Problem 23-9

During the latter part of the year, Haze Company won a litigation award for P1,500,000 which was tripled to P4,500,000 to include punitive damages.

The defendant, who is financially stable, appealed only the P3,000,000 punitive damages.

The entity was awarded P5,000,000 in an unrelated suit it filed which is being appealed by the defendant. Counsel is unable to estimate the outcome of these appeals.

What amount should be reported as pretax gain for the year?

a. 1,500,000

b. 4,500,000

c. 5,000,000

d. 9,500,000