ACC 306 Week 1 P12-1 Fuzzy Monkey Technologies, Inc

ACC 306 Week 1 P12-1 Fuzzy Monkey Technologies, Inc


Asked by 4 years ago
398.7k points

ACC 306 Week 1 P12-1 Fuzzy Monkey Technologies, Inc

P 121 - Fuzzy Monkey Technologies, Inc. - Securities held- to-maturity; bond investment; effective interest ? LO1

Fuzzy Monkey Technologies, Inc., purchased as a long-term investment $80 million of 8% bonds, dated January 1, on January 1, 2011. Management has the positive intent and ability to hold the bonds until maturity. 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, 2011, was $70 million.

Required:

1.Prepare the journal entry to record Fuzzy Monkeys investment on January  1, 2011.

2.Prepare the journal entry by Fuzzy Monkey to record interest on June 30, 2011 (at the effective rate).

3.Prepare the journal entries by Fuzzy Monkey to record interest on December 31, 2011 (at the effective rate).

  1. At what amount will Fuzzy Monkey report its investment in the December 31, 2011, balance sheet? Why?  

  2. How would Fuzzy Monkeys 2011 statement of cash flows be affected by this investment?

ACC 306
maddy

1 Answer

Answered by 4 years ago
407.5k points

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 ACC 306 Week 1 P12-1 Fuzzy Monkey Technologies, Inc

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Excerpt from file: ACC306 - ACC 306 - Week 1 DQ2 - Judgment Case 13-9 - Intermediate Accounting I AU Judgment Case 139 - Valleck Corporation - Loss contingency and full disclosure LO5 LO6 In the March 2012 meeting of Valleck Corporations board of directors, a question arose as to the way a possible obligation should

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