Tanner UNF Corporation acquired as a long term investment $240 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 $200 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 $210 million.
1. Record the entry to recognize fair value changes as of December 31, 2013.
2. At what amount will Tanner UNF report its investment in the December 31, 2013, balance sheet?
3. Record the fair value changes as of December 31.