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FINANCIAL ACCOUNTING
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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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. İssued 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 prevalling interest rate for similar debt without a conversion option was 12 percent. Required: a. Prepare journal entries for this campound financial Instrument for the year ending December 31, 2020, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entrylies) 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.)
Transcribed Image Text: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. İssued 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 prevalling interest rate for similar debt without a conversion option was 12 percent. Required: a. Prepare journal entries for this campound financial Instrument for the year ending December 31, 2020, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entrylies) 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.)
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