Tanner-UNF Corporation acquired as a long-term investment $245 million of 8% bonds, dated July 1, on July 1, 2018. The marketinterest rate (yield) was 10% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company willreceive interest semiannually on June 30 and December 31. Company management has classified the bonds as available-for-saleinvestments. As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $205 million.Required:1. & 2. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2018 and interest on December 31, 2018, atthe effective (market) rate.3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, balance sheet. 4. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment onJanuary 2, 2019, for $180 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.Req and 2No12Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investmenton January 2, 2019, for $180 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 atransaction/event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1decimal place, (i.e., 5,500,000 should be entered as 5.5).)3Req 3Event123Req 4X Answer is not complete.No journal entry requiredGeneral JournalUnrealized holding loss-OCIFair value adjustmentCashDiscount on bond investmentLoss on sale of investmentsInvestment in bonds››X›› › ›✓✓✓Debit4.8180.0✔44.820.2✔CreditShow less ▲4.8 X245.0✔✓

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Tanner-UNF Corporation acquired as a long-term investment $245 million of 8% bonds, dated July 1, on July 1, 2018. The market interest rate (yield) was 10% 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 $205 million. Required: 1. & 2. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate. 3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, balance sheet.

Tanner-UNF Corporation acquired as a long-term investment $245 million of 8% bonds, dated July 1, on July 1, 2018. The market interest rate (yield) was 10% 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 $205 million. Required: 1. & 2. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate. 3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, balance sheet.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 1RE

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