Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $80 million of 8% bonds, dated January 1, on January 1, 2024. 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, 2024, was $70 million.
Fuzzy Monkey Technologies, Incorporated purchased as a long-term investment $80 million of 8% bonds, dated January 1, on January 1, 2024. 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, 2024, was $70 million.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Step 1: Define 'Investments':
VIEWStep 2: (1 to 3) Prepare the relevant journal entries on the respective dates:
VIEWStep 3: (4) Determine the amount to report its investment in the December 31, 2021, balance sheet:
VIEWStep 4: (5) Determine the impact of investment on statement of cash flows:
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