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Izmir A.S. issued convertible bonds at their face value of 134,000 lira on December 31, 2017. The bonds have a 10-year life with interest of 11 percent payable annually. At the date of issue, the prevailing interest rate for similar debt without a conversion option was 13 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 financial statements. Ignore income taxes.
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