Question

Question 3 At December 31, 2020, Lawton & Border Inc. is involved in a lawsuit. Under existing standards in IAS 37, prepare the December 31 entry assuming it is probable (and very likely) that Lawton & Border will be liable for $700,000 as a result of this suit. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit Dec 31, 2020 Under existing standards in IAS 37, prepare the December 31 entry, if any, assuming it is probable (although not likely) that Lawton & Border will be liable for a payment as a result of this suit. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Dec. 31, 2020 Debit Credit Under existing standards in IAS 37, prepare the December 31 entry assuming it is not probable that Lawton & Border will be liable for $700,000 as a result of this suit. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit Dec 31, 2020 Prepare the December 31 entry assuming it is probable (and very likely) that Lawton & Border will be liable for $700,000 as a result of this suit. Assume that Lawton & Border follows ASPE. (Credit account titles are automatically indented when the amount is entered Do not indent manually. If no entry is required, select "No Entry for the account titles and enter o for the amounts.) Date Account Titles and Explanation Dec 31, 2020 Debit Credit Prepare the December 31 entry, if any, assuming it is probable (although not likely) that Lawton & Border will be liable for $700,000 as a result of this suit. Assume that Lawton & Border follows ASPE. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Account Titles and Explanation Date Dec 31, 2020 Debit Credit

Answer 1

S.No.	Date	Account Titles and explanation	Debit $	Credit $
(i)	Dec.31,2020	Lawsuit Loss	700,000
		Lawsuit Liability		700,000
(ii)	Dec.31,2020	Lawsuit Loss	700,000
		Lawsuit Liability		700,000
(iii)		No Entry. The loss is not incurred because   it is not probable that liability has been incurred at Dec.31,2020
(iv)	Dec.31,2020	Lawsuit Loss	700,000
		Lawsuit Liability		700,000
(v)		No Entry. The loss is not accrued because it is not likely that liability has been incurred at Dec.31,2020