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How much interest expense will be recorded

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Question - Cheery Company follows IFRS for its financial reporting. On January, Cheery issued 250 million euros of 10 year convertible notes that pay interest at 5% annually. Investors pay 250 million euros 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 euros

On Cheery's December 31, 2015 income statement how much interest expense will be recorded?

A) 25 million euros

B) 12.5 million euros

C) 17.5 million euros

D) 8.75 million euros

Reference no: EM132633638

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