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Woodbridge is a public company that builds, develops, and operates airports and prepares its financial statements using IFRS. During the year ended 31 December 2021, a section of an airport collapsed, and several people were hurt. The accident resulted in the closure of the terminal and legal action against Woodbridge was threatened. When the financial statements for the year ended 31 December 2021 were being prepared, the investigation into the accident and the reconstruction of the damaged section of the airport were still in progress and no legal action had yet been brought in connection with the accident. The expert report that was to be presented to the civil courts to determine the cause of the accident and to assess the respective responsibilities of the various parties, was expected in 2022.
How should the legal action be reflected in the financial statements of Woodbridge for the year ended 31 December 2021.
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