ADV. ACCT CONNECT STAND ALONE
ADV. ACCT CONNECT STAND ALONE
13th Edition
ISBN: 9781266295744
Author: Hoyle
Publisher: MCG
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Chapter 11, Problem 19P

a.

To determine

Determine the appropriate accounting for this compound financial instrument for the year ending December 31, 2017, under (1) IFRS and (2) U.S. GAAP.

b.

To determine

Prepare the entry that the U.S. parent would make on the December 31, 2017, conversion worksheet to convert IFRS balances to U.S. GAAP.

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Izmir A.S. issued convertible bonds at their 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 US. GAAP to prepare consolidated financial statements. Ignore income taxes. Required: a. Prepare journal entries for this compound financial instrument for the year ending December 31. 2017, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31, 2017. conversion worksheet to convert IFRS balances to US. GAAP.
On 2/1/2012, the Union Company issued an amount of 1,500,000 dinars in the form of bonds with a value of 10% due on December 31, 2021. Note that the interest rate in the market is 11%. Interest on the bonds is accrued annually at the end of each year 12/31. The bond carries a callable bound, and the company decided to use the real interest method to amortize the difference between the bond interest rate and the market price, and on 1/2/2015, Al-Ittihad decided to call the bond (pay the bond value) at 1,010,000 dinars of the face value for bonds.Required:(A) Determining the price of Union Company bonds when they are issued on 2/1/2012.(B) Determining the book value of the bond in 2016. (Through the amortization schedule for the period 2012-2016 or using the formula)(C) Preparing the journal entries for the bond payment on 2/1/2015.
tzmir A.S. issued convertible bonds at their 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 coverted to U.S. GAAP to prepare consolidated financial statements. Ignore income taxes. Required: a. Prepare journal entries for this compound financial instrument for the year ending December 31. 2017, under (1) IFRS and (2) U.S. GAAP. b. Prepare the entry(ies) that the U.S. parent would make on the December 31. 2017, conversion worksheet to convert IFRS balances to U.S. GAAP
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