4. Client: Brown Bhd. Brown Bhd. whose functional currency is Ringgit Malaysia (RM), secured a borrowing from a bank in

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4. Client: Brown Bhd. Brown Bhd. whose functional currency is Ringgit Malaysia (RM), secured a borrowing from a bank in

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4. Client: Brown Bhd.Brown Bhd. whose functional currency is Ringgit Malaysia (RM),secured a borrowing froma bank in Borneo on 1 July 2020 for an amount B$ 8 million. Theloan is payable in full on 1March 2021. Brown Bhd.’s financial year ends on 31 December.The spot rates are as follows:
1 July 2020 B$ 1 = RM231 December 2020 B$ 1 = RM2.25
Required:a) How shall Brown Bhd. recognise the loan in its books of account?(3 marks)b) How should Brown Bhd. record the journal entries for the loan on1 July 2020 and 31December 2020? (5 marks)c) How shall the difference on exchange be accounted for? (1mark)
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