Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2021. Company management has classified the bonds as an available for sale investment. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200 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, 2021, was $210 million. Required: 1. & 2. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2021 and interest on December 31, 2021, at the effective (market) rate. 3. Prepare any additional Journal entry necessary for Tanner-UNF to report its investment in the December 31, 2021, 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, 2022, for $190 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. Reg 1 and 2 Reg 3 Reg 4 Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2022, for $190 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 the first account field. Enter your answers in millions rounded to 1 decimal place, te, 5,500,000 should be entered as 5.5).) Show less No Debit Credit 1 Date General Journal January 02, 2022 Loss on investment (unrealized. OCI Fair value adjustment 20.0 20.0 2 January 02, 2022 Fair value adjustment 10.0 January 2, 2022, for $190 million. Prepare the journal entries necessary to record the sale, including updating the fe adjustment, recording any reclassification adjustment, and recording the sale. Complete this question by entering your answers in the tabs below. Req 1 and 2 Req3 Reg 4 Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investmer on January 2, 2022, for $190 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 the first account field. Enter your answers in millions rounded to 1 decimal place, (I.e., 5,500,000 should be entered as 5.5).) Show less No Date Debit Credit 1 General Journal January 02, 2022 Loss on investment (unrealized, OCI) Fair value adjustment 20.0 20.0 2 January 02, 2022 Fair value adjustment Reclassification adjustment (OCI) 10.0 10.0 3 January 02, 2022 Cash 190.0 Loss on investment (NI) Discount on bond investment Investment in bonds 10.8 39,2 240.0
