Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31 st December, 2018 under IFRS. Given information: The company G has gone through a case in which Company P sued for patent infringement. As on December 31 st , 2018, the case was in the early stage and the company believed that they are likely to win. By the end of year 2019, the case progressed and potential liability was estimated between $1 million to $3 million. By 31 st March, 2020 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

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Answer 1

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Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 13, Problem 2JC

1.

To determine

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31^st December, 2018 under IFRS.

Given information:

The company G has gone through a case in which Company P sued for patent infringement. As on December 31^st, 2018, the case was in the early stage and the company believed that they are likely to win. By the end of year 2019, the case progressed and potential liability was estimated between $1 million to $3 million. By 31^st March, 2020 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

2.

To determine

The way in which the contingency should be reported as on December 31^st, 2019 under IFRS.

3.

To determine

The way in which the contingency should be reported as on December 31^st, 2020 under IFRS.

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7 What will a contingency note contain? Review Later A circumstance where a company may have a liability A disclosure of future contracts to be performed A disclosure of all future commitments of the company A set of criteria required to be able to recognize revenue

Appropriations of retained earnings are proper a. When required by contractual agreements b. All of the other choices c. When BOD voluntarily designates a portion of retained earnings for future expenses or contingencies d. When required by law

Answer 2

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 13, Problem 2JC

1.

To determine

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31^st December, 2018 under IFRS.

Given information:

The company G has gone through a case in which Company P sued for patent infringement. As on December 31^st, 2018, the case was in the early stage and the company believed that they are likely to win. By the end of year 2019, the case progressed and potential liability was estimated between $1 million to $3 million. By 31^st March, 2020 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

2.

To determine

The way in which the contingency should be reported as on December 31^st, 2019 under IFRS.

3.

To determine

The way in which the contingency should be reported as on December 31^st, 2020 under IFRS.

Expert Solution & Answer

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Answer 3

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 13, Problem 2JC

1.

To determine

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31^st December, 2018 under IFRS.

Given information:

The company G has gone through a case in which Company P sued for patent infringement. As on December 31^st, 2018, the case was in the early stage and the company believed that they are likely to win. By the end of year 2019, the case progressed and potential liability was estimated between $1 million to $3 million. By 31^st March, 2020 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

2.

To determine

The way in which the contingency should be reported as on December 31^st, 2019 under IFRS.

3.

To determine

The way in which the contingency should be reported as on December 31^st, 2020 under IFRS.

Expert Solution & Answer

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Answer 4

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 13, Problem 2JC

1.

To determine

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31^st December, 2018 under IFRS.

Given information:

The company G has gone through a case in which Company P sued for patent infringement. As on December 31^st, 2018, the case was in the early stage and the company believed that they are likely to win. By the end of year 2019, the case progressed and potential liability was estimated between $1 million to $3 million. By 31^st March, 2020 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

2.

To determine

The way in which the contingency should be reported as on December 31^st, 2019 under IFRS.

3.

To determine

The way in which the contingency should be reported as on December 31^st, 2020 under IFRS.

Expert Solution & Answer

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Answer 5

Chapter 13, Problem 2JC

1.

To determine

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31^st December, 2018 under IFRS.

Given information:

The company G has gone through a case in which Company P sued for patent infringement. As on December 31^st, 2018, the case was in the early stage and the company believed that they are likely to win. By the end of year 2019, the case progressed and potential liability was estimated between $1 million to $3 million. By 31^st March, 2020 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

2.

To determine

The way in which the contingency should be reported as on December 31^st, 2019 under IFRS.

3.

To determine

The way in which the contingency should be reported as on December 31^st, 2020 under IFRS.

Answer 6

Chapter 13, Problem 2JC

1.

To determine

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31^st December, 2018 under IFRS.

Given information:

The company G has gone through a case in which Company P sued for patent infringement. As on December 31^st, 2018, the case was in the early stage and the company believed that they are likely to win. By the end of year 2019, the case progressed and potential liability was estimated between $1 million to $3 million. By 31^st March, 2020 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

Answer 7

Chapter 13, Problem 2JC

1.

To determine

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31^st December, 2018 under IFRS.

Given information:

The company G has gone through a case in which Company P sued for patent infringement. As on December 31^st, 2018, the case was in the early stage and the company believed that they are likely to win. By the end of year 2019, the case progressed and potential liability was estimated between $1 million to $3 million. By 31^st March, 2020 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

Answer 8

2.

To determine

The way in which the contingency should be reported as on December 31^st, 2019 under IFRS.

Answer 9

2.

To determine

The way in which the contingency should be reported as on December 31^st, 2019 under IFRS.

Answer 10

3.

To determine

The way in which the contingency should be reported as on December 31^st, 2020 under IFRS.

Answer 11

3.

To determine

The way in which the contingency should be reported as on December 31^st, 2020 under IFRS.

Answer 12

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Answer 13

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Answer 14

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Answer 15

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Solution Summary: The author explains that if the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31 st December, 2018 under IFRS, the amount of loss cannot be estimated

The way in which the contingency should be reported as on December 31^st, 2019 under IFRS.

The way in which the contingency should be reported as on December 31^st, 2020 under IFRS.

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Chapter 13 Solutions

Solution Summary: The author explains that if the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31 st December, 2018 under IFRS, the amount of loss cannot be estimated

The way in which the contingency should be reported as on December 31st, 2019 under IFRS.

The way in which the contingency should be reported as on December 31st, 2020 under IFRS.

Want to see the full answer?

Chapter 13 Solutions

The way in which the contingency should be reported as on December 31^st, 2019 under IFRS.

The way in which the contingency should be reported as on December 31^st, 2020 under IFRS.