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In: Accounting

Sirius Company has the following securities in its portfolio on December 31: Market Values, Dec. 31,...

Sirius Company has the following securities in its portfolio on December 31:

Market Values, Dec. 31,

Cost

Year 2

Year 1

5,000 shares of Minerva Corp.

$30,000

$27,500

$0

10,000 shares of Lumos Co.

40,000

43,650

44,200


Additional information:

*

Sirius is not able to exercise significant influence over either of the investments.

*

The Lumos Company securities were purchased at the beginning of Year 1 and the appropriate year-end adjustments were made at the end of that year. Sirius intends to hold the Lumos stock for long-term growth.

*

The investment in Minerva Corp. was in anticipation of a quick wash sale during February of Year 3.

*

During Year 2, Sirius received cash dividends of $450 from Lumos Corp.

A.

How will each of the two securities be accounted for by Sirius Company - Available For Sale, Trading, or Held to Maturity? Justify your choices.

B.

How will the change in values of Lumos and Minerva appear on the income statement, and in what amounts?

Solutions

Expert Solution

ekkarill92 answered 9 months ago
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