Business, 02.04.2020 02:18 nehakarakkattu

Tanner-UNF Corporation acquired as a long-term investment $170 million of 6% bonds, dated July 1, on July 1, 2013. 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 (yield) 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, 2013, was $150 million.

Required:

1. How would this investment be classified on Tanner-UNF's balance sheet? Significant-influence investments Other securities Available-for-sale securities Trading securities Held-to-maturity securities.

2. Prepare the journal entry to record Tanner-UNF's investment in the bonds on July 1, 2013. (If no entry is required for a particular 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).)

3. Prepare the journal entry used by Tanner-UNF to record interest on December 31, 2013, at the effective (market) rate. (If no entry is required for an event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place, (i. e., 5,500,000 should be entered as 5.5).)

4. Prepare any journal entry necessary to recognize fair value changes as of December 31, 2013. (If no entry is required for an event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place, (i. e., 5,500,000 should be entered as 5.5).)

5. At what amount will Tanner-UNF report its investment in the December 31, 2013, balance sheet? (Do not round your intermediate calculations. Enter your answer in millions.)

6. Prepare the 2014 adjusting journal entry assuming that Tanner-UNF has no other securities in this category. Suppose Moody's bond rating agency downgraded the risk rating of the bonds motivating Tanner-UNF to sell the investment on January 2, 2014, for $120 million. (If no entry is required for a particular event, select "No journal entry required" in the first account field. Enter your answers in millions rounded to 1 decimal place, (i. e., 5,500,000 should be entered as 5.5).)

Answers: 2

Show answers

Another question on Business

Business, 21.06.2019 21:00

The price of trade suppose that portugal and sweden both produce rye and wine. portugal's opportunity cost of producing a bottle of wine is 4 bushels of rye while sweden's opportunity cost of producing a bottle of wine is 10 bushels of rye. by comparing the opportunity cost of producing wine in the two countries, you can tell thatportugal/sweden has a comparative advantage in the production of wine.andportugal/sweden has a comparative advantage in the production of rye. suppose that portugal and sweden consider trading wine and rye with each other. portugal can gain from specialization and trade as long as it receives more rye for each bottle of wine it exports to sweden. similarly, sweden can gain from trade as long as it receives more bottles of wine for each bushel of rye it exports to portugal. based on your answer to the last question, which of the following prices of trade (that is, price of wine in terms of rye) would allow both sweden and portugal to gain from trade? a. 1 bushels of rye per bottle of wineb. 8 bushels of rye per bottle of winec. 9 bushels of rye per bottle of wined. 3 bushels of rye per bottle of wine

Answers: 3

Answer

Business, 21.06.2019 21:00

Identify the accounting assumption or principle that is described below. (a) select the accounting assumption or principle is the rationale for why plant assets are not reported at liquidation value. (note: do not use the historical cost principle.) (b) select the accounting assumption or principle indicates that personal and business record-keeping should be separately maintained. (c) select the accounting assumption or principle assumes that the dollar is the "measuring stick" used to report on financial performance. (d) select the accounting assumption or principle separates financial information into time periods for reporting purposes. (e) select the accounting assumption or principle measurement basis used when a reliable estimate of fair value is not available. (f) select the accounting assumption or principle dictates that companies should disclose all circumstances and events that make a difference to financial statement users.

Answers: 3

Answer

Business, 22.06.2019 16:50

Arestaurant that creates a new type of sandwich is using (blank) as a method of competition.

Answers: 1

Answer

Business, 22.06.2019 19:00

Adrawback of short-term contracting as an alternative to making a component in-house is thata. it is the most-integrated alternative to performing an activity so the principal company has no control over the agent. b. the supplying firm has no incentive to make any transaction-specific investments to increase performance or quality. c. it fails to allow a long planning period that individual market transactions provide. d. the buying firm cannot demand lower prices due to the lack of a competitive bidding process.

Answers: 2

Answer

You know the right answer?

Tanner-UNF Corporation acquired as a long-term investment $170 million of 6% bonds, dated July 1, on...

Questions