On February 5, 2001, an employee filed a P2,000,000 lawsuit against Steel 5 points Company for damages suffered when one of Steel’s plants exploded on December 29,2000. Steel’s legal counsel expects the company will lose the lawsuit and estimates the loss to be between P500,000 and P1,000,000. The employee has offered to settle the lawsuit out of court for P900,000, but Steel will not agree to the settlement. In its December 31, 2000 balance sheet, what amount should Steel report as liability from lawsuit? 2,000,000 1,000,000 900,000 500,000
On February 5, 2001, an employee filed a P2,000,000 lawsuit against Steel 5 points Company for damages suffered when one of Steel’s plants exploded on December 29,2000. Steel’s legal counsel expects the company will lose the lawsuit and estimates the loss to be between P500,000 and P1,000,000. The employee has offered to settle the lawsuit out of court for P900,000, but Steel will not agree to the settlement. In its December 31, 2000 balance sheet, what amount should Steel report as liability from lawsuit? 2,000,000 1,000,000 900,000 500,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On February 5, 2001, an employee filed a P2,000,000 lawsuit against Steel 5 points Company for damages suffered when one of Steel’s plants exploded on December 29,2000. Steel’s legal counsel expects the company will lose
the lawsuit and estimates the loss to be between P500,000 and
P1,000,000. The employee has offered to settle the lawsuit out of court for P900,000, but Steel will not agree to the settlement. In its December 31, 2000 balance sheet, what amount should Steel report as liability from lawsuit?
- 2,000,000
- 1,000,000
- 900,000
- 500,000
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