Answer:
Debit legal expense/penalties (p/l) $900,000
Credit Provisions (B/s) $900,000
Explanation:
According to IAS 37 Provisions, contingent liabilities and contingent assets, a provision is to be recorded where there is a present obligation as a result of a past event and the outflow of economic benefits to satisfy the obligation is probable.
Hence if it is probable that Scorcese will be liable for $900,000 as a result of this suit, a provision is needed and will be recorded by;
Debit legal expense/penalties (p/l) $900,000
Credit Provisions (B/s) $900,000
