On 1 July 2016 McGrath Ltd Enters into an Arrangement

question 64

Multiple Choice

On 1 July 2016 McGrath Ltd enters into an arrangement with a Hong Kong bank to borrow $HK1 500 000.The term of the loan is 3 years with interest payable annually in arrears on 30 June at the rate of 7 per cent.The exchange rate information is: $$\begin{array} { | l | l | } \hline \text { 1 July } 2016 & \text { A\$1 } = \text { \$HK4.25 } \\\hline 30 \text { June } 2017 & \text { A\$1 } = \text { \$HK3.50 } \\\hline 30 \text { June } 2018 & \text { A\$1 } = \text { \$HK4.50 } \\\hline\end{array}$$ What journal entries are required in McGrath Ltd's books for 1 July 2016 and 30 June 2017 and 30 June 2018 in accordance with AASB 121 (rounded to the nearest whole A$) ?

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Definitions:

Isopropyl Tert-Butyl Ether

A chemical compound, an ether, formed from the reaction between isopropyl alcohol and tertiary butyl alcohol.

Alkoxymercuration

A chemical reaction that introduces an alkoxy group into an alkene to form an ether, typically involving mercury (II) acetate.

Demercuration

A chemical reaction process that removes mercury from an organomercury compound, often used in the context of reductive reactions and organic synthesis cleanup.

Synthesize

The act of chemically uniting simple elements to produce a substance that is more complex.