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What is required journal entry as result of this litigation

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Reference no: EM133134926

Question - Nia company is involved in litigation regarding a faulty product sold in a prior year. The entity has consulted with an attorney and determined that is possible that the entity may lose the case.

The Attorney estimated that there is a 40% chance of losing. If this is the case, the attorney estimated that the amount of any payment would be P5,000,000.

What is the required journal entry as a result of this litigation?

A. Debit litigation expense and credit litigation liability P5,000,000

B. No journal entry is required.

C. Debit litigation expense and credit litigation liability P2,000,000

D. Debit litigation expense and credit litigation liability P3,000,000

Reference no: EM133134926

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