On 20 December 20X6 one of Incident plc’s lorries was involved in an accident with a car. The lorr y driver was responsible for the accident and the company agreed to pay for the repair to the car. The company put in a claim to its insurers on 17 Januar y 20X7 for the cost of the claim. The company expected the claim to be settled by the insurance company except for a £250 excess on the insurance policy. The cost of repairing the car was estimated as £5,000, all of which was incurred after the year end.

Required:

Explain how this item should be treated in the financial statements for the year ended 31 December 20X6 according to ED IAS 37 Non-financial Liabilities.