Harrier Ltd Has Borrowed Substantially Using Foreign Currency Loans

question 7

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) Note disclosure of the event should be made.
• E) None of the given answers.

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Definitions:

Self-serving Bias

The common tendency to attribute successes to personal attributes and failures to external factors.

Ambiguous

Something that can be understood in more than one way or is unclear due to having multiple interpretations.

Concentrating

The mental process of focusing one's attention or thoughts on a specific object or activity.

High Self-esteem

A positive evaluation of oneself, characterized by feelings of respect, confidence, and worthiness.