1. Record fuzzy monkey's

Problem 12-4 Fair value option; bond investment; effective interest [LO12-1, 12-2, 12-3, 12-4, 12-8]

Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $80 million of 8% bonds, dated January 1, on January 1, 2018. Management intends to have the investment available for sale when circumstances warrant. When the company purchased the bonds, management elected to account for them under the fair value option. 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, 2018, was $70 million. Required: 1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate).

• 1
  Record Fuzzy Monkeys investment on bonds on January 1, 2018.
• 2
  Record the interest revenue on June 30, 2018.
• 3
  Record the interest revenue on December 31, 2018.

4-a. At what amount will Fuzzy Monkey report its investment in the December 31, 2018, balance sheet? 4-b. Prepare the journal entry necessary to achieve this reporting objective. 5. How would Fuzzy Monkeys 2018 statement of cash flows be affected by this investment assuming Fuzzy anticipates holding these investments for a sufficiently long period?

Please answer all questions.

Problem 12-4 Fair value option; bond investmenl; effective inleresi [LO12-1, 12-2, 12-3, 12-4, 12-8] FuZZV Monkey lennclcgies, Inc. purchased isa ontlern rveerment S8rri llor or B bonds daled January on January.' 2Q12. Mal agement intends to have te : werrent V11acle fcr sale wre circumst3rces war at. When te comoary purchased te xnos, concitions. Ine tar vaJe the bonosa: Decenoer 31, 20-S,'HESS/milli on. Roquired: 4-a. At wral errount Vell uzzv Money, lepot its investmen: in theecerreer 31 218, belar ce sreet? 4-b, cpere te . ornal etry necessary to ach ieve the report ng ocdsctive urmplete this question by entering your dnswers in the, tubs below calculaticns. Enter licnsrcunced tc E cecimal poces, (e., s. soJ. JCO should be entered as 5.5J vcu- cns-er: n 1. 2019 . Recuro the interest revenue oi June 31, 2113. ecord the intrt rerbar 31, 2c13. Req 4 R2C 4 t ha: arount wi Fuzzy Monkey repot its nvesrent in the Decsmte- 31, 2018, baance shee? (Dc rot rourd rntermedate calcustions Ene your aswer n rilioi. 10,000,000 stould e entered as 10) 1 tr 3 rilions roi.nded to 3 deca placas, a5,5C, shouid be entarad a 5.50. Journal entry worksheet Dccembr 31, 2010 Record entry Clear eniry ew general journal eUJ'daG tu 1 stin'el oldie, i, 5,500,000 s.ILudbs tst-G es5,5)., rtl