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ANSWER FOR ACCTG CURRENT LIABILITIES
These is the answer portion. We all may be explain to you as to why it is, the answer.
ANSWERS
1a
150,000 - March 1 Obligation
3,600,000 - Short-term obligation
1,000,000 - Loan (1/4)
1,000,000 - Debt obligation
5,750,000 - Current Liabilities
b
2,500,000 - Long-term loan
3,000,000 - Debt Obligation (3/4)
5,500,000 - Non-current
The December 1, 2014 long-term obligation worth 2,500,000 has been breached. But then, it was waived so making it recognized as non-current liability.
2a
B = .10(4,650,000 - B - T)
T = .30(4,650,000 - B)
B = .10(4,650,000 - B - .30(4,650,000 - B))
B = .10(4,650,000 - B - 1,395,000 + .30B)
B = 465,000 - .10B - 139,500 + .03B
B + .10B - .03B = 465,000 - 139,500
B = 1.07B = 325,500
B = 325,500 / 1.07B
B = 304,205.61
b
T = .30(4,650,000 - 304,205.61)
T = 1,303,738.20
c
Bonus Expense 304,205.61
Bonus Payable 304,205.61
3a
85,000 - 2012 deliveries, beyond two years
(57,500) - 2012 deliveries returned
27,500 - Revenue recognized for 2014
b
Deliveries
2013 - 240,000
2014 - 430,000
Total - 670,000 670,000
Less Returns
2013 - 140,000
2014 - 157,000
Total - 297,000 (297,000)
Liability 373,000
4a
54,000,000 - Sale from musical instruments
x 2% - Estimated Cost
1,080,000 - Warranty Expense
b
1,080,000 - Warranty Expense (est)
1,360,000 - Warranty Liability ,beg
(1,640,000) - Warranty Expense (act)
800,000 - Warranty Liability, end
c
340 - 200 = 140 - Premium Expense/CD Player
1,200,000 - 1,080,000 = 120,000 - Premium coupons in expense
120,000/200 = 600 units in expense
6,000 - 600 x 140 = 756,000 Premium Expense
d
1,175 - Beginning inventory
6,500 - Purchases
(6,000) - Redemption
1,675 - Inventory
1,675 + 340 = 569,500 -- Inventory of Premium CD Players
e
**Still solving it. :) **
5a
No accrual of the
loss would be made. The judgment will be appealed and the outcome uncertain. A
note disclosure would be appropriate.
b
Neither accrual
nor disclosure would have to be made. The BIR claim is as yet unasserted, and an
assessment is not probable.
c
No adjustment or
disclosure is required because the possibility of loss is remote.
d
The loss
is both probable and reasonably estimable. Thus, the related obligation is not
a contingent liability bust should be recognized as a provision as mandated by
PAS 37. The entry to recognize the provision is as follows:
Dr. Provision for litigation loss Php 500,000
Cr. Estimated liability for litigation loss
Php500,000
e
The situation
involves a contingent asset because the company is the plaintiff in the
lawsuit. Under PAS 37, a contingent asset shall not be recognized because this
may result to recognition of income that may never be realized. A contingent
asset is only disclosed when it is probable. However, when realization of
income is virtually certain, the related asset is no longer aontingent asset
and its recognition becomes appropriate.
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