Provision, Contingent Assets, Contingent Liabilities and RestructingRequired: Determing the ff for the year ended Dec. 31, 20141. Accrued asset on Dec. 31, 20142. Disclosed Contingent Asset on Dec. 31, 2014 Problem 2. On December 31, 2014, ECO Inc. was a plaintiff in four independent cases providedbelow:> In the first case, ECO Inc. prevailed based on the decision of the Supreme Court whichordered the defendant to pay ECO Inc. P2,000,000.> In the second case, the legal counsel determined that it is probable that ECO will prevail in thecase with a reliable estimate of damages of P1,000,000.> In the third case, the legal counsel determined that it is reasonably possible that ECO willprevail in the case with a reliable estimate of damages of P3,000,000.> In the fourth case, the legal counsel determined that it is remote that ECO will prevail in thecase with a reliable estimate of damages of P4,000,000.Required: Determine the following for the year ended December 31, 2014:_1. Accrued Asset on December 31, 20142. Disclosed Contingent Asset on December 31, 2014

Contingent Asset : 1. A possible asset that arises from past events and whose existence will be…

Answered: below: > In the first case, ECO Inc.…

FINANCIAL ACCOUNTING

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Chapter1: Financial Statements And Business Decisions

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Provision, Contingent Assets, Contingent Liabilities and Restructing

Required: Determing the ff for the year ended Dec. 31, 2014

1. Accrued asset on Dec. 31, 2014

2. Disclosed Contingent Asset on Dec. 31, 2014

Problem 2. On December 31, 2014, ECO Inc. was a plaintiff in four independent cases provided
below:
> In the first case, ECO Inc. prevailed based on the decision of the Supreme Court which
ordered the defendant to pay ECO Inc. P2,000,000.
> In the second case, the legal counsel determined that it is probable that ECO will prevail in the
case with a reliable estimate of damages of P1,000,000.
> In the third case, the legal counsel determined that it is reasonably possible that ECO will
prevail in the case with a reliable estimate of damages of P3,000,000.
> In the fourth case, the legal counsel determined that it is remote that ECO will prevail in the
case with a reliable estimate of damages of P4,000,000.
Required: Determine the following for the year ended December 31, 2014:
_1. Accrued Asset on December 31, 2014
2. Disclosed Contingent Asset on December 31, 2014

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.

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