Problem
Part I
For the financial year ended June 30, 2020 waste from a manufacturing company caused environmental damage in a country without environmental legislation. The citizens of the community demonstrated and the bauxite company rectified the environmental damage at a cost of US$5,000. The other two manufacturing entities in the community indicated that they had nothing to do with the environmental damage and therefore did not contribute to the cost of US$5,000 to rectify the damage.
For the financial year ended June 30, 2021 the environment again sustained damage as a result of waste from a manufacturing company. Once again the other two manufacturing entities indicated that they had nothing to do with the environmental damage. The citizens of the community obtained an estimate for US$30,000 to rectify the environmental damage and delivered the estimate to the bauxite company. Members of the Board of Directors of the bauxite company argued that given the significant cost of US$30,000 the company should not pay to rectify the damage, since they have no legal obligation to do so. The directors are also of the opinion that the other two manufacturing entities should contribute US$10,000 each and the bauxite company should contribute US$10,000 as a good corporate citizen,
Should a provision be recognized in the financial statements for the year ended June 30, 2021 and if so how much? Explain your answer to the Board of Directors.
Part II
The directors of a company do not understand how the company made a net loss and still has a taxation charge in the Statement of Comprehensive Income. The directors are of the opinion that only when the company makes a net profit should taxation be charged.
Explain to the Board of Directors how it is possible for a company to make a loss and still has a taxation charge in the Statement of Comprehensive.
Part III
A. In cybersecurity what is the meaning of CIA?
B. Identify six features of good corporate governance.
C. A parent entity has several subsidiaries, a manufacturing company, a distribution company and an insurance company. Would you recommend a current/non-current distinction or order of liquidity for the parent entity
Consolidated Balance Sheet? Explain your answer.