Tanner-UNF Corporation acquired as a long-term investment $150 million of 4% bonds, dated July 1, on July 1, 2024. Company 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 6% for bonds of similar risk and maturity. Tanner-UNF paid $120 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, 2024, was $130 million.

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

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 $100 million. Prepare the journal entries to record the sale.