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Sirius Company has the following securities in its portfolio on December 31: Market Values, Dec. 31, Cost Year 2 Year...

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Question

Accounting

Sirius Company has the following securities in its portfolio onDecember 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 eitherof the investments.

*

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

*

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

*

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

A.

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

B.

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

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