Unite Ltd Provided a Loan of $1 000 000 to Its

question 40

Multiple Choice

Unite Ltd provided a loan of $1 000 000 to its subsidiary Inspire Ltd. Interest of $100 000 was charged during the year ended 30 June 2018. On consolidation, which of the following adjustments is needed at 30 June 2018 in relation to the interest charged?

• A) No adjustment needed
• B) Dr Interest revenue $100 000 Cr Interest expense $100 000
• C) Dr Interest expense $100 000 Cr Interest revenue $100 000
• D) Dr Retained earnings $100 000 Cr Cash $100 000

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Definitions:

Material Terms

Critical and essential components of a contract that specify the rights and obligations of the parties involved, impacting the performance and outcome of the contract.

UCC

A comprehensive legal code, the Uniform Commercial Code, exists to oversee all commercial transactions happening in the United States.

Common Law

A body of law based on judicial decisions and precedent rather than statutory laws.

Additional Terms

Extra conditions or provisions added to an agreement or contract that were not included in the original draft.