reliminary judgment of P300,000 was issued and is under appeal. The entity’s attorney agrees that it is probable that the entity will lose this appeal. What amount of provision should be accrued as liability? a. 0 b. 800,000 c. 500,000
reliminary judgment of P300,000 was issued and is under appeal. The entity’s attorney agrees that it is probable that the entity will lose this appeal. What amount of provision should be accrued as liability? a. 0 b. 800,000 c. 500,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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XYZ Company has long owned a manufacturing site that has now been discovered to be contaminated with toxic waste. The entity has acknowledged its responsibility for the contamination.
An initial clean up feasibility study has shown that it will cost at least P500,000 to clean up the toxic waste.
During the current year, the entity has been sued for patent infringement and lost the case. A preliminary judgment of P300,000 was issued and is under appeal.
The entity’s attorney agrees that it is probable that the entity will lose this appeal.
What amount of provision should be accrued as liability?
a. 0
b. 800,000
c. 500,000
d. 300,000
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