Assume that you are a team of graduate accountants working for Hitech Group Ltd, an independent consulting & accounting firm Situated at 111 George Avenue, Melbourne, VIC 3000. The Manager of your firm, Ms. Araneda Jackson has asked you to draft a letter in response to an email received from Mr. Jason Alba, the General Manager of Qantas Airway Ltd, raising accounting issues - see the copy of the email on the next page.

Dear Araneda, Thank you for your phone call this morning, as agreed I am emailing you regarding the accounting issues we briefly discussed. By the way to assist the Management team in our decision-making process, could you please make sure you reference any relevant sources relating to your advice, for example, AASBs, Corporations Act, and relevant websites? Here is the background to our problem - like every airline in the world, COVID has severely impacted QANTAS, and we have experienced huge volatility in our monthly revenue. Due to the sudden closure of international borders (and subsequently the domestic borders); QANTAS has to refund the fares to everyone who had bought a refundable ticket and was eligible for a refund. QANTAS has initially recognised the receipt of cash as revenue (when the customer made the booking), and now the refunds have been recognised as a "sales return". We have obviously kept the money from customers who weren't eligible for a refund. Is this all okay? Should we do anything differently? Are there any tax consequences? On the other side, we had to defer the payments of several expenses and costs due to lack of cash on hand. We are in ongoing negotiations with the Commonwealth Government to provide us with a support package so that we can meet all our financial obligations for the next two years. The exact details are yet to be finalised, but this support package will likely be an interest-free loan for about ten years. Could you please suggest what we should do about these expenses that we haven't paid yet? Can we recognise this support package as a gift from the government because it is interestfree? Please respond by letter (not email) as I would like to present your views to our board. I look forward to hearing from you shortly