Tanner$-$UNF Corporation acquired as a long$-$term investment $$250$ million of $5\%$ bonds, dated July $1,$ on July $1,2024.$ Company Answer is complete but not entirely correct.

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

Req $1$

Req $2$ to $4$

Req $6$

How would this investment be classified on Tanner$-$UNF's balance sheet? Complete this question by entering your answers in the tabs below.

Req $1$

Req $2$ to $4$

Req $5$

Prepare the journal entry to record Tanner$-$UNF's investment in the bonds on July $1,2024,$ interest on December $31,2024,$ at the effective $($market$)$ rate, and fair value changes as of December $31,2024.$

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to $2$ decimal places $($i$.$e$.,5,50,000$ should be entered as $5\mathrm{.}50).$

Show less

$\backslash$table$[[$No$,$Transaction,General Journal,Debit,Credit$],[1,1,$Investment in bonds,$(,250\mathrm{.}00,],[,,$Discount on bond investment,$(>),,40\mathrm{.}00],[,,$Cash,$(,,210\mathrm{.}00],[2,2,$Cash,$(,6\mathrm{.}00\backslash$times $,],[,,$Discount on bond investment,$(>),1\mathrm{.}35\backslash$times $,],[,,$Interest revenue,$,,7\mathrm{.}35],[3,3,$Fair value adjustment,$,11\mathrm{.}35\backslash$times $,],[,,$Gain on investment $($unrealized$,$ OCI$),\backslash$times $,,11\mathrm{.}35\backslash$times $]]$

Req $1$

Req $5$ Complete this question by entering your answers in the tabs below.

Req $2$ to $4$

Req $5$

Req $6$

Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner$-$UNF to sell the investment on January $2,2025,$ for $$200$ million. Prepare the journal entries to record the sale.

Note: If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" in the first account field. Do not round intermediate calculations. Enter your answers in millions rounded to $2$ decimal places $($i$.$e$.,5,500,000$ should be entered as $5\mathrm{.}50).$

Show less $4$

management has the positive intent and ability to hold the bonds until maturity, but when the bonds were acquired, Tanner$-$UNF

decided to elect the fair value option for accounting for its investment. The market interest rate $($yield$)$ was $7\%$ for bonds of similar risk

and maturity. Tanner$-$UNF paid $$210$ million for the bonds. The company will receive interest semiannually on June $30$ and December

As a result of changing market conditions, the fair value of the bonds at December $31,2024,$ was $$220$ million.

Required:

How would this investment be classified on Tanner$-$UNF's balance sheet?

to $4.$ Prepare the journal entry to record Tanner$-$UNF's investment in the bonds on July $1,2024,$ interest on December $31,2024,$ at

the effective $($market$)$ rate, and fair value changes as of December $31,2024.$

At what amount will Tanner$-$UNF report its investment in the December $31,2024,$ balance sheet?

Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner$-$UNF to sell the investment on

January $2,2025,$ for $$200$ million. Prepare the journal entries to record the sale.