Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31 st December, 2014 under IFRS. Given information: The company named Generics Inc. has gone through a case in which Pharma Inc. sued for patent infringement. As on December 31 st , 2014, the case was in the early stage and the company believed that they are likely to win. By the end of year 2015, the case progressed and potential liability was estimated between $1 million to $3 million. By 31 st march, 2015 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

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Answer 1

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Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 13, Problem 2JC

1.

To determine

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31^st December, 2014 under IFRS.

Given information:

The company named Generics Inc. has gone through a case in which Pharma Inc. sued for patent infringement. As on December 31^st, 2014, the case was in the early stage and the company believed that they are likely to win. By the end of year 2015, the case progressed and potential liability was estimated between $1 million to $3 million. By 31^st march, 2015 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

2.

To determine

The way in which the contingency should be reported as on December 31^st, 2015 under IFRS.

3.

To determine

The way in which the contingency should be reported as on December 31^st, 2016 under IFRS.

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Answer 2

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Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 13, Problem 2JC

1.

To determine

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31^st December, 2014 under IFRS.

Given information:

The company named Generics Inc. has gone through a case in which Pharma Inc. sued for patent infringement. As on December 31^st, 2014, the case was in the early stage and the company believed that they are likely to win. By the end of year 2015, the case progressed and potential liability was estimated between $1 million to $3 million. By 31^st march, 2015 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

2.

To determine

The way in which the contingency should be reported as on December 31^st, 2015 under IFRS.

3.

To determine

The way in which the contingency should be reported as on December 31^st, 2016 under IFRS.

Expert Solution & Answer

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Answer 3

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 13, Problem 2JC

1.

To determine

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31^st December, 2014 under IFRS.

Given information:

The company named Generics Inc. has gone through a case in which Pharma Inc. sued for patent infringement. As on December 31^st, 2014, the case was in the early stage and the company believed that they are likely to win. By the end of year 2015, the case progressed and potential liability was estimated between $1 million to $3 million. By 31^st march, 2015 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

2.

To determine

The way in which the contingency should be reported as on December 31^st, 2015 under IFRS.

3.

To determine

The way in which the contingency should be reported as on December 31^st, 2016 under IFRS.

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 4

Question

Definition Definition Costs that a business is responsible for paying, should a particular event potentially occur in the future. Also called a potential liability, a contingent liability is generally recorded only when the amount of liability can be reasonably estimated and the contingency is likely to occur shortly. The Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Principles (IFRS) make it mandatory for the companies to record any contingent liability taking the principles of full disclosure, materiality, and prudence into consideration.

Chapter 13, Problem 2JC

1.

To determine

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31^st December, 2014 under IFRS.

Given information:

The company named Generics Inc. has gone through a case in which Pharma Inc. sued for patent infringement. As on December 31^st, 2014, the case was in the early stage and the company believed that they are likely to win. By the end of year 2015, the case progressed and potential liability was estimated between $1 million to $3 million. By 31^st march, 2015 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

2.

To determine

The way in which the contingency should be reported as on December 31^st, 2015 under IFRS.

3.

To determine

The way in which the contingency should be reported as on December 31^st, 2016 under IFRS.

Expert Solution & Answer

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Answer 5

Chapter 13, Problem 2JC

1.

To determine

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31^st December, 2014 under IFRS.

Given information:

The company named Generics Inc. has gone through a case in which Pharma Inc. sued for patent infringement. As on December 31^st, 2014, the case was in the early stage and the company believed that they are likely to win. By the end of year 2015, the case progressed and potential liability was estimated between $1 million to $3 million. By 31^st march, 2015 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

2.

To determine

The way in which the contingency should be reported as on December 31^st, 2015 under IFRS.

3.

To determine

The way in which the contingency should be reported as on December 31^st, 2016 under IFRS.

Answer 6

Chapter 13, Problem 2JC

1.

To determine

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31^st December, 2014 under IFRS.

Given information:

The company named Generics Inc. has gone through a case in which Pharma Inc. sued for patent infringement. As on December 31^st, 2014, the case was in the early stage and the company believed that they are likely to win. By the end of year 2015, the case progressed and potential liability was estimated between $1 million to $3 million. By 31^st march, 2015 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

Answer 7

Chapter 13, Problem 2JC

1.

To determine

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated on 31^st December, 2014 under IFRS.

Given information:

The company named Generics Inc. has gone through a case in which Pharma Inc. sued for patent infringement. As on December 31^st, 2014, the case was in the early stage and the company believed that they are likely to win. By the end of year 2015, the case progressed and potential liability was estimated between $1 million to $3 million. By 31^st march, 2015 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

Answer 8

2.

To determine

The way in which the contingency should be reported as on December 31^st, 2015 under IFRS.

Answer 9

2.

To determine

The way in which the contingency should be reported as on December 31^st, 2015 under IFRS.

Answer 10

3.

To determine

The way in which the contingency should be reported as on December 31^st, 2016 under IFRS.

Answer 11

3.

To determine

The way in which the contingency should be reported as on December 31^st, 2016 under IFRS.

Answer 12

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Answer 13

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Answer 14

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Answer 15

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The way in which the contingency should be reported as on December 31st, 2015 under IFRS.

The way in which the contingency should be reported as on December 31st, 2016 under IFRS.

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Chapter 13 Solutions

The way in which the contingency should be reported as on December 31^st, 2015 under IFRS.

The way in which the contingency should be reported as on December 31^st, 2016 under IFRS.