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Problem 12-1 Securities held-to-maturity; bond investment; effective interest [LO12-1, 12-2] Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $210 million of 6% bonds, dated
Problem 12-1 Securities held-to-maturity; bond investment; effective interest [LO12-1, 12-2] Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $210 million of 6% bonds, dated January 1, on January 1, 2018. Management has the positive intent and ability to hold the bonds until maturity. For bonds of similar risk and maturity the market yielod was 8%. The price paid for the bonds was $192 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, 2018, was $200 million. Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate) 4. At what amount will Fuzzy Monkey report its investment in the December 31, 2018, balance sheet? 5. How would Fuzzy Monkey's 2018 statement of cash flows be affected by this investment? nt Sheet
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