APPLICATION EXERCISES 1 Gajus Berhad, whose functional currency is the Malaysian Ringgit, borrowed BN$8,000,000 from a bank in Brunei on 1 July 20x2. The loan is payable in full on 1 March 20x3. Gajus Berhad's financial year ends on 31 December. The spot rates are as follows: 1 July 20x2 BN$1 = RM2.00 31 December 20x2 BN$1 = RM2.25 Required: (a) Explain how Gajus Berhad should recognize the loan. (b) Prepare the journal entry to record the loan on 1 July 20x2 and 31 December 20x2. (c) Explain the treatment of the difference on exchange