TopSteamer has provided guarantee to its subsidiary, GermanStove, for a HK$10 million long-term bank loan from a German bank with interest payable annually at 31 March. The recent financial crisis and economic downturns in the European countries has led to the tightening of the bank's lending policies. Since January 2020, the subsidiary has been experiencing cash flow difficulties and has fully extended its overdraft facility to support its daily operations. The subsidiary's interest accrual as at 31 December 2019 amounts to HK$250,000 and the long-term loan will be matured in 2023. Assume TopSteamer has not made any entry or disclosure for the subsequent events, describe and explain the nature of adjusting entries or disclosure, if any, you would suggest TopSteamer to make for each of the above situations

Answer rating: 100% (QA)

TopSteamers Guarantee and Subsequent Events Accounting Treatment Based on the information provided h... View the full answer