On April 30, 20x2, an explosion occurred at CONVOLUTE TWIST Co's plant causing extensive property damage to area buildings. CONVOLUTE's management and counsel concluded that it is likely that claims will be asserted and that it is probable that CONVOLUTE will be held responsible for damages. CONVOLUTES management believed that P5,000,000 would be a reasonable estimate of its liability. CONVOLUTE'S P20,000,000 comprehensive public liability policy has a 1,000,000 deductible clause. CONVOLUTE's financial statements were authorized for issue on March 30, 20x2. How should the event above be reported in CONVOLUTE'S December 31, 20x1 financial statements?

On April 30, 20x2, an explosion occurred at CONVOLUTE TWIST Co's plant causing extensive property damage to area buildings. CONVOLUTE's management and counsel concluded that it is likely that claims will be asserted and that it is probable that CONVOLUTE will be held responsible for damages. CONVOLUTES management believed that P5,000,000 would be a reasonable estimate of its liability. CONVOLUTE'S P20,000,000 comprehensive public liability policy has a 1,000,000 deductible clause. CONVOLUTE's financial statements were authorized for issue on March 30, 20x2. How should the event above be reported in CONVOLUTE'S December 31, 20x1 financial statements?

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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