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Federal Semiconductors issued 8% bonds, dated January 1, with a face amount of $850 million on January 1, 2018. The bonds sold for $771,793,266 and mature on December 31, 2037 (20 years). For bonds of similar risk and maturity the market yield was 9%. Interest is paid semiannually on June 30 and December 31. Federal determines interest at the effective rate. Federal elected the option to report these bonds at their fair value. On December 31, 2018, the fair value of the bonds was $760 million as determined by their market value in the over-the-counter market. Assume the fair value of the bonds on December 31, 2019 had risen to $766 million. Required: Complete the below table to record the following journal entries. 1. & 2. Prepare the journal entry to adjust the bonds to their fair value for presentation in the December 31, 2018, balance sheet, and adjust the bonds to their fair value for presentation in the December 31, 2019, balance sheet. Federal determined that one-half of the increase in fair value was due to a decline in general interest rates.

semi-annual interest period-end cash interest paid bond interest expense increase in balance carrying value far value unrealized holding gain/loss
01/01/2018 771,793,266
06/30/2018 ? ?
12/31/2018 ? ? 760,000,000 ?
06/302019 ?
12/31/2019 ? 766,000,000 ?
Bonds Payable BP Fair Value Adjustment FVA
01/01/2018 771,793,266
06/30/2018
12/31/2018
771,793,266
06/30/2019
12/31/2019
771,793,226

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Nelly Stracke
Nelly StrackeLv2
28 Sep 2019

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Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2018. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. Company management has classified the bonds as available-for-sale investments. As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $210 million.

Required:
1. & 2. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate.
3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, balance sheet.
4. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2019, for $190 million. Prepare the journal entries necessary to record the sale, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale.

Tanner-UNF Corporation acquired as a long-term investment $300million of 6% bonds, dated July 1, on July 1, 2018. The marketinterest rate (yield) was 8% for bonds of similar risk andmaturity. Tanner-UNF paid $250 million for the bonds. The companywill receive interest semiannually on June 30 and December 31.Company management is holding the bonds in its trading portfolio.As a result of changing market conditions, the fair value of thebonds at December 31, 2018, was $260 million.

Required:
1. & 2. Prepare the journal entry to recordTanner-UNF’s investment in the bonds on July 1, 2018 and intereston December 31, 2018, at the effective (market) rate.
3. Prepare any additional journal entry necessaryfor Tanner-UNF to report its investment in the December 31, 2018,balance sheet.
4. Suppose Moody’s bond rating agency downgradedthe risk rating of the bonds motivating Tanner-UNF to sell theinvestment on January 2, 2019, for $240 million. Prepare thejournal entries to record the sale.

please include work so I can understand how you came up with the answer

On March 31, 2018, Chow Brothers, Inc., bought 10% of KT Manufacturing’s capital stock for $50 million. KT’s net income for the year ended December 31, 2018, was $80 million. The fair value of the shares held by Chow was $35 million at December 31, 2018. KT did not declare or pay a dividend during 2018.


Required:
1. Prepare all appropriate journal entries related to the investment during 2018.

2. Assume that Chow sold the stock on January 20, 2019 for $30 million. Prepare the journal entry Sanborn would use to record the sale.

journal entry for #1

1.Record the purchase of KT Manufacturing’s capital stock for $50 million.

2. Record the entry for KT's net income.

3 Record the fair value adjustment.

jounal entry for #2 1. Record the sale of stock on January 20, 2019 for $30 million.

As a long-term investment at the beginning of the 2018 fiscal year, Florists International purchased 30% of Nursery Supplies Inc.'s 8 million shares for $56 million. The fair value and book value of the shares were the same at that time. During the year, Nursery Supplies earned net income of $40 million and distributed cash dividends of $1.25 per share. At the end of the year, the fair value of the shares is $52 million.

Required:
Prepare the appropriate journal entries from the purchase through the end of the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in millions, (i.e., 10,000,000 should be entered as 10).)

1 Record the investment in Nursery Supplies shares.

2 Record the investment revenue in Nursery Supplies shares.

3 Record the cash dividends received from Nursery Supplies shares.

4 Record fair value adjustment at year-end.

Tanner-UNF Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2018. The market interest rate (yield) was 8% for bonds of similar risk and maturity. Tanner-UNF paid $200 million for the bonds. The company will receive interest semiannually on June 30 and December 31. Company management has classified the bonds as available-for-sale investments. As a result of changing market conditions, the fair value of the bonds at December 31, 2018, was $210 million.

Required:
1. & 2. Prepare the journal entry to record Tanner-UNF’s investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate.

transaction list 1 Record Tanner-UNF’s investment in the bonds on July 1, 2018. 2 Record interest on December 31, 2018.

3. Prepare any additional journal entry necessary for Tanner-UNF to report its investment in the December 31, 2018, balance sheet.

transaction list
Record interest on December 31, 2018.

4. Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2019, for $190 million. Prepare the journal entries necessary to record the sale, including updating the fair-value adjustment, recording any reclassification adjustment, and recording the sale.

transactin list 1. Record the entry for fair-value adjustment, AFS investment. 2 Record the entry for reclassification adjustment.3 Record the sale of the investment by Tanner-UNF.

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