Question
Swan Ltd signed an agreement with ABC Bank on 3 March 2020 to the effect that Swan guarantees a long-term loan made by ABC Bank
Swan Ltd signed an agreement with ABC Bank on 3 March 2020 to the effect that Swan guarantees a long-term loan made by ABC Bank to Tui Ltd, a subsidiary of Swan Ltd. Tui Ltd.s loan with ABC Bank was $60 million as of 31 March 2020. Tui Ltd was in a strong financial position as of 31 March 2020.
In 2021, international trading conditions deteriorated to such an extent that Tui Ltd incurred substantial losses. Finally, Tui Ltd was forced to file for bankruptcy on 29 March 2021.
REQUIRED
How would Swan Ltd report the guarantee provided to Tui Ltd in its financial statements for the ended 31 March 2020 and 31 March 2021? Please include reference to NZ IAS 37 (Provisions, Contingent Liabilities and Contingent Assets) in your discussion
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Auditing As Preventive Measure Of Future Financial Crisis Internal Control System Possibilities And Dangers
Authors: Muhammed Zakir Hossain
1st Edition
365918781X, 978-3659187810
