A manufacturer gives warranties at the time of sale to purchasers of its product. Under the terms of the contract for sale, the manufacturer undertakes to make good by repair or replacement, manufacturing defects that become apparent within three years from the date of sale. On past experience, it is probable that there will be some claims under the warranties. Past experience suggests that $75\%$ of the goods sold will have no defects, $20\%$ will have minor defects and $5\%$ will have major defects. If minor defects were detected in all products sold, the cost of repairs would be $$1,000,000$; if major defects were detected in all products sold, the cost would be $$4,000,000.$

Requirements:

$1.$ Do you think a provision should be recognized? Explain your decision $($based on IFRS$)$

$2.$ If a provision should be recognized, prepare the necessary journal entry to record the liability.