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On 31 December 20x7, F Ltd acquired 60% of G Ltd. On this date, F Ltd...

On 31 December 20x7, F Ltd acquired 60% of G Ltd. On this date, F Ltd and G Ltd each reported a contingent liability under which there is a 30% probability of paying a damage claim of $100,000 to a third party. In August 20x8, F Ltd and G Ltd settled their respective contingent liability out of court by each paying $50,000 to the third party.

In F Ltd’s 20x7 consolidated financial statements (* delete those not applicable)

F Ltd’s contingent liability will be *

(i) disclosed as a contingent liability in the notes to financial statements

(ii) recognized as a liability in the balance sheet at $100,000

(iii) recognized as a liability in the balance sheet at $30,000

G Ltd’s contingent liability will be *

(i) disclosed as a contingent liability in the notes to financial statements

(ii) recognized as a liability in the balance sheet at $100,000

(iii) recognized as a liability in the balance sheet at $30,000

In F Ltd’s 20x8 consolidated financial statements:

Litigation loss = $............................................................................................

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ekkarill92 answered 1 year ago
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