Just missing Increase (Decrease) Fair Value Adjustment for 12/31/2021 and Journal Entry 3 and 6, thank you so much!
Federal Semiconductors issued 8% bonds, dated January 1, with a face amount of $750 million on January 1, 2021. The bonds sold for $680,994,058 and mature on December 31, 2040 (20 years). For bonds of similar risk and maturity the market yield was 9%. Interest is paid semiannually on June 30 and December 31. Federal determines interest at the effective rate. Federal elected the option to report these bonds at their fair value. On December 31, 2021, the fair value of the bonds was $670 million as determined by their market value in the over-the-counter market. Assume the fair value of the bonds on December 31, 2022 had risen to $676 million. Required: Complete the below table to record the following journal entries. 1. & 2. Prepare the journal entries to adjust the bonds to their fair value for presentation in the December 31, 2021, balance sheet, and adjust the bonds to their fair value for presentation in the December 31, 2022, balance sheet. Federal determined that none of the change in fair value in 2021 was due to a decline in general interest rates and one-half of the increase in fair value in 2022 was due to a decline in general interest rates. Semiannual Interest Period-End Cash Interest Bond Interest Paid Expense Increase in Balance Carrying Value Fair Value Fair value adjustment balance needed Increase (decrease) in Fair value adjustment 0 01/01/2021 06/30/2021 12/31/2021 06/30/2022 12/31/2022 $ 30,000,000 $ 30,644,733 $ 30,000,000 30,673,746 30,000,000 30,704,064 30,000,000 30,735,747 12,312,537 $ 680,994,058 $ 681,638,791 682,312,537 $ 670,000,000 $ 683,016,601 683,752,348 $ 676,000,000 $ 644,733 673,746 704,064 735,747 7,752,348 (4,560,189) Fair Value Adjustment Net Liability(FMV) 01/01/2021 06/30/2021 12/31/2021 Bonds Payable 680,994,058 01/01/2021 644,733 06/30/2021 673,746 12/31/2021 682,312,537 704,064 06/30/2022 735,747 12/31/2022 683,752,348 $ 12,312,537 12,312,537 $ 670,000,000 06/30/2022 12/31/2022 (4,560,189) 7,752,348 $ 676,000,000 10 No Credit Date June 30, 2021 Debit 30,644,733 1 General Journal Interest expense Discount on bonds payable Cash 644,733 30,000,000 4.16 points 2 December 31, 202 Interest expense 30,673,746 Discount on bonds payable Cash 673,746 30,000,000 3 December 31, 202 Fair value adjustment Gain on bonds payable (unrealized, OCI) 4 June 30, 2022 30,704,064 Interest expense Discount on bonds payable Cash OOO 704,064 30,000,000 5 December 31, 202 Interest expense 30,735,747 0 Discount on bonds payable Cash 735,747 30,000,000 6 December 31, 202 Loss on bonds payable (unrealized, NI) Loss on bonds payable (unrealized, OCI) Fair value adjustment
