8. Refer to MC No. 6. Which ofthe following is correctregarding the litigation case onDecember 2019? *a. Even if the happening of the eventis remote, Buwis Buhay should stillexplain it in the notes as this canimpact its future financialperformance given the materialamount of P20,000,000.b. Whether an item is provision,contingent liability, or contingentO asset, it should only be disclosed inthe financial statements since theoccurrence is remote.c. Buwis Buhay should appeal thelitigation case the fact that theevidences presented are not strongenough to defeat the company.d. The event needs to be shown as adisclosure as showing remotenessof behavior. 6. Buwis Buhay Incorporatedhad several outstandingobligations on December 31,2019. The brief descriptionslisted below can be ascertainedfrom these liabilities.r.In June 2019, Buwis Buhay was involved in a court case amounting to P10,000,000. The attorneyassessed that it is probable that the company will win the case with P4,500,000 as the best estimateof the reward.• In August 2019, Baguio City brought an action against the company for polluting the surroundingrivers with its waste products costing P5,000,000. It is probable that Baguio City will be successfulbut the amount of damages Buwis Buhay might have to pay is not to exceed P2,500,000.• In December 2019, another litigation case amounting to P20,000,000 was filed against Buwis Buhayfor injuring pedestrians due to its renovation projects within the premise. This court case is seen tohave remote likelihood of occurrence because the evidences filed are not strong.

Liabilities that depend on the outcome of an uncertain event, must pass two criterions before they…

8. Refer to MC No. 6. Which of the following is correct regarding the litigation case on December 2019? * a. Even if the happening of the event is remote, Buwis Buhay should still explain it in the notes as this can impact its future financial performance given the material amount of P20,000,000. b. Whether an item is provision, contingent liability, or contingent asset, it should only be disclosed in the financial statements since the occurrence is remote. c. Buwis Buhay should appeal the litigation case the fact that the evidences presented are not strong enough to defeat the company. d. The event needs to be shown as a disclosure as showing remoteness of behavior.

8. Refer to MC No. 6. Which of the following is correct regarding the litigation case on December 2019? * a. Even if the happening of the event is remote, Buwis Buhay should still explain it in the notes as this can impact its future financial performance given the material amount of P20,000,000. b. Whether an item is provision, contingent liability, or contingent asset, it should only be disclosed in the financial statements since the occurrence is remote. c. Buwis Buhay should appeal the litigation case the fact that the evidences presented are not strong enough to defeat the company. d. The event needs to be shown as a disclosure as showing remoteness of behavior.

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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Consider the following statements: a. Only Statement I is true. b. Only Statement II is true. c. Both Statements I and II are true. d. Neither Statement I nor II is true.
If a company estimates that it is "reasonably possible" that it will lose a significant amount in a lawsuit, then this contingent liability: a. should be reported as a liability on the balance sheet. b. should be disclosed in the footnotes to the financial statements. c. need not be disclosed. d. should be reported as a contra-liability on the balance. sheet. e. should be reported as a reduction of stockholders' equity on the balance sheet.
Statement I: If an agent acts in his name, the principal shall have a right of action against the persons with whom the agent has contracted. Statement II: Should there be a stipulation that the agent shall advance the necessary funds, he shall be bound to do so even if the principal is insolvent. Only Statement I is true. Only Statement II is true. Both statements are true. Both statements are false.
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O 500,000 Which of the following would not require an explanatory/emphasis-of-matter paragraph in the auditor's report? * Going concern. Additional emphasis. O Opinion based in part on the report of another auditor. OLack of consistency in the financial statements due to accounting changes. Which of the following parties is responsible for the fairness of the representations made in financial statements?
Which of the following criteria is not required for the recognition of a liability for compensated absences? The amount of the obligation must be estimable. Payment of the obligation will require the use of current assets. Payment of the obligation must be probable. The compensation either evsts with the employee ir can be carried forward to subsequent years.
What is a cram down?a. An agreement about the total amount of money to be reserved to pay creditors who have priority.b. The bankruptcy court’s confirmation of a reorganization even though a class of creditors or stockholders did not accept it.c. The filing of an involuntary bankruptcy petition, especially by the holders of partially secured debts.d. The court’s decision as to whether a particular creditor has priority.
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Robin states that 'voluntary disclosure of information in financial reports can help resolve the lemons problem'. Do you agree? Why and why not?
34. The following statements are correct, except a. A liability will be reported at less than its maturity amount prior to the maturity date if the stated rate of interest on the liability is higher than the market rate of interest. b. A liability is created because of the acquisition of an asset, payment of another liability, incurrence of an expense, declaration of cash or property dividend, a loss, or a revenue collected in advance. In all cases, each of these “causes” usually provides the basis for measuring the liability. c. Accounts payable with customary term of 18 months is classified as current liability. d. Most liabilities have stated and effective interest rates that are the same; in such a situation the principal, face, and maturity amounts are all the same.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
2. Which of the following statement is correct about the statement of affairs? I. Net free assets are the excess of liquidation value of assets pledged to fully secured creditors over the amount of fully secured liabilities plus free assets less unsecured liabilities with priority. II. The estimated deficiency to unsecured creditors is total unsecured liabilities less total Net free assets III.Total unsecured liabilities includes unsecured liability with priority [A] I only [B] I and II only [C] II and III only [D] I, II and III 3. S1: For a joint venture, rights pertains to the rights and obligations associated with individual assets and liabilities, whereas with a joint the right operation, the rights and obligations pertains to the net assets. S2: Where the joint operators have designed the joint arrangement so that its activities primarily aim to provide the parties with an output it will be classified as joint venture. [A]Both statements are correct [B]Both statements are…