In the current year, Largo Co. purchased bonds of MacDermott Corp. with a cost of $125,000 and a year-end fair value of $127,000. These are classified as long-term available-for-sale debt securities. Prepare the journal entry to record any necessary fair value adjustment to the debt investments as of December 31.
What will be an ideal response?
| Dec 31 | Fair Value Adjustment-Available-for-Sale | 2,000 | ? |
| ? | Unrealized Gain-Equity | ? | 2,000 |
| ? | ? | Fair | Holding gain |
| ? | Cost | Value | (loss) |
| MacDermott Co. bonds | $125,000 | $127,000 | $2,000 |
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