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In: Accounting
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $70 million of 6% bonds, dated January...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $70 million of 6% bonds, dated January 1, on January 1, 2018. Management intends to have the investment available for sale when circumstances warrant. When the company purchased the bonds, management elected to account for them under the fair value option. For bonds of similar risk and maturity the market yield was 8%. The price paid for the bonds was $55 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 $60 million. Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). 4-a. At what amount will Fuzzy Monkey report its investment in the December 31, 2018, balance sheet? 4-b. Prepare the journal entry necessary to achieve this reporting objective. 5. How would Fuzzy Monkey’s 2018 statement of cash flows be affected by this investment assuming Fuzzy anticipates holding these investments for a sufficiently long period?
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ekkarill92 answered 1 year agoRelated Solutions
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $80 million of 6% bonds, dated January...
Fuzzy Monkey Technologies, Inc., purchased as a long-term
investment $80 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 yield was 8%. The price paid for the bonds was $64 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,...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $90 million of 6% bonds, dated January...
Fuzzy Monkey Technologies, Inc., purchased as a long-term
investment $90 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 yield was 8%. The price paid for the bonds was $73 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,...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $60 million of 6% bonds, dated January...
Fuzzy Monkey Technologies, Inc., purchased as a long-term
investment $60 million of 6% bonds, dated January 1, on January 1,
2021. Management intends to have the investment available for sale
when circumstances warrant. For bonds of similar risk and maturity
the market yield was 8%. The price paid for the bonds was $46
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, 2021, was...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $80 million of 6% bonds, dated January...
Fuzzy Monkey Technologies, Inc., purchased as a long-term
investment $80 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 yield was 8%. The price paid for the bonds was $64 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,...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $ 180 million of 6% bonds, dated...
Fuzzy Monkey Technologies, Inc., purchased as a long-term
investment $ 180 million of 6% bonds, dated January 1, on January
1, 2018. Management intends to have the investment available for
sale when circumstances warrant. For bonds of similar risk and
maturity the market yield was 8%. The price paid for the bonds was
$160 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,...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $ 80 million of 6% bonds, dated...
Fuzzy Monkey Technologies, Inc., purchased as a long-term
investment $ 80 million of 6% bonds, dated January 1, on January 1,
2018. Management intends to have the investment available for sale
when circumstances warrant. For bonds of similar risk and maturity
the market yield was 8%. The price paid for the bonds was $64
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,...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $80 million of 8% bonds, dated January...
Fuzzy Monkey Technologies, Inc., purchased as a long-term
investment $80 million of 8% bonds, dated January 1, on January 1,
2021. Management intends to have the investment available for sale
when circumstances warrant. For bonds of similar risk and maturity
the market yield was 10%. The price paid for the bonds was $66
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, 2021, was...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $110 million of 10% bonds, dated January...
Fuzzy Monkey Technologies, Inc., purchased as a long-term
investment $110 million of 10% 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 yield was 12%. The price paid for the bonds was $94 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,...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $80 million of 8% bonds, dated January...
Fuzzy Monkey Technologies, Inc., purchased as a long-term
investment $80 million of 8% bonds, dated January 1, on January 1,
2021. Management has the positive intent and ability to hold the
bonds until maturity. For bonds of similar risk and maturity the
market yield was 10%. The price paid for the bonds was $66 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, 2021,...
Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $80 million of 8% bonds, dated January...
Fuzzy Monkey Technologies, Inc., purchased as a long-term
investment $80 million of 8% bonds, dated January 1, on January 1,
2021. Management intends to have the investment available for sale
when circumstances warrant. For bonds of similar risk and maturity
the market yield was 10%. The price paid for the bonds was $66
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, 2021, was...
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