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How much is the provision to be recognized in the statement

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Question - The following are the provisions related to Zendaya, Inc. for 2020:

- On December 31. 2020. Zendaya purchased a special machinery to conduct its oil drilling operations in Davao for P5000000. its useful life is 10 years. The Company is required by local government to clean the area after the drilling operations. The estimated clean-up costs was P1,500,000. The relevant discount rate was 8%.

- Zendaya has been operating its powerplant in Davao for 15 years in order to supply energy to surrounding areas. On December 27, 2020 there was a minor chemical leak. This was resolved immediately on December 29, 2020. On January 16, 2021, before the ?nancial statements were issued, there was a major chemical leak that lead to an explosion resulting to a ?re that damaged the surrounding areas. The Company's legal counsel believed that damages amounting to PB,000,000 will be paid. The Company has a P20,000,000 comprehensive public liability insurance plan with a P1,000,000 deductible clause.

How much is the provision to be recognized in the statement of financial position as of December 31, 2020?

Reference no: EM133140154

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