On 1 July 2018 an Australian company lent to its New Zealand subsidiary an amount of NZ$2.5 million for a period of six years. At the time the exchange rate was A$1 5 NZ$1.13. Assume the exchange rate was A$1 5 NZ$1.09 on 30 June 2019, while on 30 June 2020 the exchange rate was A$1 5 NZ$1.02.
Required
Prepare the general journal entries to record the above events for the first two years of the loan, following the requirements of AASB 121. Be careful to specify any assumptions you make. (Lo2, Lo3)