Melbourne Inc. became involved in a tax dispute with the national tax authority. Melbourne’s legal counsel indicates that there is a 70 percent likelihood that the company will lose this dispute and estimates that the amount the company will have to pay is between $500,000 and $700,000, with all amounts in that range being equally likely. What amount, if any, should Melbourne recognize as a provision related to this tax dispute?
a. $0.
b. $500,000.
c. $600,000.
d. $700,000.