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$7\mathrm{.}5$

points

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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$.$ issued convertible bonds at their face value of $107,500$ lira on December $31,2024.$ 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:

Prepare journal entries for this compound financial instrument for the year ending December $31,2024,$ under $(1)$ IFRS and $(2)$ U$.$S$.$ GAAP. Abbreviated PV Table

Prepare the entry$($ies$)$ that the U$.$S$.$ parent would make on the December $31,2024,$ conversion worksheet to convert IFRS balances to U$.$S$.$ GAAP. Abbreviated PV Table