Starco Corp. wishes to purchase 8,000 shares of Gertrom Ltd., a publicly traded company. Starco...
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Accounting
Starco Corp. wishes to purchase 8,000 shares of Gertrom Ltd., a publicly traded company. Starco contracts to buy the shares from a related party, Unit Ltd., for $73 per share in 120 days time. The fair value was $73 per share on this day. One month later, at year-end, the fair value of the Gertrom shares is $62 per share, and it is $68 per share at the end of 120 days. At that time, the shares are bought, and the contract is closed out
Prepare journal entries to record the inception of the contract, the change in its fair value at year-end, and its maturity.
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