Liontown prepares it’s annual reports in Australian Dollars reflecting it’s Primary Domicile (Australia).
From an Australian Accounting accounting perspective - USD denominated debt is treated as foreign currency debt.
When the debt is first recognised the USD denominated debt is converted into Australian Dollars using the exchange rate at the transaction date.
eg a company borrows USD 10million when the exchange rate is 1USD = 1.3 Aud, the debt recorded is 13 Million on the balance sheet.
Foreign currency debts are then re-measured at each reporting date using the current exchange rate.
This means that any fluctuation in the exchange rate between USD and AUD will affect the book value of the debt in AUD.
eg if the exchange rate changes to 1USD = 1.4 Aud by the end of the reporting period the company will adjust the value of its USD denominated debt in the balance sheet to reflect the new exchange rate USD 10 Million X 1.4 = 14 Million
This will then be recorded as a foreign exchange rate gain or loss (in this case).
Cheers
DYOR IMO
LTR Price at posting:
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