Show me the correct solution pleasee. thanks PROBLEM 12-3: FOR CLASSROOM DISCUSSIONLinbilities317Which of the following may result to the recognition of aliability in Entity A's December 31, 20x1 statement of financialposition?a. Entity A enters into an entity combination (businesscombination) with Entity B on January 12, 20x2.b. Entity A's building is razed by fire on January 1, 20x2 andan adjacent building is affected. Investigation shows thatEntity A was negligent. It is probable that Entity A will beheld liable for damages. The owner of the adjacentbuilding is seeking compensation for damages amountingto P1M; however, Entity A's legal counsel believes thatEntity A will probably settle the case for P800,000.C. A lawsuit is filed against Entity A on January 3, 20x2.Apparently, Entity A's geodetic engineer miscalculatedthe area of the lot where Entity A has started constructingan office building in December 20x1. This resulted to theencroachment of an adjacent lot owned by a privateindividual. Entity A has offered to settle the case out-of-court for P1M; however, the defendant wants paymentofP1.2M. Both parties agreed to a settlement of P1.050M onJanuary 31, 20x1.d. Entity A enters into a purchase contract involving theacquisition of construction materials worth P2M onDecember 26, 20x1. The materials are to be delivered in thesecond week of January 20x2.Entity A purchases office supplies and receives_deliveryfrom this transaction2.

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Which of the following may result to the recognition of a liability in Entity A's December 31, 20x1 statement of financial position? a. Entity A 'enters into an entity combination (business combination) with Entity B on January 12, 20x2. b. Entity A's building is razed by fire on January 1, 20x2 and an adjacent building is affected. Investigation shows that Entity A was negligent. It is probable that Entity A will be held liable for damages. The owner of the adjacent unting

Which of the following may result to the recognition of a liability in Entity A's December 31, 20x1 statement of financial position? a. Entity A 'enters into an entity combination (business combination) with Entity B on January 12, 20x2. b. Entity A's building is razed by fire on January 1, 20x2 and an adjacent building is affected. Investigation shows that Entity A was negligent. It is probable that Entity A will be held liable for damages. The owner of the adjacent unting

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.23E: Unusual income statement items Assume that the amount of each of the following items is material to...

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