You are the accountant for Violet Ltd, a large organisation with a number of subsidiaries. On 1 January 2019, Violet Ltd purchased all of the shares of another company, Crumble Ltd.

Following this acquisition, management have raised the following issues with you:

1. We were told Crumble Ltd reported a tax loss for the year ending 30 June 2018, but we cannot find any evidence of this in the financial statements. Isnt this a breach of the qualitative characteristics of financial information? Can you give us evidence from both accounting standards and the AASB Framework to support your explanation? You need to use authoritative, relevant references and relevant Accounting Standards and the AASB Framework to help support your argument. However, remember your audience (senior management) are not accountants, so you need to use this information to support your argument (e.g. dont just quote large sections of the standards, as the managers wont read it!).