RECOGNITION OF TAX LOSSES Whale Ltd is engaged primarily in agricultural pursuits as well as in forestry products, including the management of its own forest reserves. Unfortunately, in the current year an eruption of a volcano in the mountain range bordering the company’s operations resulted in the destruction of 20 000 hectares of standing timber, harvested logs, forestry buildings and equipment. As a result the company recognised a $40 million tax loss in the current period. The management of Whale Ltd are debating whether it can raise a deferred tax asset in relation to this loss in the financial statements for the current period. Required Prepare a report to management providing advice on the raising of a deferred tax asset and specifying the conditions, if any, under which the asset could be recognised. CASE STUDY