esTanner-UNF Corporation acquired as a long-term Investment $170 million of 6% bonds, dated July 1, on July 1, 2024. Companymanagement has the positive Intent and ability to hold the bonds until maturity, but when the bonds were acquired, Tanner-UNFdecided to elect the fair value option for accounting for Its Investment. The market Interest rate (yleld) was 8% for bonds of similar riskand maturity. Tanner-UNF paid $140 million for the bonds. The company will receive Interest semiannually on June 30 and December31. As a result of changing market conditions, the fair value of the bonds at December 31, 2024, was $150 million.Required:1. How would this Investment be classified on Tanner-UNF's balance sheet?2. to 4. Prepare the journal entry to record Tanner-UNF's Investment in the bonds on July 1, 2024, Interest on December 31, 2024, atthe effective (market) rate, and fair value changes as of December 31, 2024.5. At what amount will Tanner-UNF report Its Investment in the December 31, 2024, balance sheet?6. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the Investment onJanuary 2, 2025, for $120 million. Prepare the Journal entries to record the sale.Complete this question by entering your answers in the tabs below.Aeq 1Reg 2 to 4ClassificationReq 5Req 6How would this investment be classified on Tanner-UNF's balance sheet?Trading securities

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Tanner-UNF Corporation acquired as a long-term Investment $170 million of 6% bonds, dated July 1, on July 1, 2024. Company management has the positive Intent and ability to hold the bonds until maturity, but when the bonds were acquired, Tanner-UNF decided to elect the fair value option for accounting for Its Investment. The market Interest rate (yleld) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $140 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 $150 million.

Tanner-UNF Corporation acquired as a long-term Investment $170 million of 6% bonds, dated July 1, on July 1, 2024. Company management has the positive Intent and ability to hold the bonds until maturity, but when the bonds were acquired, Tanner-UNF decided to elect the fair value option for accounting for Its Investment. The market Interest rate (yleld) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $140 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 $150 million.

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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E4
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