Pink Ltd is the parent Floyd Ltd.On 1 January 20X3 Pink made a loan to Floyd in the form of bills of exchange in the total amount of $80 000 face value.Floyd was required to repay the $80 000 amount (which included the interest component) on 1 October 20X3.On 1 February Pink discounted $20 000 of the bills with the Darkside bank and received $15 000 cash.The end of financial reporting year for the group is 30 June.
From the group point of view, with regard to the bills, Pink is the:

Question

Quizplus · Accepted Answer

From the group's perspective, Pink Ltd, the parent company, is considered the drawer of the bills of exchange since it is the entity that has created the bills for Floyd Ltd, the subsidiary, to acknowledge and repay. The acceptor would typically be the entity that agrees to pay the bill, which in this case would be Floyd Ltd. However, within the context of consolidated financial statements for the group, transactions between Pink Ltd and Floyd Ltd are eliminated, focusing on the role Pink plays in initiating the transaction.

Pink Ltd Is the Parent Floyd Ltd