Auto Star Albania sells Mercedes Benz vehicles. For each sale the company gives a 3 year warranty for repairing defects of sold vehicles. According to the experience of previous years, it comes out that about 10% of sold vehicles during a year results with serious defects, 40% results with normal defects and 50% without defects. From experience, the cost of repairing a serious defect is 2 million ALL and of a normal defect was 500,000 ALL. During 20X7, 30 cars were sold which will enjoy the right of warranty for the next three years.

Required:

Should Auto Star Albania recognize a provision at the end of 20X7, if yes, what will be the amount of the provision?