On 1 July 2018 an Australian company lent to its New Zealand subsidiary an amount of NZ$2.5 million for a period of six years. At the time the exchange rate was A$1 5 NZ$1.13. Assume the exchange rate

was A$1 5 NZ$1.09 on 30 June 2019, while on 30 June 2020 the exchange rate was A$1 5 NZ$1.02.

Required

Prepare the general journal entries to record the above events for the first two years of the loan, following the requirements of AASB 121. Be careful to specify any assumptions you make. (LO2, LO3)

Answer rating: 100% (QA)

General Journal Entries for Loan to Subsidiary AASB 121 Assumptions The loan bears interest but the interest rate is not provided We will focus on the ... View the full answer