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Explain the sport rate and closing rate

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Question - On 1 July 2016 Air town Ltd entered into an arrangement with a Hong Kong bank to borrow $HK 1,500,000. The term of the loan was 3 years with interest payable annually in arrears on 30 June at the rate of 5 per cent. The exchange rate information is: 1 July 2016 $A1 = $HK5.25 30 June 2017 $A1 = $HK4.50 30 June 2018 $A1 = $HK5.50 30 June 2019 $A1 = $HK5.80 Required: Prepare the journal entries required in Air town Ltd's books for 1 July 2016, 30 June 2017, 30 June 2018 and 30 June 2019 in accordance with AASB 121 (rounded to the nearest whole $A). Explain the sport rate and closing rate.

Reference no: EM133012985

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