amount should be reported as accrued liability.
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?
Beautiful Company is involved in litigation regarding a faulty product sold in a prior year during 2021. 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 P500,000.How much is the Provision to be reported at December 31, 2021?
Chapter 11 Solutions
ADVANCED ACCOUNTING(LL) W/CONNECT
Ch. 11 - Historically, what factors contributed to the...Ch. 11 - Nestl S.A. is a very large company headquartered...Ch. 11 - Prob. 3QCh. 11 - Prob. 4QCh. 11 - Prob. 5QCh. 11 - In general terms, how does IFRS for SMEs differ...Ch. 11 - Prob. 7QCh. 11 - What are three countries that do not allow...Ch. 11 - Prob. 9QCh. 11 - Prob. 10Q
Ch. 11 - Prob. 11QCh. 11 - What are the two extreme approaches that a company...Ch. 11 - Prob. 13QCh. 11 - Prob. 14QCh. 11 - Prob. 15QCh. 11 - Prob. 16QCh. 11 - Prob. 17QCh. 11 - Prob. 18QCh. 11 - Prob. 19QCh. 11 - Even if all companies in the world were to use...Ch. 11 - Prob. 1PCh. 11 - Prob. 2PCh. 11 - Which of the following is not a reason for...Ch. 11 - Prob. 4PCh. 11 - Prob. 5PCh. 11 - Prob. 6PCh. 11 - Prob. 7PCh. 11 - Prob. 8PCh. 11 - Prob. 9PCh. 11 - Prob. 10PCh. 11 - Prob. 11PCh. 11 - Prob. 12PCh. 11 - Which of the following statements is true for a...Ch. 11 - Prob. 14PCh. 11 - Prob. 15PCh. 11 - Prob. 16PCh. 11 - Prob. 17PCh. 11 - Prob. 18PCh. 11 - Prob. 19PCh. 11 - Prob. 20PCh. 11 - Prob. 21PCh. 11 - Prob. 22PCh. 11 - Prob. 23PCh. 11 - Prob. 24PCh. 11 - Prob. 25PCh. 11 - Prob. 26PCh. 11 - Parnell Company acquired construction equipment on...Ch. 11 - Prob. 28PCh. 11 - Prob. 29PCh. 11 - Hirsch Company acquired equipment at the beginning...
Knowledge Booster
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
- Waterway Shoes Foot 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 45% chance of losing. If this is the case, their attorney estimated that the amount of any payment would be $815000. What is the required journal entry as a result of this litigation? Debit Litigation Expense for $366750 and credit Litigation Liability for $366750. Debit Litigation Expense for $448250 and credit Litigation Liability for $448250. No journal entry is required. Debit Litigation Expense for $815000 and credit Litigation liability for $815000.arrow_forwardFresh Limited, a manufacturer of toothpaste, was taken to court over alleged defamation charges when the company accused a rival toothpaste manufacturer of fraud. Before year end (31 December 2018), the lawyer of Fresh Limited advised that, although losing the case was unlikely, legal fees and settlement costs could amount to $ 900 000 in the event that the court case was lost. On 04 February 2019, the judge presiding over the case ruled that Fresh should pay $ 1 000 000 to the plaintiff as well as pay all of the plaintiff's legal fees, which amounted to $ 180 000. The financial statements had not yet been authorized for issue at the time of the court ruling. Required: Discuss how this information should be treated in the financial statements of Fresh Limited for the year ended 31 December 2018arrow_forwardOn 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?arrow_forward
- 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 300,000arrow_forwardIn August 2021, a company's worker was injured in the factory in an accident partially the result of his own negligence. The worker has sued the company for P800,000. The company's counsel believes it is possible but not probable that the outcome of the suit will be unfavorable, and that the settlement would cost the company from P250,000 to P500,000. At year-end, the company should A. disclose the existence of a contingent liability with a range of P250,000 to P500.000. B. disclose the existence of a contingent liability for P375,000. C. record a liability of P375.000. D. do nothing. A suit for breach of contract seeking damages of P2,400,000 was filed by an author against a company on October 4, 2021. The company's legal counsel believed that an unfavorable outcome is probable. A reasonable estimate of the award to the plaintiff is between P600,000 and P1,800,000. No amount within this range is a better estimate of potential damages than any