Mills Corporation acquired as an investment $245 million of 8% bonds, dated July 1, on July1, 2024. Company management is holding the bonds in its trading portfolio. The marketinterest rate (yield) was 6% for bonds of similar risk and maturity. Mills paid $280 million forthe bonds. The company will receive interest semiannually on June 30 and December 31. As aresult of changing market conditions, the fair value of the bonds at December 31, 2024, was $ 260 million. Required: 1. & 2. Prepare the journal entry to record Mills' investment in thebonds on July 1, 2024 and interest on December 31, 2024, at the effective (market) rate. 3.Prepare the journal entry by Mills to record any fair value adjustment necessary for the yearended December 31, 2024. 4. Suppose Moody's bond rating agency upgraded the riskrating of the bonds, and Mills decided to sell the investment on January 2, 2025, for $295million. Prepare the journal entries required on the date of sale.

Mills Corporation acquired as an investment $245 million of 8% bonds, dated July 1, on July 1, 2024. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 6% for bonds of similar risk and maturity. Mills paid $280 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 $

Mills Corporation acquired as an investment $245 million of 8% bonds, dated July 1, on July 1, 2024. Company management is holding the bonds in its trading portfolio. The market interest rate (yield) was 6% for bonds of similar risk and maturity. Mills paid $280 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 $

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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