Blast Ltd (Blast) is a large public listed Australian energy company that owns several coal-fired and gas power stations. The acquisition of these assets has been financed by loans from Australian banks. Blast has adopted the AASB 116: Property, Plant and Equipment cost model for this class of asset. For many years Blast has successfully sold energy produced by their coal-fired and gas power stations assets to commercial clients and residential customers. The findings of a recent Government Energy Industry in Crisis investigation released on 31 August 2021 states, due to lenders fossil fuel loan restrictions, transition to low carbon economy challenges and rapidly declining cost of and increasing consumer preference for alternative renewable energy, many coal and gas energy companies present non renewable energy operations are at risk. Blasts current loan agreements contain strict liquidity, solvency and debt to total assets and interest coverage ratio covenant requirements. Based on previous years financial statements, Blast has satisfied these ratio requirements. Blasts Directors want to maintain current finance arrangements and its generous employee bonus scheme. You are part of the Blast financial reporting team and have been assigned the responsibility of considering the financial reporting and ethical implications of the Energy Industry in Crisis investigation findings on Blasts financial statements for the year ended 30 June 2022.

REQUIRED: Your draft Part A response is to be presented in a short answer format.

Part A From a financial reporting perspective, consider the Energy Industry in Crisis investigation findings on the preparation of Blasts financial statements for the year ended 30 June 2022. (a) Explain the anticipated impact of going concern as a financial reporting issue in:

(i) a relevant account balance and respectively the total asset or liability amount presented in Blasts statement of financial position; (ii) a related line item and the profit or loss before tax amount presented on Blasts statement of financial performance; and (iii) additional information disclosed in the notes to Blasts financial statements. Specific paragraph references from appropriate accounting standards are required and calculations are not required in your answer.

(b) Discuss how going concern in your (a) answers could affect future decisions lenders make in relation to their investment in Blast. Include a supporting example.