Find the amount that the company will report

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Reference no: EM132871721

Problem - ODA Ltd. reports under ASPE and in July 20X1, the company guaranteed a $300,000 loan that a related company received from its bank. The related company made all required loan payments throughout 20X1 and is expected to continue doing this in the future. In October 20X1, ODA was sued by an employee for wrongful dismissal. Legal counsel has advised management that the company will have to settle the lawsuit by paying damages ranging from $150,000 to $180,000. No payments for damages have been made in 20X1 but are expected to be made in 20X2.

Required -

1. Find the amount that the company will record for the lawsuit provision for the year ended December 31, 20X1.

2. Find the amount that the company will report on its December 31, 20X1 statement of financial position for the loan guarantee liability.

Reference no: EM132871721

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