Harrier Ltd Has Borrowed Substantially Using Foreign Currency Loans

question 41

Multiple Choice

Harrier Ltd has borrowed substantially using foreign currency loans.An unexpected major downturn in the Australian economy after reporting date has substantially weakened the Australian dollar,increasing the size of the debt materially.According to AASB 110,how should this event be reported in the financial statements?

• A) The foreign currency debt should be restated at the new exchange rates and the loss recognised.
• B) No reporting is required.
• C) Harrier Ltd's bank and/or debenture trustees should be notified of the potential that the company may break its debt covenant.
• D) A note disclosure of the event should be made.

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Definitions:

Short-Run Aggregate Supply

The total supply of goods and services that firms in an economy are willing and able to produce over a short period, generally at existing price levels.

Price Level Expectations

Price level expectations refer to the anticipations of consumers, firms, and other economic actors regarding the future general price level in the economy, influencing their economic decisions.

Short-Run Aggregate-Supply Curve

A visual depiction that illustrates the link between the overall output of goods and services and the price level for production in the short-term.

Short-Run Economic Fluctuations

Variations in the pace of economic activity, typically characterized by changes in GDP, unemployment, and other indicators, happening over a short period.