Trotter Pty Ltd operates a horse-riding business. The business has just been notified that its annual insurance premium will increase from $5000 to $20 000. The owners decide not to renew their insurance but to self-insure. This involves setting aside a portion of the profits each year to a provision for insurance account. The provision for insurance is recognised as a liability account on the balance sheet. Referring to the definition and recognition criteria for recognising liability, discuss the appropriateness of Trotter Pty Ltd's accounting for self-insurance.