Karingai Co Ltd Has Been Experiencing Cash Flow Difficulties and Sought

question 51

Multiple Choice

Karingai Co Ltd has been experiencing cash flow difficulties and sought a long-term loan from a merchant bank to enable it to restructure its financing from short-term to long-term debt.The loan has been approved by the bank after reporting date and the funds are expected to be received before the time of completion of the accounts.How should this event be reported according to AASB 110?

• A) If the loan is material and the effect on the future financial performance of the entity is significant, AASB 110 requires the directors to disclose the event in the Director's Report and incorporate it into the financial statements.
• B) The directors are required to disclose the event in the Directors' Declaration.
• C) No note disclosure is required in this case.
• D) The even should be disclosed in a note, the fact that it occurred after reporting date and its financial effect on the company should be provided.

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Definitions:

Verbal Communication

The process of conveying messages or information through spoken words, tone of voice, and vocal inflections.

Nonverbal Communication

The transmission of information or feelings without the use of spoken words, utilizing gestures, facial expressions, and body language.

Discrepancy

A difference or inconsistency between two or more facts, figures, or findings.

Understanding

The ability to comprehend or grasp the nature, significance, or explanation of something.