(Answer length - approximately 100 words)

The law in your community requires shop-owners to shovel snow and ice from the pavement (footpath) in front of their shops. You failed to do that. A pedestrian slipped and fell, resulting in serious and costly injury. The pedestrian has sued you. Your lawyer says that while he will vigorously defend you in the lawsuit, you should expect to lose $25,000 to cover the injured partys costs. A court decision, however, is not expected for at least a year.

Required:

Should you recognise a liability for this event at the end of the financial year? Justify your answer by reference to the definitions and recognition criteria in the Conceptual Framework. (4 Marks)