* * Problem 4-4 (IAA) Eastern Company provided the following information on December 31, 2020. In May 2020, Eastern Company became involved in litigation. In December 2020, the court assessed a judgment for P1,600,000 against Eastern Company. The entity is appealing the amount of the judgment. The attorneys believed it is probable that the assessment can be reduced on appeal by 50%. The appeal is expected to take at least a year. In July 2020, Pasig City brought action against Eastern Company for polluting the Pasig River with its waste products. It is probable that Pasig City will be successful but the amount of damages the entity might have to pay should not exceed P1,500,000. Eastern Company has signed as guarantor for a P1,000,000 loan by First Bank to Northern Company, a principal supplier to Eastern Company. At this time, there is a only a remote likelihood that Eastern Company will have to make payment on behalf of Northern Company. Eastern Company has long owned a manufacturing site that has now been discovered to be contaminated with toxic waste. The entity has acknowledged its responsibility for the contamination. An initial clean up feasibility study has shown that it will cost at least P500,000 to clean up the toxic waste. Eastern Company has been sued for patent infringement and lost the case. A preliminary judgment of P300,000 was issued and is under appeal. The entity's attorneys agree that it is probable that the entity will lose this appeal. Required: Prepare journal entries to recognize any provision at the end of current year. * * 118