The annual accounting date of Lawston plc is 31 May. The following matters need to be dealt with before the financial statements for the year to 31 May 2018 can be finalised:

(a) The company is currently suing one of its suppliers for failure to supply goods according to contract. Legal advice suggests that Lawston plc will probably win the case and will probably be awarded damages.

(b) The company operates an open-cast mine and is legally obliged to restore the environment when mine workings are complete. This is expected to occur in the year 2028. The estimated cost of rectifying the environmental damage caused so far is £3 million. The estimated total cost of rectifying the damage caused until mine workings are complete is £25 million.

Explain how these two matters should be dealt with in the financial statements for the year to 31 May 2018.