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.

Question

Quizplus · Accepted Answer

As per AASB 110, events occurring after the reporting period but before the financial statements are authorized for issue should be disclosed in the notes to the financial statements. Therefore, in this case, Harrier Ltd should disclose the event of the unexpected major downturn in the Australian economy and the impact it has had on the Australian dollar and its foreign currency loans in the notes to the financial statements.

Harrier Ltd Has Borrowed Substantially Using Foreign Currency Loans