What amount of loss from lawsuit should be reported

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Problem 1: On November 25, 2020, an explosion occurred at a Rye Company plant causing extensive property damage to area buildings. By March 10, 2021, claims had been asserted against Rye Company. The management and counsel concluded that it is probable Rye Company will be responsible for damages, and that P3,500,000 would be a reasonable estimate of the liability. The entity's P10,000,000 comprehensive public liability policy has a P500,000 deductible clause. The financial statements for 2020 were issued on March 25,2021. What amount of loss from lawsuit should be reported in the income statement for 2020?

A. 3,500,000
B. 500,000
C. 3,000,000
D. 0

Reference no: EM132688476

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