A company acquired as a long - term investment $ 1 5 0 million of 4 .
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Question:
A company acquired as a longterm investment $ million of bonds, dated July on July Year Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate yield was for bonds of similar risk and maturity. The company paid $ million for the bonds. The company will receive interest semiannually on June and December As a result of changing market conditions, the fair value of the bonds at December Year was $ million.
Required:
& Prepare the journal entry to record the company's investment in the bonds on July Year and interest on December Year at the effective market rate.
At what amount will the company report its investment in the December Year balance sheet?
Suppose Moodys bond rating agency downgraded the risk rating of the bonds motivating the company to sell the investment on January Year for $ million. Prepare the journal entry to record the sale.
Related Book For
Intermediate Accounting
ISBN: 9781259722660
9th Edition
Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas
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