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:

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. Isn't 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?

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