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Cheery Company Follows IFRS for Its Financial Reporting

question 94

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Cheery Company follows IFRS for its financial reporting. On January 1, 2015 Cheery issued €250 million of 10-year convertible notes that pay interest at 5% annually. Investors pay €250 million for the notes even though the company's credit risk at the time implies a 10% interest rate for traditional debt of similar duration. When the cash flows associated with the debt are discounted at 10%, the resulting value is €175 million.
-On Cheery's December 31,2015 income statement how much interest expense will be recorded?


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Prenatal Development

The process of growth and development within the womb from conception to birth.

Longest Period

The most extended duration or time that something exists or continues in effect.

Age Of Viability

The age (about 22 weeks after conception) at which a fetus might survive outside the mother’s uterus if specialized medical care is available.

Weeks

units of time each comprising seven days, commonly used to measure and organize time in a cultural or operational context.

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