A company is considering issuing $10 000 000 of lo
A company is considering issuing $10,000,000 of long-term debt with a 6% coupon rate or the same amount of convertible debt with a 5% coupon rate. Both will be issued at par and have the same maturity. Which statement below best describes the impact on the firm’s debt ratio?
A. The debt ratio would be higher for U.S.GAAP than for IFRS.
B. The debt ratio would be lower for U.S.GAAP than for IFRS.
C. The debt ratio would be the for U.S.GAAP than for IFRS.
参考解答
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2024-11-07 09:38:40
Ans:A.
Under U.S.GAAP the entire amount of the issue is recorded as debt while under IFRS the amount of the issue is split into the fair value of the debt and the difference between fair value and issue value is recorded as (option) equity.
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