Case $D{?}_{(}()())$

After a wedding in $20$X$0,$ ten people died, possibly as a result of food poisoning from products

sold by company DAVO. Legal proceedings are started seeking damages of $$10$ million from

DAVO but DAVO disputes the liability. Up to the date of authorisation of the financial

statements for the year to $31$ December $20$X$0$ for issue, DAVO's lawyers advise that it is

probable that DAVO will not be found liable. However, when DAVO prepares the financial

statements for the year to $31$ December $20$X$1,$ its lawyers advise that, owing to developments

in the case, it is probable that the entity will be found liable for an estimated damages of

$$17$ million. ${?}_{(}()())$

$($i$)$ How much liability should DAVO recognize in its financial statements for year

ended $31$ December $20$X$0?$ Briefly explain your reasons.

$($ii$)$ How much liability should DAVO recognize in its financial statements for year

ended $31$ December $20$X$1?$ Briefly explain your reasons.