Kylie, an employee of Aljur Company, filed a P3.000.000 complaint against the company on December 2, 2020, for damages experienced when one of Aljur's plants burst on July 20, 2020. Aljur's legal counsel anticipates that the company will lose the litigation and believes that the loss will range between P500,000 and P1,000,000. An employee, Kylie, has offered to settle the complaint out of court for P900,000, but Aljur would not accept the offer. What amount should Aljur Company report as a provision from a lawsuit in its December 31, 2020, statement of financial position?* a. P500,000 b. P1,000,000 c. P3,000,000 d. P750,000
Kylie, an employee of Aljur Company, filed a P3.000.000 complaint against the company on December 2, 2020, for damages experienced when one of Aljur's plants burst on July 20, 2020. Aljur's legal counsel anticipates that the company will lose the litigation and believes that the loss will range between P500,000 and P1,000,000. An employee, Kylie, has offered to settle the complaint out of court for P900,000, but Aljur would not accept the offer. What amount should Aljur Company report as a provision from a lawsuit in its December 31, 2020, statement of financial position?* a. P500,000 b. P1,000,000 c. P3,000,000 d. P750,000
Chapter16: Accounting Periods And Methods
Section: Chapter Questions
Problem 30P
Related questions
Question
![Kylie, an employee of Aljur Company, filed a P3,000,000
complaint against the company on December 2, 2020, for
damages experienced when one of Aljur's plants burst on July
20, 2020. Aljur's legal counsel anticipates that the company will
lose the litigation and believes that the loss will range between
P500,000 and P1,000,000. An employee, Kylie, has offered to
settle the complaint out of court for P900,000, but Aljur would
not accept the offer.
What amount should Aljur Company report as a provision from
a lawsuit in its December 31, 2020, statement of financial
position?*
a. P500,000
b. P1,000,000
c. P3,000,000
d. P750,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcbed21f2-fccf-48e4-b56c-67ace2cea4f5%2F2ba96333-42f6-4d44-a59d-1c73ab516659%2Fpaok1xq_processed.png&w=3840&q=75)
Transcribed Image Text:Kylie, an employee of Aljur Company, filed a P3,000,000
complaint against the company on December 2, 2020, for
damages experienced when one of Aljur's plants burst on July
20, 2020. Aljur's legal counsel anticipates that the company will
lose the litigation and believes that the loss will range between
P500,000 and P1,000,000. An employee, Kylie, has offered to
settle the complaint out of court for P900,000, but Aljur would
not accept the offer.
What amount should Aljur Company report as a provision from
a lawsuit in its December 31, 2020, statement of financial
position?*
a. P500,000
b. P1,000,000
c. P3,000,000
d. P750,000
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