Tray Ltd is a listed company that provides food to function centres that host events such as weddings and engagement parties. After an engagement party held by one of Tray Ltd’s customers in June 2023, 100 people became seriously ill, possibly as a result of food poisoning from products sold by Tray Ltd. Legal proceedings were commenced seeking damages from Tray Ltd. Tray Ltd disputed liability by claiming that the function centre was at fault for handling the food incorrectly. Up to the date of authorisation for issue of the financial statements for the year to 30 June 2023, Tray Ltd’s lawyers advised that it was probable that Tray Ltd would not be found liable. However, two weeks after the financial statements were published, Tray Ltd’s lawyers advised that, owing to developments in the case, it was probable that Tray Ltd would be found liable and the estimated damages would be material to the company’s reported profits.

Required 

Should Tray Ltd recognise a liability for damages in its financial statements at 30 June 2023? How should it deal with the information it receives 2 weeks after the financial statements are published?