1. XYZ Sdn. Bhd. (XYZ) is a small manufacturing company. The manufacturing process produces toxic chemicals which pollute the nearby environment. Legislation requires that a clean-up operation must be undertaken by XYZ on 30 September 2020 at the latest. As at 30 September 2016, the company estimated the clean-up cost on 30 September 2020 will be RM33,000. The discount rate is 8%.

Required:

The directors are unsure as to whether any provision for the above amounts should be made in the financial statements as at 30 September 2017.