Tanner-UNF Corporation acquired as a long-term investment $340
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, 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 9% for bonds of similar risk
and maturity. Tanner-UNF paid $310 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 $320 million.
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