What would be the provision charges in the second quarter

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Problem 1: An entity prepares quarterly interim financial reports in accordance with PAS 34. The entity sells goods which are subject to warranty. The company made a provision for warranty in the first quarter of the year 2019 at 5% of sales, as the company in the past experienced a 5% claim on warranty based on sales. However, in the second quarter, a modification in the design of the product resulted to a design fault and the company expected the warranty claims to increase to 10% for the whole year 2019. Sales in the first and second quarters were P10,000,000 and P15,000,000, respectively. What would be the provision charges in the second quarter's interim financial statements?

Reference no: EM132794359

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