Izmir A.S. issued convertible bonds at the face value of 113,000 lira on December 31, 2017. The bonds have a 10-year life with interest of 12 percent payable annually. At the date of issue, the prevailing interest rate for similar debt without a conversion option was 14 percent. 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 finanacial statements. Ignore income taxes. Required; a. Prepare journal entries for this compound financial instrument for the year ending December31, 2017, under (1) IFRS and (2) U,S. GAAP. b. Prepare the entries that the U.S. parent would make on the December 31, 2017, conversion worksheet to convert IFRS balances to U.S. GAAP
Izmir A.S. issued convertible bonds at the face value of 113,000 lira on December 31, 2017. The bonds have a 10-year life with interest of 12 percent payable annually. At the date of issue, the prevailing interest rate for similar debt without a conversion option was 14 percent.
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 finanacial statements. Ignore income taxes.
Required;
a. Prepare
b. Prepare the entries that the U.S. parent would make on the December 31, 2017, conversion worksheet to convert IFRS balances to U.S. GAAP
Bonds is an instrument which is used by issuer to raise debt from an individual, group and company. Bonds are provided to those holders who provides debt in the exchange for example individual A has provided $200,000 to company X then, in the exchange of debt company X provided bonds to the individual.
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