You are the accountant of a Company whose operations have been largely impacted by COVID-19 and is consequently facing cash flow issues.

(a) The Company will be receiving government subsidy to cover some of its employee costs for the next three months. For tax accounting purposes, how do you think this subsidy should be treated. Provide justifications for your answer.

(b) The Company has a loan of $8 million with an Australian bank. Given its current financial situation, the Company has qualified to defer its monthly loan repayments for the next six months, with its interest capitalised.

The Chief Executive Officer (CEO) of the company advises you that you do not need to include the loan in the general-purpose financial statements ending 30 June 2020, but instead in the financial reports for the year ending 30 June 2021. Do you agree with this advice? Provide justifications for your answer