Cheery Company Follows IFRS for Its Financial Reporting

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.
-When Cheery records interest expense on December 31,2015 the entry will include

A) A debit to interest expense for €25 million.
B) A credit to convertible notes payable for €12.5 million.
C) A debit to convertible notes payable for €17.5 million.
D) A credit to convertible notes payable for €5 million