Mills Corporation acquired as a long-term investment $260 million of 6% bonds, dated July 1, on July 1, 2018. Mills determined that it should account for the bonds as an available-for-sale investment. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Mills paid $300 million for the bonds. The company will receive interest semiannually on June 30 and December 31. As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $280 million.

Suppose Moodys bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2019, for $314 million. Prepare the journal entries to record the sale.

Record the updating the fair-value adjustment.

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(Reclassification adjustment-OCI is right answer)

Journal entry worksheeft 2 Record the updating the fair-value adjustment. Note: Enter debits before credits. Event General Journal Debit Credit Reclassification adjustment-oCi Record entry Clear entry View general journal