. Contingent Liabilities. In August, 2020, a worker was injured in the factory in an accident partially the result of his own negligence. The worker has sued Lester Co. for P800,000. Counsel believes it is possible but not probable that the outcome of the suit will be unfavorable and that the settlement would cost the company from P250,000 to P500,000. Discuss the proper accounting treatment, including any required disclosures for the situation. 9. Bonds Payable. On January 1, 2020, Gillian Co. issued its 10% bonds at face amount of P3,000,000, which will mature on January 1, 2025. The bonds were issued for P3,405,000 to yield 8%, resulting in bond premium of P405,000. Gillian uses the effective-interest method of amortizing bond premium. Interest is payable annually on December 31. a. What is the issue price of the bonds? b. What should be the carrying value of the bonds at December 31, 2020?