Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Tanner NF Corporation acquired as a long-term investment $260 millionof 6% bonds, dated July 1, on July 1, 2018. The market interest rate yield receive

image text in transcribed
Tanner NF Corporation acquired as a long-term investment $260 millionof 6% bonds, dated July 1, on July 1, 2018. The market interest rate yield receive interest semiannually on June 30 and Dec investments. As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $230 million was 8% for bonds of similar risk and maturity Tanner UNF paid $220 millionfor the bonds. The company wil ember 31. Company management has classified the bonds as available-for-sale Required: 1. & 2. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2018 and interest on December 31.2018, at the effective (market) rate. 3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, balance sheet. 4. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2019, for $200 million. Prepare the journal entries necessary to record the sale, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale. Complete this question by entering your answers in the tabs below. Req1 and 2 Req 3 Req 4 Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2019, for $200 million. Prepare the journal entries necessary to record the sale, including updating the fair- value adjustment, recording any reclassification adjustment, and recording the sale. (If no entry is required for a transaction/event, select "No journal entry required" in t decimal place, (i.e., 5,500,000 should be entered as 5.5).) he first account field. Enter your answers in millions rounded to1 Show less A View transaction list Journal entry worksheet 2 3

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Corporate Risk Management

Authors: Faisal F. Al-Thani, Tony Merna

2nd Edition

0470518332, 978-0470518335

More Books

Students also viewed these Accounting questions