Reference no: EM132739243

Questions -

Q1) During 2019, Learning! Inc. became involved in a tax dispute with the government. Learning's attorneys have indicated that they believe it is probable that Learning will lose this dispute. They also believe that Learning will have to pay the government between P800, 000 and P1, 400,000. After the 2019 financial statements were issued, the case was settled with the government for P1, 200,000. What amount, if any, should be reported as a liability for this tax dispute as of December 31, 2019?

Q2) On October 1, 2019, Class 101 Chemical was identified as a potentially responsible party by its Environmental Regulatory Agency. Class 101's management along with its counsel have concluded that it is probable that Class 101 will be responsible for damages, and a reasonable estimate of these damages is P6,000,000. Class 101's insurance policy of P9, 000,000 has a deductible clause of P500, 000. How should Class 101 Chemical report this information in its financial statements at December 31, 2019?

Q3) Avengers Inc. had a manufacturing plant in Vienna, which was destroyed in the civil war. It is not certain who will compensate Avengers for this destruction, but Avengers has been assured by governmental officials that it will receive a definite amount for this plant. The amount of the compensation will be less than the fair value of the plant but more than its book value. How should the compensation be reported in the financial statements of Avengers Inc.?