On December 13, 2019, ABC Company was in an accident with an automobile driven by DEF. ABC received notice on December 31,2019 of a lawsuit for P600,000 damages for personal injuries suffered by DEF. ABC's counsel believes it is probable that DEF will be awarded an estimated amount in the range between P300,000 and P600,000 and that P 450,000 is a best estimate of potential liability. ABC's accounting year ends on December 31 and the 2019 financial statements were issued on March 2, 2020. On April 30,2020,before the financial statements were issued, ABC settled DEF for the amount of P 500,000. What amount of liability should ABC Company recognize at December 31, 20197? * O P 600,000 O P 300,000 O P 500,000 O P 450,000
On December 13, 2019, ABC Company was in an accident with an automobile driven by DEF. ABC received notice on December 31,2019 of a lawsuit for P600,000 damages for personal injuries suffered by DEF. ABC's counsel believes it is probable that DEF will be awarded an estimated amount in the range between P300,000 and P600,000 and that P 450,000 is a best estimate of potential liability. ABC's accounting year ends on December 31 and the 2019 financial statements were issued on March 2, 2020. On April 30,2020,before the financial statements were issued, ABC settled DEF for the amount of P 500,000. What amount of liability should ABC Company recognize at December 31, 20197? * O P 600,000 O P 300,000 O P 500,000 O P 450,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter9: Current Liabilities And Contingent Obligations
Section: Chapter Questions
Problem 4C: Pending Damage Suit Disclosure On December 15, 2019, a truck driver for Cork Transfer Company...
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![On December 13, 2019, ABC Company was in an accident with an automobile driven by DEF.
ABC received notice on December 31,2019 of a lawsuit for P600,000 damages for personal
injuries suffered by DEF. ABC's counsel believes it is probable that DEF will be awarded an
estimated amount in the range between P300,000 and P600,000 and that P 450,000 is a best
estimate of potential liability. ABC's accounting year ends on December 31 and the 2019
financial statements were issued on March 2, 2020. On April 30,2020,before the financial
statements were issued, ABC settled DEF for the amount of P 500,000.
What amount of liability should ABC Company recognize at December 31, 2019? *
O P 600,000
O P 300,000
O P 500,000
O P 450,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fde380825-c64f-418c-97fe-0e6c0a062e2c%2Fde884817-8b3e-4fe6-8c45-2b24818716c6%2Fb5nok4_processed.png&w=3840&q=75)
Transcribed Image Text:On December 13, 2019, ABC Company was in an accident with an automobile driven by DEF.
ABC received notice on December 31,2019 of a lawsuit for P600,000 damages for personal
injuries suffered by DEF. ABC's counsel believes it is probable that DEF will be awarded an
estimated amount in the range between P300,000 and P600,000 and that P 450,000 is a best
estimate of potential liability. ABC's accounting year ends on December 31 and the 2019
financial statements were issued on March 2, 2020. On April 30,2020,before the financial
statements were issued, ABC settled DEF for the amount of P 500,000.
What amount of liability should ABC Company recognize at December 31, 2019? *
O P 600,000
O P 300,000
O P 500,000
O P 450,000
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