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

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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
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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