A lawsuit has been filed against ABC Mining Ltd for environmental damage, and the companys solicitors believe there is a high probability of losing the lawsuit. If ABC Mining Ltd lose the case, the court will order the company to repair the environmental damage the companys mining activities have caused. However, at the moment, ABC Mining Ltd is not able to estimate the cost of repairing the environmental damage.

Required:

Refer to conceptual framework to discuss whether the cost of repairing environmental damage should be considered as a liability and recognised in the statement of financial position (3 marks).

Word limit: 200 words

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