other amount. At yearend, the company…arrow_forwardIn 2019, five people died in a car accident, possibly due to the products sold by SH Limited. Legal proceedings are started seeking damages of $3 million from SH Limited. Up to the date of approval of financial statements for the year ended 31 December 2019, the lawyers of SH Limited advised that it is probable that it will not be found liable. However, when SH Limited prepares the financial statements for the year ended 31 December 2020, its lawyers advised that, owing to developments in the case, it is probable that it will be found liable. According to HKAS 37 Provisions, Contingent Liabilities and Contingent Assets, what accounting treatment for SH Limited is required: (a) at 31 December 2019 (b) at 31 December 2020arrow_forward
- Harrington Company was sued by an employee in late 2017. General counsel concluded that there was an 75 percent probability that the company would lose the lawsuit. The range of possible loss is estimated to be $35,000 to $90,000, with no amount in the range more likely than any other. The lawsuit was settled in 2018, with Harrington making a payment of $70,000. Assume that a U.S. based company is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS . Thus, adjustments to convert from U.S. GAAP to IFRS must be made. Ignore income taxes. a. Prepare journal entries for this lawsuit for the years ending December 31, 2017, and December 31, 2018, under (1) U.S. GAAP and (2) IFRS b. Prepare the entries that Harrington would make on the December 31, 2017, and December 31, 2018, conversion worksheets to convert U.S. GAAP balances to IFRS.arrow_forwardOn 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?arrow_forwardFinley Roofing is involved with several situations that possibly involve contingencies. Each is described below. Finley's fiscal year ends December 31, and the 2023 financial statements are issued on March 20, 2024. 1. Finley is involved in a lawsuit resulting from a dispute with a customer. On January 25, 2023, judgment was rendered against Finley in the amount of $10 million plus interest, a total of $11 million. Finley plans to appeal the judgment, but does not expect the appeal to succeed. 2. At March 20, 2023, the EPA is in the process of investigating possible environmental violations at one of Finley's work sites, but has not proposed a deficiency assessment. Management feels an assessment is probable, and if an assessment is made an unfavorable settlement between $15 million to $23 million is probable. 3. Finley is the plaintiff in a $41 million lawsuit filed against AA Asphalt for damages due to lost profits from rejected contracts and for unpaid receivables. The case is in…arrow_forward
- Constant Company is being sued for P4, 000,000 for an injury caused to a child as a result of alleged negligence while the child was visiting the Constant Company plant in March 2018. The suit was filed in July 2018. Constant’s lawyer states that it is probable that Constant will lose the suit and be found liable for a judgement costing anywhere from P400, 000 to P2, 000,000. However the lawyer states that the most probable judgement is P1, 000,000. Instructions:How should Constant report the suit in its 2018 financial statements. Discuss the rationale for your answer. Include in your disclosures, if any, that should be made in Constant’s financial statementsarrow_forwardOn 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…arrow_forwardOn November 5, 2020, a Dunn Company truck was in an accident with an auto driven by Bell. The entity received notice on January 12, 2021 of a lawsuit for P700,000 damages for personal injuries suffered by Bell. The entity's counsel believed it is probable that Bell will be awarded an estimated amount in the range between P200,000 and P500,000. The possible outcomes are equally likely. The accounting year ends on December 31 and the 2020 financial statements were issued on March 31, 2021. What amount of provision should be accrued on December 31, 2020?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Dividend disocunt model (DDM); Author: Edspira;https://www.youtube.com/watch?v=TlH3_iOHX3s;License: Standard YouTube License, CC-BY