Skip to main content

Business Accounting Pearson eText Intermediate Accounting -- Instant Access (Pearson+)

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated 31 s t December 2018 under IFRS. Given information: Company G has gone through a case in which Company P sued for patent infringement. As of December 31 s t , 2018, the case was in the early stage and the company believed that they are likely to win. By the end of the year 2019, the case progressed and potential liability was estimated between $1 million to $3 million. By 31 s t March 2020 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

Whether the company should accrue, disclose or not report at all the contingency in the financial statement dated 31 s t December 2018 under IFRS. Given information: Company G has gone through a case in which Company P sued for patent infringement. As of December 31 s t , 2018, the case was in the early stage and the company believed that they are likely to win. By the end of the year 2019, the case progressed and potential liability was estimated between $1 million to $3 million. By 31 s t March 2020 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

Pearson eText Intermediate Accounting -- Instant Access (Pearson+)

Pearson eText Intermediate Accounting -- Instant Access (Pearson+)

3rd Edition

ISBN: 9780136946649

Author: Elizabeth Gordon, Jana Raedy

Publisher: PEARSON+

See similar textbooks

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 31^s^t December 2018 under IFRS.

Given information:

Company G has gone through a case in which Company P sued for patent infringement. As of December 31^s^t, 2018, the case was in the early stage and the company believed that they are likely to win. By the end of the year 2019, the case progressed and potential liability was estimated between $1 million to $3 million. By 31^s^t March 2020 the company realized that they are going to lose the case while the loss estimated at that time was $4 million.

2.

To determine

How the contingency should be reported as of December 31^s^t, 2019 under IFRS.

3.

To determine

How the contingency should be reported as of December 31^s^t, 2020 under IFRS.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

Blurred answer

Chapter 13, Problem 1JC

Chapter 13, Problem 3JC

Students have asked these similar questions

1.1.13 accounting solve pl

How many units were started and completed?

No ai debt ratio. Prob

Chapter 13 Solutions

Pearson eText Intermediate Accounting -- Instant Access (Pearson+)

Ch. 13 - Prob. 13.1Q Ch. 13 - Prob. 13.2Q Ch. 13 - Prob. 13.3Q Ch. 13 - Do sellers recognize sales taxes as expenses on...Ch. 13 - Prob. 13.5Q Ch. 13 - Prob. 13.6Q Ch. 13 - Prob. 13.7Q Ch. 13 - What is a gam contingency? Is It accrued and...Ch. 13 - Do firms always accrue and record loss...Ch. 13 - Prob. 13.10Q

Ch. 13 - Prob. 13.11Q Ch. 13 - Prob. 13.12Q Ch. 13 - Prob. 13.13Q Ch. 13 - Prob. 13.14Q Ch. 13 - Prob. 13.15Q Ch. 13 - Prob. 13.16Q Ch. 13 - Prob. 13.1MC Ch. 13 - Prob. 13.2MC Ch. 13 - Prob. 13.3MC Ch. 13 - Medical Services Inc allows employees at the end...Ch. 13 - Trade Notes Payables. On February 1, Seville...Ch. 13 - Unearned Revenues. On June 1 of the current year,...Ch. 13 - Unearned Revenues. GoSnow Inc. provides snow...Ch. 13 - Prob. 13.4BE Ch. 13 - Prob. 13.5BE Ch. 13 - Prob. 13.6BE Ch. 13 - Sales Taxes Payable. Kloth Fabric Store operates...Ch. 13 - Prob. 13.8BE Ch. 13 - Prob. 13.9BE Ch. 13 - Prob. 13.10BE Ch. 13 - Asset Retirement Obligation at Acquisition. On...Ch. 13 - Prob. 13.12BE Ch. 13 - Asset Retirement Obligation, Disposal. Buckner...Ch. 13 - Prob. 13.14BE Ch. 13 - Prob. 13.15BE Ch. 13 - Prob. 13.16BE Ch. 13 - Prob. 13.17BE Ch. 13 - Warranty Liability, Assurance-Type Warranty,...Ch. 13 - Prob. 13.19BE Ch. 13 - Prob. 13.20BE Ch. 13 - Trade Notes Payable. On November 1, Barcelona...Ch. 13 - Unearned Revenues. On May 1 of the current year,...Ch. 13 - Gift Cards. Diamond Depot sold 57,000 of gift...Ch. 13 - Sales Taxes Payable. Eaton Technology operates...Ch. 13 - Prob. 13.5E Ch. 13 - Asset Retirement Obligation. On January 1,...Ch. 13 - Prob. 13.7E Ch. 13 - Prob. 13.8E Ch. 13 - Prob. 13.9E Ch. 13 - Prob. 13.10E Ch. 13 - Prob. 13.11E Ch. 13 - Prob. 13.12E Ch. 13 - Prob. 13.13E Ch. 13 - Payroll Taxes Payable, Pay Exceeds. Wage Base....Ch. 13 - Current Operating Liabilities. James Stores, Inc....Ch. 13 - Prob. 13.2P Ch. 13 - Prob. 13.3P Ch. 13 - Prob. 13.4P Ch. 13 - Prob. 13.5P Ch. 13 - Prob. 13.6P Ch. 13 - Prob. 13.7P Ch. 13 - Payroll Taxes Payable. Jackson Corporation employs...Ch. 13 - Prob. 1JC Ch. 13 - Prob. 2JC Ch. 13 - Prob. 3JC Ch. 13 - Prob. 1FSC Ch. 13 - Surfing the Standards Case 1: Environmental...Ch. 13 - Prob. 2SSC Ch. 13 - Prob. 1BCC

Knowledge Booster

Background pattern image

Similar questions

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education

Text book image

FINANCIAL ACCOUNTING

Accounting

ISBN:9781259964947

Author:Libby

Publisher:MCG

Text book image

Accounting

ISBN:9781337272094

Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:Cengage Learning,

Text book image

Accounting Information Systems

Accounting

ISBN:9781337619202

Author:Hall, James A.

Publisher:Cengage Learning,

Text book image

Horngren's Cost Accounting: A Managerial Emphasis...

Accounting

ISBN:9780134475585

Author:Srikant M. Datar, Madhav V. Rajan

Publisher:PEARSON

Text book image

Intermediate Accounting

Accounting

ISBN:9781259722660

Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:McGraw-Hill Education

Text book image

Financial and Managerial Accounting

Accounting

ISBN:9781259726705

Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:McGraw-Hill Education

SEE MORE TEXTBOOKS