Turtle Inc., purchased as a long-term investment S80 million of 8% bonds, dated January 1, on January 1, 2017. Management intends to have the investment available for sale when circumstances warrant. 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, 2017, was $70 million. a. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). b. At what amount will Turtle Inc. report its investment in the December 31, 2017, balance sheet? c. Prepare the entry necessary to achieve this reporting objective. SHOW IN EXCEL PLEASE

Turtle Inc., purchased as a long-term investment S80 million of 8% bonds, dated January 1, on January 1, 2017. Management intends to have the investment available for sale when circumstances warrant. 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, 2017, was $70 million. a. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate). b. At what amount will Turtle Inc. report its investment in the December 31, 2017, balance sheet? c. Prepare the entry necessary to achieve this reporting objective. SHOW IN EXCEL PLEASE

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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