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What total amount of provision should be recognized

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Question - Picasso Company provided you the following information regarding pending litigation as of December 31, 2020:

The company is defending against a lawsuit involving patent infringement. The legal counsel believes it is probable that the company will lose in court. It was estimated that the damages will be P2,500,000.

The company is defending against another lawsuit for which management believes that it is highly probable that the company will lose in court. If it loses the lawsuit, management estimates damages will fall somewhere in the range of P1,000,000 to P3,000,000 with each amount in that range equally likely to occur.

The company is defending against another lawsuit and believes that it is likely that the company will lose in court. If the entity loses, management believes damages will fall between P2,000,000 and P4,000,000, P3,200,000 being the best estimate.

Required - What total amount of provision should be recognized on December 31, 2020?

Reference no: EM133126444

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