Business, 20.12.2019 03:31 mostman077

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 semi-annually 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 $210 million.
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.
4. 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 $190 million. prepare the journal entries to record the sale.

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Tanner-unf corporation acquired as a long-term investment $240 million of 6% bonds, dated july 1, on...