During the year 2021, Bong Company was involved in a lawsuit. Bong was sued by an employee for illegal dismissal from employment. Legal proceedings started and owing to the developments in the case, as of December 31, 2021, Bong’s lawyer believes that an unfavorable outcome was probable and a reasonable estimate of damages was P5,000,000 but could be as much as P6,500,000. Before the 2021 financial statements were issued, the employee accepted a cash settlement of P6,000,000 from Bong. In its December 31, 2021 financial statements issued in March 2022, what amount of liability would Bong have reported?
During the year 2021, Bong Company was involved in a lawsuit. Bong was sued by an employee for illegal dismissal from employment. Legal proceedings started and owing to the developments in the case, as of December 31, 2021, Bong’s lawyer believes that an unfavorable outcome was probable and a reasonable estimate of damages was P5,000,000 but could be as much as P6,500,000. Before the 2021 financial statements were issued, the employee accepted a cash settlement of P6,000,000 from Bong. In its December 31, 2021 financial statements issued in March 2022, what amount of liability would Bong have reported?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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During the year 2021, Bong Company was involved in a lawsuit. Bong was sued by an employee for illegal dismissal from employment. Legal proceedings started and owing to the developments in the case, as of December 31, 2021, Bong’s lawyer believes that an unfavorable outcome was probable and a reasonable estimate of damages was P5,000,000 but could be as much as P6,500,000. Before the 2021 financial statements were issued, the employee accepted a cash settlement of P6,000,000 from Bong.
In its December 31, 2021 financial statements issued in March 2022, what amount of liability would Bong have reported?
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