At the end of the financial period, Rosella Limited was awaiting the final details of a court case for damages awarded in its favour. The amount and possible receipt of damages is unknown and will not be decided until the court sits again in approximately three months time. How should Rosella Limite recognise this situation when preparing the financial statements?

Disclose in the notes to the financial statements as it is possible that the entity will receive the damages and the court decision is out of its control.

Recognise as a deferred asset in the statement of financial position and re-classify as a non-current asset when the court decision is known.

Recognise as an asset in the financial statements as the receipt of damages is probable.

Do not recognise or disclose in the financial statements as the possibility of receiving damages is remote.