Reference no: EM132825912
Problem 1 - The balance in Josephine Company's accounts payable at December 31, 2020 was P1,210,000 before any year-end adjustment relating to the following:
1. Goods were in transit from a vendor to Josephine on December 31, 2020. The invoice cost was P87,000. The goods were received on January 3, 2021. Terms were FOB Shipping
2. Goods shipped FOB Shipping point on December 23, 2020 from a vendor to Josephine, were lost in transit. The invoice cost was P67,000. On January 4,2021, Josephine filed a
3. Goods shipped FOB Destination with invoice price of P19,500 were received and paid on January 3, 2020.
Required -
1. What amount of accounts payable should be reported in the statement of financial position as of December 31, 2020?
Problem 2 - On December 31, 2020, Richard, Inc is the plaintiff of a patent infringment over Machu, Inc. according to its legal counsel it is probable that Richard will win the case and claim P200,000 in damages.
Required -
1. How should the contingent asset above be accounted for in the 2020 financial statements?
Problem 3 - On December 12, 2020, Machu, Inc. was factory used in processing gold was burned by an employee of Richard, Inc. in retaliation of a patent infringement case. The cost of the factory was P5,000,000, with accumulated depreciation of P3,000,000.
The surrounding town was also affected by the fire. Machu's legal counsel believed that it was probable that P3,500,000 will be paid in damages to the neighborhood.
Machu has a P20,000,000 comprehensive insurance policy, which covers the damages resulting from the fire that broke out. The insurance policy has a P1,000,000 deductible clause.
Required -
1. What is the amount of provision that will be presented in the statement of financial position as of December 31, 2020?
2. What is the amount of contingent asset that should be recognized in the statement of financial position as of December 31, 2020?
3. How much should be taken to the statement of comprehensive income as of December 31, 2020?