Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to US. GAAP to prepare consolidated financial statements. Ignore income taxes. Izmir A.S. issued convertible bonds at their face value of 109,000 lira on December 31, 2020. The bonds have a 10-year life with interest of 10 percent payable annually. At the date of issue, the prevailing interest rate for similar debt without a conversion option was 12 percent. Required: a. Prepare journal entries for this compound financial instrument for the year ending December 31, 2020, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020, conversion worksheet to convert IFRS balances to U.S. GAAP. Complete this question by entering your answers in the tabs below. Required A Required B Prepare journal entries for this compound financial instrument for the year ending December 31, 2020, under (1) IFRS and (2) U.S. GAAP. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round PV factor to 7 decimals. Round your intermediate and final answers to nearest whole dollar.)

Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to US. GAAP to prepare consolidated financial statements. Ignore income taxes. Izmir A.S. issued convertible bonds at their face value of 109,000 lira on December 31, 2020. The bonds have a 10-year life with interest of 10 percent payable annually. At the date of issue, the prevailing interest rate for similar debt without a conversion option was 12 percent. Required: a. Prepare journal entries for this compound financial instrument for the year ending December 31, 2020, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020, conversion worksheet to convert IFRS balances to U.S. GAAP. Complete this question by entering your answers in the tabs below. Required A Required B Prepare journal entries for this compound financial instrument for the year ending December 31, 2020, under (1) IFRS and (2) U.S. GAAP. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round PV factor to 7 decimals. Round your intermediate and final answers to nearest whole dollar.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Assume that a foreign company using IFRS is owned by a company using U.S. GAAP. Thus, IFRS balances must be converted to U S
GAAP to prepare consolidated financial statements. Ignore income taxes.
Izmir A.S. issued convertible bonds at their face value of 109,000 lira on December 31, 2020. The bonds have a 10-year life with
intelest of 10 percent payable annually. At the date of issue, the prevailing interest rate for similar debt without a conversion option
was 12 percent.
Required:
a. Prepare journal entries for this compound financial instrument for the year ending December 31, 2020, under (1) IFRS and (2) U.S.
GAAP.
b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2020, conversion worksheet to convert IFRS
balances to U.S. GAAP.
nces
Complete this question by entering your answers in the tabs below.
Required A
Required B
Prepare journal entries for this compound financial instrument for the year ending December 31, 2020, under (1) IFRS and (2) U.S.
GAAP. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round PV factor to 7
decimals. Roùund your intermediate and final answers to nearest whole dollar.)
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On 1 March 2020 Holmes Ltd enters into a binding agreement with a New Zealand company, which requires the New Zealand Company to construct an item of machinery for Holmes Ltd. The cost of the machinery is NZ$750,000. The machinery is completed on 1 June 2021 and shipped FOB Auckland on that date. The debt is unpaid at 30 June 2020, which is also Holmes Ltd’s reporting date. The exchange rates at the relevant dates are: 1 March 2020 A$1.00 = NZ$1.20 30 June 2020 A$1.00 = NZ$1.30 1 June 2021 A$1.00 = NZ$1.25 Required: a) Determine the amount in AUD, as at: • 1 March 2020; and • 30 June 2020. b) Prepare the journal entries for the above dates, up to 1 June 2021,showing the amount of exchange gain or loss. Thanks
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