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$)?

Question

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$)?

Quizplus · Accepted Answer

The Answer of 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$)?

On 1 July 2016 McGrath Ltd Enters into an Arrangement