What total amount should be accrued as provision

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Question - Regal Company has several contingent liabilities on December 31, 2019. The auditor obtained the following brief description of each liability. In May 2019, Regal Company became involved in litigation. In December 2019, the court assessed a judgment for P1,600,000 against Regal.

The entity is appealing the amount of the judgment. The entity's attorneys believed it is probable that they can reduce the assessment on appeal by 50%.

In July 2019, Pasig City brought action against Regal Company for polluting the Pasig River with its waste products.

It is probable that Pasig City will be successful but the amount of damages Regal might have to pay should not exceed P1,500,000.

Required - What total amount should be accrued as provision on December 31, 2019?

Reference no: EM132640529

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