Problem -

Norman Co., a fast-growing golf equipment company, uses GAAP. It is considering the issuance of convertible bonds. The bonds mature in 10 years, have a face value of $400,000, and pay interest annually at a rate of 4%. The equity component of the bond issue has a fair value of $35,000. Greg Shark is curious as to the difference in accounting for these bonds if the company were to use IFRS.

A) Prepare the entry to record issuance of the bonds at par under GAAP.

B) Repeat the requirement for part "a" assuming application of IFRS to the bond issuance.

C) Which approach provides the better accounting? Explain.