Question

"Rico's Grill, Inc. is solely owned by Rico Vito. Rico's Grill borrows $10,000 from a local bank to finance the purchase of a new range. The payments are to be made monthly over a two-year period. The bank"

Answer 1

Answer:

Need not make any special disclosure

Explanation:

The reason is that it is not a parent-subsidiary transaction which means if the group as a whole trade with each other then they must add a special disclosure in the financial statement otherwise it must be neglected. The company must not specially disclose small borrowings from the lenders when it is presenting that figure in the financial statement borrowing figures. If the transaction is between the group or the borrowings are prominent it must be disclosed separately in the note to financial statement.