Additional Event that Occurred After 30 June 2019:

Assume that it is now Friday 26 July 2019. You are in the process of preparing the financial statements of The Flavours of Italy Unit Trust for the year ended 30 June 2019. The 2019 financial statements are yet to be signed off by Mario and Luciano.

You have just received a telephone call from Mario advising that they have just received notification of a pending legal suit from a customer who suffered extreme and violent food poisoning a day or two after having dinner at their restaurant on Saturday 13 July 2019.

Luciano and Mario are rigorously denying the claim and have engaged solicitors to defend the claim on their behalf. They claim that the customer's food poisoning had nothing to do with the food that was eaten at their restaurant. The solicitors for Luciano and Mario agree and consider that the likelihood of the restaurant losing the case is around 25 percent.

Whilst it is too early to assess the likelihood of losing the lawsuit, the person is suing the trust for $60,000 for out-of-pocket medical expenses, loss of earnings from not being able to work for four weeks as well as the emotional trauma suffered as a result of the food poisoning.

Question: This is an additional event occurring after reporting period. As an accountant, I am confused that whether I have to record $60,000 as an expense in the 2019 financial statement or mention in the notes of financial statements of annual report. I think the legal suit is pending and they do not have actually pay the full amount of $60,000 due to the likelihood of losing the lawsuit.