Required:

1) Justify the above recording referring to the Conceptual Framework of Financial Reporting

2) Provide the correct entry with a brief but grounded explanation.

Mike, the general manager of Blue-Sky Pty Ltd (Blue-Sky), purchased a lottery ticket worth $1,000 on June 25, 20X9. The lottery draw date was July 24th, 20X9. The financial year ends at 30 June. Mike was not the owner of the company. The $1,000 was transferred from the company's bank account. The draw amounts and probability are shown as follows. Draw amounts Probability $1 millions 1/1,000,000 $10,000 1/10,000 $500 1/20 $0 95% Purchasing the lottery tickets was an authorized act of the company. The purchase of the lottery was recorded as shown below. However, the auditor disagreed. Dr. Lottery ticket (asset) 1,000 Cr. Cash 1,000