Reference no: EM132961681

Questions -

Prob 1 - The following information relates to Doraemon Company as of December 31, 2020. Answer the following questions relating to each of the independent situations as requested.

Beginning 2020, Doraemon Company began marketing a new beer called "Red Colt". To help promote the product, the management is offering a special beer mug to each customer for every 20 specially marked bottle caps of Red Colt. Doraemon estimates that out of the 300,000 bottles of Red Colt sold during 2020, only 50% of the marked bottle caps will be redeemed. For the year 2020, 8,000 mugs were ordered by the company at a total cost of P360,000. A total of 4,500 mugs were already distributed to customers. What is the amount of the liability that Doraemon Company should report on its December 31, 2020 statement of financial position?

Prob 2 - The following information relates to Doraemon Company as of December 31, 2020. Answer the following questions relating to each of the independent situations as requested.

During 2020, Doraemon Company guaranteed a supplier's P500,000 loan from a bank. On October 1, 2020, Doraemon was notified that the supplier had defaulted on the loan and filed for bankruptcy protection. Counsel believes Doraemon will probably have to pay between P250,000 and P450,000 under its guarantee. As a result of the supplier's bankruptcy, Doraemon entered into a contract in December 2020 to retool its machines so that Doraemon could accept parts from other suppliers. Retooling costs are estimated to be P300,000. What amount should Doraemon report as a liability in its December 31, 2020 statement of financial position?

Prob 3 - The following information relates to Doraemon Company as of December 31, 2020. Answer the following questions relating to each of the independent situations as requested.

A court case decided on December 21, 2020 awarded damages against Doraemon. The judge has announces that the amount of damages will be set at a future date, expected to be in March 2021. Doraemon has received advice from its lawyers that the amount of the damages could be anything between P20,000 and P7,000,000. As of December 31, 2020, how much should be recognized in the statement of financial position regarding this court case?

Prob 4 - The following information relates to Doraemon Company as of December 31, 2020. Answer the following questions relating to each of the independent situations as requested.

1. Doraemon's directors decided on November 3, 2020 to restructure the company's operations as follows:

I. Factory T would be closed down and put on the market for sale

II. 100 employees working in Factory T would be retrenched effective November 30, 2020 and would be paid their accumulated entitlements plus 3 months' wages

III. The remaining 20 employees working in Factory T would be transferred to Factory X, which would continue operating

IV. 5 head-office staff would be retrenched effective December 31, 2020 and would be paid their accumulated entitlements plus 3 months' wages.

As at December 31, 2020 the following transactions and events had occurred:

Factory T was shut down on November 30, 2020. An offer of P80M had been received for Factory T; however there was no binding sales agreements

The 100 employees had been retrenched, had left and their accumulated entitlements had been paid, however an amount of P1,520,000, representing a portion of the 3 months' wages for the retrenched employees, had still not been paid

Costs of P4460,000 were expected to be incurred in transferring the 20 employees to their new work in Factory X. the transfer will occur on January 15, 2021

Four of the five head-office staff had been retrenched, had left and their accumulated entitlements, including the 3 months' wages, had been paid. However one employee, D. Terminator, remained on to complete dministrative tasks relating to the closure of Factory T and the transfer of staff to Factory X. D. Terminator was expected to stay until January 31, 2021. D. Terminator's salary for January would be P80,000 and his retrenchment package would be P260,000, all of which would be paid on the day he left. He estimated that he would spend 60% of his time administering the closure of Factory T, 30% of his time administering the transfer of staff to Factory X and the remaining 10% on general administration.

Calculate the amount of the restructuring provision to be recognized in Doraemon's financial statements as at December 31, 2020.