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:

Economy of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.

Small Manufacturers

Companies engaged in the production of goods on a smaller scale, often characterized by more specialized products or services.

Cottages

Small, typically cozy houses, often located in rural or vacation settings, and sometimes used as secondary homes or vacation retreats.

Symbiotic Relationship

A mutualistic interaction between two different organisms living in close physical association, typically to the advantage of both.