How much is provision to be reported in financial statements

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Q1. In 2021, a lawsuit was filed against Keri Keri Co. for patent infringement. The plaintiff is claiming P400M in damages. Keri Keri's legal counsel believes that it is probable that Keri Keri will lose the lawsuit and pay damages of not less than P40M but not more than P400M. The probability of any amount within the range is as likely as any other amount also within the range. The plaintiff has offered to settle the lawsuit out of court for P360M but Keri Keri did not agree to the settlement. How much is provision to be reported in Keri Keri's year-end financial statements?

Q2. In the long-term liabilities section of its statement of financial position on December 31, 2022, Bergify Co. reported a lease liability of P75,000, net of current portion. Payments of P9,000 were made on both January 2, 2023, and January 2, 2024. Bergify 's incremental borrowing rate on the date of the lease was 11% and the lessor's implicit rate, which was known to Bergify, was 10%. In its December 31, 2023's Statement of Financial Position, what amount should Bergify report as lease liability, net of current portion?

Reference no: EM133184583

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