Jackknife Trucking Ltd has announced a renounceable rights issue of 1-for-5 based on shares held at 2 July 2024. The shareholders have to exercise their rights by 31 August 2024, and pay \($1\) per share on application. At the end of the company’s reporting period, 30 June 2024, 70 percent of the company’s shareholders have applied for the new shares, and the company has received \($2.8\) million. The monies received have been recorded in an ‘application account’. The accountant of jackknife Ltd plans to report the application account as a liability in the statement of financial position prepared at 30 June 2024, arguing that this is consistent with the accounting used for new issues of shares by the company.

Required 

Write a report to the accountant of Jackknife Trucking Ltd , critiquing the accountant’s decision.