1. Otis Company sells calculators that carry a one-year warranty againstmanufacturer's defects. Based on company experience, warranty costsare estimated at P300 per calculator. During 2017, Otis sold 24,000calculators, and paid warranty costs of P170,000.In its income statement for the year ended December 31, 2017, howmuch should Otis report as warranty expense?a. 1,700,000b. 2,400,000c. 5,500,000d. 7,200,0002. In May 2017, Maive Company filed suit against Wiley, Inc. seekingP850,000 damages for patent infringement. A court verdict in November2017 awarded Maive P600,000 in damages, but Wiley's appeal is notexpected to be decided before 2017. Maive's counsel believes it isprobable but not virtually certain that Maive will be successfulagainst Wiley for an estimated amount in the range between P300,000and P450, 000, with P400,000 considered the most likely amount. Whatamount should Maive record as contingent asset from lawsuit in theyear ended December 31, 2017?a. Noneb. 300,000c. 400,000d. 600,000

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1. Otis Company sells calculators that carry a one-year warranty against manufacturer's defects. Based on company experience, warranty costs are estimated at P300 per calculator. During 2017, Otis sold 24,000 calculators, and paid warranty costs of P170,000. In its income statement for the year ended December 31, 2017, how much should Otis report as warranty expense? a. 1,700,000 b. 2,400,000 c. 5,500,000 d. 7,200,000

1. Otis Company sells calculators that carry a one-year warranty against manufacturer's defects. Based on company experience, warranty costs are estimated at P300 per calculator. During 2017, Otis sold 24,000 calculators, and paid warranty costs of P170,000. In its income statement for the year ended December 31, 2017, how much should Otis report as warranty expense? a. 1,700,000 b. 2,400,000 c. 5,500,000 d. 7,200,000

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money

Section: Chapter Questions

Problem 9.5AP

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