From Intermediate Accounting 9th Edition by J David Spiceland E 12 10 Tanner UNF Corporation acquired as a long term investment $240 million of 6 bonds, dated July 1, on July 1, 2018 The market interest rate (yield) was 8 for bonds of similar risk and maturity Tanner UNF paid $200 million for the bonds The company will receive interest semiannually on June 30 and December 31 Company management has classified the bonds as available for sale investments As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $210 million Required Prepare the journal entry to record Tanner UNFs investment in the bonds on July 1, 2018 Prepare the journal entries by Tanner UNF to record interest on December 31, 2018, at the effective (market) rate Prepare any additional journal entry necessary for Tanner UNF to report its investment in the December 31, 2018, balance sheet Suppose Moodys bond rating agency downgraded the risk rating of the bonds motivating Tanner UNF to sell the investment on January 2, 2019, for $190 million Prepare the journal entries necessary to record the sale, including updating the fair value adjustment, recording any reclassification adjustment, and recording the sale

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From Intermediate Accounting 9th Edition by J.David Spiceland E 12-10 Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1,

From "Intermediate Accounting 9th Edition by J.David Spiceland"

E 12-10

Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2018. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. Company management has classified the bonds as available-for-sale investments. As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $210 million.

Required:

Prepare the journal entry to record Tanner-UNFs investment in the bonds on July 1, 2018.
Prepare the journal entries by Tanner-UNF to record interest on December 31, 2018, at the effective (market) rate.
Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, balance sheet.
Suppose Moodys bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2019, for $190 million. Prepare the journal entries necessary to record the sale, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale.