Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. mills corporation acquired as a long-term investme

Mills Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1,...

70.2K

Verified Solution

Question

Accounting

Mills Corporation acquired as a long-term investment $240 million of 6% bonds, dated July 1, on July 1, 2018. Company management has the positive intent and ability to hold the bonds until maturity. The market interest rate (yield) was 4% for bonds of similar risk and maturity. Mills paid $280 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, 2018, was $270 million. Required: 1. & 2. Prepare the journal entry to record Mills investment in the bonds on July 1, 2018 and interest on December 31, 2018, at the effective (market) rate. 3. At what amount will Mills report its investment in the December 31, 2018, balance sheet? 4. Suppose Moodys bond rating agency upgraded the risk rating of the bonds, and Mills decided to sell the investment on January 2, 2019, for $290 million. Prepare the journal entry to record the sale.

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

Q

Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $60,000 or...

Finance
Q

Question 2 When gene flow between two populations ceases the potential for O sexual reproduction...

Biology
Q

What do plant most protist and fungus cells have that animals do not Cell walls...

Biology
Q

C Both A and B The relative permitivity of vacuum is A 0 B 1...

Physics
Q

The reading of voltmeter in the circuit shown is 6 V 1 2 25 V...

Physics
Q

The dimensions of a rectangular prism are 8 m x1 9 m x 10 m....

Basic Math
Q

Evaluate the following indefinite integral 1 11t 6t 1 11t4 6t dt dt 0 Type...

Calculus
Q

Table of Contents at high risk for progressing to severe COVID-19 and/or hospitalization. The EUA...

Accounting
Q

Before the year began, Brookville Manufacturing estimated that manufacturing overhead for the year would be...

Accounting
Q

Blossom Company's record of transactions concerning part X for the month of April was as...

Accounting
Q

LUCIE SLUCI dy D Question 3 Apple, Inc. provides the following information for 20X9: Net...

Accounting
Q

The intercept of the security market line (SML) is the risk-free rate and the slope...

Finance