17. 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 los 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

17. 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 los 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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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