Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. fuzzy monkey technologies, inc., purchased as a lo

Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $170 million of 10% bonds, dated...

60.1K

Verified Solution

Question

Accounting

Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $170 million of 10% bonds, dated January 1, on January 1, 2021. Management intends to have the investment available for sale when circumstances warrant. For bonds of similar risk and maturity the market yield was 12%. The price paid for the bonds was $151 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, 2021, was $160 million.

Required:

1. to 3. Prepare the relevant journal entries on the respective dates (record the interest at the effective rate).

4-a. At what amount will Fuzzy Monkey report its investment in the December 31, 2021, balance sheet?

4-b. Prepare the entry necessary to achieve this reporting objective.

5. How would Fuzzy Monkey's 2021 statement of cash flows be affected by this investment? (If more than one approach is possible, indicate the one that is most likely.)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students