Delta is an entity which prepares financial statements to 31 March each year. The functional currency of Delta is the $. During the year ended 31 March 2013 the following events occurred:

(a) On 1 April 2012, Delta raised loan finance from European investors. The investors subscribed for 50 million €1 loan notes at par. Delta incurred incremental issue costs of €1 million. Interest of €4 million is payable annually on 31 March, starting on 31 March 2013. The loan is repayable in € on 31 March 2022 at a premium and the effective annual interest rate implicit in the loan is 10%. The appropriate measurement basis for this loan is amortised cost. Relevant exchange rates are as follows:

– 1 April 2012 – €1 = $1·40.
– 31 March 2013 – €1 = $1·45.
– Average for year ended 31 March 2013 – €1 = $1·42. (7 marks)

Required:
Explain and show (where possible by quantifying amounts) how the three events would be reported in the financial statements of Delta for the year ended 31 March 2013.

Note: The mark allocation is shown against each of the three events above.