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On 31/12/21 XYZ Corp is involved in a legal case involving air pollution. In the event that XYZ Corp is found to be liable, damages
On 31/12/21 XYZ Corp is involved in a legal case involving air pollution. In the event that XYZ Corp is found to be liable, damages of 5000 have to be paid. At the moment, XYZ Corp does not recognize a provision for this amount. Assuming that an analyst believes that it is likely that XYZ Corp will lose the court case and has to pay 5000 on 31/12/24. The discount rate is 10%. What is the interest expense that the analyst would record in the 2022 income statement?
On 31/12/21 XYZ Corp is involved in a legal case involving air pollution. In the event that XYZ Corp
is found to be liable, damages of 5000 have to be paid. At the moment, XYZ Corp does not
recognize a provision for this amount. Assuming that an analyst believes that it is likely that XYZ
Corp will lose the court case and has to pay 5000 on 31/12/24. The discount rate is 10%.
What is the interest expense that the analyst would record in the 2022 income statement?
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Accounting
Authors: Carl S. Warren, James M. Reeve, Jonathan E. Duchac
22nd Edition
324401841, 978-0-324-6250, 0-324-62509-X, 978-0324401844
