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.

Question

Quizplus · Accepted Answer

According to AASB 110, the event of a substantial increase in the size of debt due to a weakened foreign currency should be disclosed in the financial statements. Therefore, note disclosure of the event should be made.

Harrier Ltd Has Borrowed Substantially Using Foreign Currency Loans