Business and Management
Submitted By bhumpharn
Question 14 GMM Grammy is beinGMM Grammy is being sued for copyright infringement in several cases. Compute the value of the liability that the company has accrued in its balance sheet for the outcome of these lawsuits?g sued for copyright infringement in several cases. Compute the value of the liabilities that the company has accrued in its balance sheet
This question is about contingent liabilities that GMM Grammy have liabilities that should recorded in balance sheet or not? If yes we will calculation provision for litigation. If not GMM Grammy will not calculation liabilities and we call this as contingent liabilities.
Provisions of liabilities
Provisions should only be used for the purpose for which they were originally recognized. They should be reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of resources will be required to settle the obligation, the provision should be reversed. Since there is common ground as regards liabilities that are uncertain, It requires that entities should not recognize contingent liabilities – but should disclose them, unless the possibility of an outflow of economic resources is remote.
As of December 31, 2011 the company has litigation with third party as follows; a) A subsidiary was sued as jointly responsible for infringement of the copyright to musical works, with initial damages of Baht 50 million claimed together with Baht 100,000 per month for future damages as from the date of litigation (26 November 2010) until infringement of the copyright ceases. The plaintiff also requested interest at a rate of 7.5 percent per annum on the principal until settlement is complete. Litigation result On 23 April 2012, the Central Intellectual Property and International Trade Court dismissed the case, and the plaintiff is...