The Cost and Fair Value of the Trading Securities Held

question 31

Essay

The cost and fair value of the trading securities held by Lindy Company as of December 31 are as follows:
​ $\begin{array}{|l|c|c|c|c|c|}\hline\text { Name } & \begin{array}{c}\text { Number of } \\\text { Shares }\end{array} & \begin{array}{c}\text { Cost } \\\text { per Share }\end{array} & \begin{array}{c}\text { Fair Value } \\\text { per Share }\end{array} & \text { Total Cost } & \text { total Fair Value } \\\hline \text { Laurie, Inc. } & 1,200 & \$ 10.50 & \$ 11.05 \\\hline \text { Scott Corp. } & 600 & 9.00 & 9.85 \\\hline \text { Stephanie Company } & 900 & 4.10 & 4.00 \\\hline \text { Timmer Company } & 1,400 & 7.35 & 6.82 \\\hline \text { Total } & & & \\\hline\end{array}$ ​
(a) Complete the table above to find the total cost and fair value for the company's trading securities portfolio.
(b) Calculate and record the required December 31 adjustment.
(c) Explain how the adjustment from step (b) is reported on Lindy's financial statements.

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Definitions:

Household Laundry Products

A category of consumer goods including detergents, fabric softeners, and stain removers used in the washing of clothes.

Aluminum

A lightweight, silvery-white metallic element used in a wide range of applications including transportation, construction, and packaging due to its durability and resistance to corrosion.

Marginal Revenue

The additional income from selling one more unit of a good; sometimes equal to price.

Pure Monopoly

A market structure where a single seller controls the entire supply of a product or service, with no close substitutes available.