What the amount of income reported in the statement

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Q1. During 2021, NUGGETS Company is a defendant in a patent infringement lawsuit. The company's lawyers believe there is a 30% chance that the court will dismiss the case.  However, if the court rules unfavorably for NUGGETS Company, there is a 25% chance that NUGGETS Company will be required to pay P500,000 and an 75% chance that NUGGETS Company will be required will require to pay damages of P150,000.

A 6% risk adjustment factor for the probability-weighted expected cash flow is considered appropriate to reflect the uncertainties in the cash flow estimates.  An appropriate discount rate is 4% per year. What the provision for the lawsuit?

Q2. In March 2021, SPURS Company filed a suit against Duncan Company seeking P2,000,000 damages for patent infringement. A court decision on November 2021 awarded SPURS Company P1,750,000 in damages. Duncan Company motioned to appeal the decision.  SPURS Company's counsel believed it is probable that it will be successful against Duncan Company for an estimated amount of P1,500,000. What the amount of income reported in the 2021 statement of profit or loss statement?

Reference no: EM133073366

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