Mills Corporation acquired as a long-term investment $220 1 of 6% bonds, dated July July Company management has classified the bonds as an available-for-sale Investment. The market Interest rate (yield) was 4% for bonds of similar risk and maturity. Mills paid $270 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, 2024, was $250 million. Required: 1. & 2. Prepare the journal entry to record Mills' Investment in the bonds on July 1, 2024 and Interest on December 31, 2024, at the effective (market) rate. 3. At what amount will Mills report its investment in the December 31, 2024, balance sheet? 4. Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the Investment on January 2, 2025, for $280 million. Prepare the journal entries required on the date of sale. Answer is not complete.

Mills Corporation acquired as a long-term investment $220 1 of 6% bonds, dated July July Company management has classified the bonds as an available-for-sale Investment. The market Interest rate (yield) was 4% for bonds of similar risk and maturity. Mills paid $270 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, 2024, was $250 million. Required: 1. & 2. Prepare the journal entry to record Mills' Investment in the bonds on July 1, 2024 and Interest on December 31, 2024, at the effective (market) rate. 3. At what amount will Mills report its investment in the December 31, 2024, balance sheet? 4. Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the Investment on January 2, 2025, for $280 million. Prepare the journal entries required on the date of sale. Answer is not complete.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Consolidation

Consolidation in general examination implies an asset oscillating between well-defined methods of trading status. Consolidation is commonly known as market indecisiveness, which completes when the asset's values move forward or backward the trading structure.

Question

Mills Corporation acquired as a long-term Investment $220 million of 6% bonds, dated July 1, on July 1, 2024. Company management
has classified the bonds as an available-for-sale Investment. The market Interest rate (yield) was 4% for bonds of similar risk and
maturity. Mills paid $270 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, 2024, was $250 million.
Required:
1. & 2. Prepare the journal entry to record Mills' Investment in the bonds on July 1, 2024 and Interest on December 31, 2024, at the
effective (market) rate.
3. At what amount will Mills report its Investment in the December 31, 2024, balance sheet?
4. Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the Investment on January 2,
2025, for $280 million. Prepare the journal entries required on the date of sale.
Answer is not complete.
Complete this question by entering your answers in the tabs below.
Req 1 and 2
Req 2
Req 4
Suppose Moody's bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on
January 2, 2025, for $280 million. Prepare the journal entries required on the date of sale.
Note: If no entry is required for a transaction/event, select 'No journal entry required" in the first account field. Do not round
intermediate calculations. Enter your answers in millions rounded to 1 decimal place, (i.e., 5,500,000 should be entered as
5.5).
No
Date
General Journal
1
January 02.2025 Fair value adjustment
Gain on investment (unrealized, OCI)
Show less▲
Debit
Credit
30.0
30.0
2
January 02.2025 Reclassification adjustment (OCI)
22.0 x
Fair value adjustment
22.0
3
January 02. 2025 Cash
Investment in bonde
Gain on investment (NI)
280.0
250.0
30.0
< Req 3
Req 4

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