Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $90 million of 6% bonds, dated January 1, on January 1, 2021. Management intends to have the investment available for sale when circumstances warrant. When the company purchased the bonds, management elected to account for them under the fair value option. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $73 million. Interest is received semiannually on June 30 and December 31. Due to changing market conditions, the fair value of the bonds at December 31, 2021, was $80 million. Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). 4-a. At what amount will Fuzzy Monkey report its investment in the December 31, 2021, balance sheet? 4-b. Prepare the journal entry necessary to achieve this reporting objective. 5. How would Fuzzy Monkeys 2021 statement of cash flows be affected by this investment assuming Fuzzy anticipates holding these investments for a sufficiently long period? (If more than one approach is possible, indicate the one that is most likely.)

• 1

  Record Fuzzy Monkeys investment on bonds on January 1, 2021.

• 2

  Record the interest revenue on June 30, 2021.

• 3

  Record the interest revenue on December 31, 2021.

4A

Complete this question by entering your answers in the tabs below.

• Req 1 to 3
• Req 4A
• Req 4B
• Req 5

At what amount will Fuzzy Monkey report its investment in the December 31, 2021, balance sheet? (Enter your answer in millions (i.e., 10,000,000 should be entered as 10).)

4B

• Record any necessary entry to report the investment at the correct value on the balance sheet.

How would Fuzzy Monkeys 2021 statement of cash flows be affected by this investment assuming Fuzzy anticipates holding these investments for a sufficiently long period? (If more than one approach is possible, indicate the one that is most likely.) (Do not round intermediate calculations. Enter all amounts as positive values. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as 5.5).)

Show less

Operating cash flow		million
Investing cash flow		million