Venom Limited is a company that handles collection of$,$ storage and disposal toxic waste. The

company manages contracts for the handling of toxic waste, picking up toxic waste and either

disposing of it immediately, depending on the type of toxic waste or store it at their plant before

disposing of it$.$ During the recent floods, that took place in April and May $2022$ in KZN$,$ the

company$$s pipes which carry the toxic waste out for disposal were destroyed, releasing the

contents into the nearby river. There was a huge public outcry by the local residents and

environmentalists as the water was now contaminated and this was the residents only form of

water supply.

Due to the huge negative publicity for the company and the way in which they handle the toxic

waste, the directors issued a statement in the newspaper on the $30$th April $2022$ that the

company would remove the contaminated soil and pollutants from the water by the $30$ June

$2022.$

The directors are unable to estimate the cost to rehabilitate the contaminated area. This is the

first time that this chemical has been spilled and expert environmental consultants are also

unable to provide an estimate. A detailed investigation will need to be carried out by experts

to determine the extent of the damage. The investigation is to be carried out during early June

$2022.$ The publication date of the financial statements is $31$st May $2022.$

REQUIRED

Discuss whether the above should be recognised in the financial statements for the year

ended $30$th April $2022$ in accordance with IAS$37$ Provisions, contingent liabilities and

contingent assets.