Q1. Determine the journal entries to be made for the years 2023 and 2024

9. In December 2023, DRAGON Company's former CFO filed a lawsuit against the Company on account of its labor practices that are detrimental to its employees. Based on the Company's assessment, there is a 30% chance that it will not be held liable for damages. In cases the Company will be held liable, there is a 40% probability that it will pay P8,000,000,40\% probability that it will pay P6,000,000 and 20% probability that it will pay P5,000,000. Due to lengthy legal procedures involving labor cases, the Company estimates that it will pay the plaintiff after three years. In addition, the Company incorporated a 10% upward cash flow adjustment to account for the possible differences between the estimated cash outflows and the amount of actual cash outflows. Relevant discount rate is 9%. Fast forward to December 31, 2024, things became clearer with the Company being able to make its best estimate of its obligation at P7,000,000, to be incurred after two years. In addition, there is now a 100% chance that the Company will be held liable for damages. Relevant discount rate is 8%. Required: Determine the journal entries to be made for the years 2023 and 2024