TWENTYFIRST Corporation a manufacturer of cleaning products is preparing annual financial statements at December 31, 2020. Because of a recently proven health hazard in one of its cleaning products, the PH government has clearly indicated its intention of having TWENTYFIRST recall all can of this paint sold in the last three months. The management of TWENTYFIRTS estimates that this recall would cost P5,800,000. What accounting recognition, if any, should be accorded this situation? Group of answer choices Expense of P5,800,000 and liability of P5,800,000 Note disclosure only Expense of P5,800,000 and retained earnings restrictions of P5,800,000 No recognition
TWENTYFIRST Corporation a manufacturer of cleaning products is preparing annual financial statements at December 31, 2020. Because of a recently proven health hazard in one of its cleaning products, the PH government has clearly indicated its intention of having TWENTYFIRST recall all can of this paint sold in the last three months. The management of TWENTYFIRTS estimates that this recall would cost P5,800,000. What accounting recognition, if any, should be accorded this situation? Group of answer choices Expense of P5,800,000 and liability of P5,800,000 Note disclosure only Expense of P5,800,000 and retained earnings restrictions of P5,800,000 No recognition
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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TWENTYFIRST Corporation a manufacturer of cleaning products is preparing annual financial statements at December 31, 2020. Because of a recently proven health hazard in one of its cleaning products, the PH government has clearly indicated its intention of having TWENTYFIRST recall all can of this paint sold in the last three months. The management of TWENTYFIRTS estimates that this recall would cost P5,800,000.
What accounting recognition, if any, should be accorded this situation?
Group of answer choices
Expense of P5,800,000 and liability of P5,800,000
Note disclosure only
Expense of P5,800,000 and retained earnings restrictions of P5,800,000
No recognition
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