Question
In: Accounting
Tanner-UNF Corporation acquired as a long-term investment $200 million of 6% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $200
million of 6% bonds, dated July 1, on July 1, 2018. 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 8% for bonds of similar risk
and maturity. Tanner-UNF paid $170 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, 2018, was $180 million.
Required:
1. How would this investment be classified on
Tanner-UNF's balance sheet?
2. to 4. Prepare the journal entry to record
Tanner-UNF’s investment in the bonds on July 1, 2018, interest on
December 31, 2018, at the effective rate and fair value changes as
of December 31, 2018.
5. At what amount will Tanner-UNF report its
investment in the December 31, 2018, 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, 2019, for $150 million. Prepare the
journal entry to record the sale.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on...
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million of 6% bonds, dated July 1, on July 1, 2021. Company
management has the positive intent and ability to hold the bonds
until maturity. 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...
Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $240
million of 6% bonds, dated July 1, on July 1, 2018. 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.
Company management has classified the bonds as available-for-sale
investments. As a result of changing market conditions, the fair
value of the bonds at December 31, 2018, was $210...
Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $240
million of 6% bonds, dated July 1, on July 1, 2018. 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 8% for bonds of similar risk
and maturity. Tanner-UNF paid $200 million for the bonds. The
company will receive interest semiannually on...
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million of 6% bonds, dated July 1, on July 1, 2018. 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 9% for bonds of similar risk
and maturity. Tanner-UNF paid $280 million for the bonds. The
company will receive interest semiannually on...
Tanner-UNF Corporation acquired as a long-term investment $300 million of 6% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $300
million of 6% bonds, dated July 1, on July 1, 2018. The market
interest rate (yield) was 8% for bonds of similar risk and
maturity. Tanner-UNF paid $250 million for the bonds. The company
will receive interest semiannually on June 30 and December 31.
Company management has classified the bonds as available-for-sale
investments. As a result of changing market conditions, the fair
value of the bonds at December 31, 2018, was $260...
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interest rate (yield) was 8% for bonds of similar risk and
maturity. Tanner-UNF paid $190 million for the bonds. The company
will receive interest semiannually on June 30 and December 31.
Company management has classified the bonds as available-for-sale
investments. As a result of changing market conditions, the fair
value of the bonds at December 31, 2018, was $200...
Tanner-UNF Corporation acquired as a long-term investment $300 million of 6% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $300
million of 6% bonds, dated July 1, on July 1, 2018. The market
interest rate (yield) was 8% for bonds of similar risk and
maturity. Tanner-UNF paid $250 million for the bonds. The company
will receive interest semiannually on June 30 and December 31.
Company management has classified the bonds as available-for-sale
investments. As a result of changing market conditions, the fair
value of the bonds at December 31, 2018, was $260...
Tanner-UNF Corporation acquired as a long-term investment $260 million of 6% bonds, dated July 1, on...
Tanner-UNF Corporation acquired as a long-term investment $260
million of 6% bonds, dated July 1, on July 1, 2018. The market
interest rate (yield) was 8% for bonds of similar risk and
maturity. Tanner-UNF paid $220 million for the bonds. The company
will receive interest semiannually on June 30 and December 31.
Company management is holding the bonds in its trading portfolio.
As a result of changing market conditions, the fair value of the
bonds at December 31, 2018, was...
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