In Its First Year of Operations,Largo Co

question 157

Essay

In its first year of operations,Largo Co.purchased bonds of MacDermott Corp.with a cost of $125,000 and a market value of $127,000.Largo also purchased bonds of Armistead with a cost of $25,000 and a market value of $24,700.These are classified as long-term available-for-sale securities.Prepare the journal entry to record the market value of the investments as of December 31.

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Definitions:

Stockholders

Stockholders, or shareholders, are individuals or entities that own one or more shares of stock in a public or private corporation, granting them equity ownership.

Acquiring Firms

Companies that purchase a majority stake in another company to assume control of its operations and resources.

Acquisition

The process by which one company takes over another and becomes the new owner.

Synergy Value

The additional value created by combining two companies, often expected from efficiencies or enhanced market power.