Israel Company provided the following facts regarding pending litigation at year-end: Lawsuit 1: Israel is defending...
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Israel Company provided the following facts regarding pending litigation at year-end: Lawsuit 1: Israel is defending against a lawsuit and believes there is only a 40% chance it will loss in court. If the entity loses, the management believes damages will fall somewhere in the range of P4,500,000 to P6,000,000 to each amount in the range equally likely to occur. Lawsuit 2: Israel is defending against a lawsuit and believes there is a 80% chance it will lose in court. The entity estimates that damages will be P3,200,000. Lawsuit 3: Israel is defending against a lawsuit with 60% chance that it will loss in court. The present values of the endpoints of the range are P2,800,000 and P4,000,000. The management believes that the time value of money on these amounts are material. Lawsuit 4: Israel is defending against a lawsuit for which management believes it is probable to lose in court. If it loses the lawsuit, management estimates that damages will fall somewhere in the range of P1,200,000 to P2,500,000 with each amount in that range equally likely to occur. Lawsuit 5: Palestine was sued by Israel in a P2,000,000 lawsuit filed against a customer for costs and lost profit from contract rejected in 2019. The lawsuit is in final appeal and attorney advised that it is probable that Israel will be awarded P1,800,000. How much is the accrued liability at year-end? Israel Company provided the following facts regarding pending litigation at year-end: Lawsuit 1: Israel is defending against a lawsuit and believes there is only a 40% chance it will loss in court. If the entity loses, the management believes damages will fall somewhere in the range of P4,500,000 to P6,000,000 to each amount in the range equally likely to occur. Lawsuit 2: Israel is defending against a lawsuit and believes there is a 80% chance it will lose in court. The entity estimates that damages will be P3,200,000. Lawsuit 3: Israel is defending against a lawsuit with 60% chance that it will loss in court. The present values of the endpoints of the range are P2,800,000 and P4,000,000. The management believes that the time value of money on these amounts are material. Lawsuit 4: Israel is defending against a lawsuit for which management believes it is probable to lose in court. If it loses the lawsuit, management estimates that damages will fall somewhere in the range of P1,200,000 to P2,500,000 with each amount in that range equally likely to occur. Lawsuit 5: Palestine was sued by Israel in a P2,000,000 lawsuit filed against a customer for costs and lost profit from contract rejected in 2019. The lawsuit is in final appeal and attorney advised that it is probable that Israel will be awarded P1,800,000. How much is the accrued liability at year-end?
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To determine the accrued liability at yearend we need to consider the likelihood of losing each laws... View the full answer
Related Book For
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
Posted Date:
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