Britle Lid is a reporting eutity which operates in the mining indastry in Australin. The firm...

 

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Britle Lid is a reporting eutity which operates in the mining indastry in Australin. The firm las been in operation for the past five (5) and has recently gotters listed on the Australisn Slock Exclange (ASX). The firm bad revamped its corporate govence structure to ensure compliance with the recommendations of ASX. The firm's financial performamce has been inproving steadily until the Covid-19 pandemie. Due to a high Covid-19 infection tate nnong the emplyecs of the fim, the operating capacity of the firm reduced to 50%, which resuked in a signiticant decline in the sales revenue of the firm for the reporting years, 2020 and 2021. While an operating loss of $5o 000 was made in 2020, an operating profit of S120 000 was generated in 2021. Curretly, maagement is unsure ef the fiture profitability of the firm's operation but remnins hopeful of a better per formance if the pandernic is managed effectively. Required: Withreference to the Case of Brittle Ltd, provide appropriate responses to the following questions a) With regards to the provisions of AASB 112, preseat a critical analysis with justifications of at least three points of how Brittle Ltd is expected to acconnt for the loss made in 2020 assuming Brittle Ltd is not likely to generate profit in 2022 and 2023 respectively. b) Provide an appropriate jounal entry to account for the response provided in (a) if any c) How woukd yoar response in (a) change if it is assumed that Brittle Ltd is likely to generate profit in 2022 and 2023 respectively. Assume an applicable tax rate of 30% for Brittle Ltd. Britle Lid is a reporting eutity which operates in the mining indastry in Australin. The firm las been in operation for the past five (5) and has recently gotters listed on the Australisn Slock Exclange (ASX). The firm bad revamped its corporate govence structure to ensure compliance with the recommendations of ASX. The firm's financial performamce has been inproving steadily until the Covid-19 pandemie. Due to a high Covid-19 infection tate nnong the emplyecs of the fim, the operating capacity of the firm reduced to 50%, which resuked in a signiticant decline in the sales revenue of the firm for the reporting years, 2020 and 2021. While an operating loss of $5o 000 was made in 2020, an operating profit of S120 000 was generated in 2021. Curretly, maagement is unsure ef the fiture profitability of the firm's operation but remnins hopeful of a better per formance if the pandernic is managed effectively. Required: Withreference to the Case of Brittle Ltd, provide appropriate responses to the following questions a) With regards to the provisions of AASB 112, preseat a critical analysis with justifications of at least three points of how Brittle Ltd is expected to acconnt for the loss made in 2020 assuming Brittle Ltd is not likely to generate profit in 2022 and 2023 respectively. b) Provide an appropriate jounal entry to account for the response provided in (a) if any c) How woukd yoar response in (a) change if it is assumed that Brittle Ltd is likely to generate profit in 2022 and 2023 respectively. Assume an applicable tax rate of 30% for Brittle Ltd.

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a AASB 112 states that an entity must recognise a provision for a loss when it is probable that a... View the full answer