In the following year, Jimbo Ltd has decided to consider using an alternative supplier of the planned maintenance. After discussions with the alternative supplier, Jimbo Ltd decided they would enter into a contract with the following details included:

• The cost of the next maintenance under the contract is $950,000.
• The contract is non-cancellable by either party.
• The maintenance is required to be completed within three-months or the external entity has to pay a fine of $2 million.

The directors of Jimbo Ltd continue to believe the planned maintenance should be recognised as a liability.

Required

Advise the directors whether a liability should be recorded in the financial period ending 30 June 2023. Justify your answer by reference to the Conceptual Framework definition and recognition criteria.