Hawk Plc Has Borrowed Substantially in Foreign Currency Loans

question 42

Multiple Choice

Hawk Plc has borrowed substantially in foreign currency loans.An unexpected major downturn in the British economy after reporting date has substantially weakened the British pound.It appears that Hawk Plc will not be able to meet the foreign currency debt as it falls due.According to IAS 10,how should this event be reported in the financial statements?

• A)additional extensive disclosure of the realisation value of assets and the amounts at which liabilities are expected to be settled
• B)recognition of the assets in the financial statements at fair value and the liabilities reported at their settlement amounts
• C)additional extensive disclosures about the timing and maturity date of debts and the cash flow shortfalls expected
• D)recasting of the financial statements using fair value basis

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Definitions:

Shareholders Meeting

A formal gathering of the shareholders of a company to discuss and vote on company business.

Special Meeting

A meeting called for a specific purpose, outside of the regularly scheduled sessions.

Cumulative Voting

A system of voting for directors of a corporation in which shareholders can concentrate their votes on one candidate, rather than having to distribute them equally among candidates.

Majority Shareholder

An individual or entity that owns more than half of a company's outstanding shares, giving them controlling interest.