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 $116,000$ lira on December $31,2020.$ The bonds have a $8-$year life with interest

of $13$ percent payable annually. At the date of issue, the prevailing interest rate for similar debt without a conversion option was $15$

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.