Recently Silph Entity (SE) Discovered a Defect in One of Their

Multiple Choice

Recently Silph Entity (SE) discovered a defect in one of their long-range cameras. The Head of Product Development has stated that it is more likely than not that they would have to replace or reimburse a significant number of cameras. SE estimates that there is a 30 percent chance of $100,000, a 45 percent chance of $500,000, a 20 percent chance of $1,000,000, and a 5 percent chance of $2,000,000 in warranty damages in each of the respective scenarios. What is SE's credit in the journal entry to recognize the provision?

A) Warranty Expense $3,600,000
B) Warranty Expense $555,000
C) Warranty Provision $555,000
D) Warranty Provision $500,000