At the end of Year 1, Lane Co. held trading securities that cost $86,000 and had

Question

At the end of Year 1, Lane Co. held trading securities that cost $86,000 and had a year-end market value of $92,000. During Year 2, all of these securities were sold for $104,500. At the end of Year 2, Lane had acquired additional trading securities that cost $73,000 and had a year-end market value of $71,000. What is the impact of these stock activities on Lane At the end of Year 1, Lane Co. held trading securities that cost $86,000 and had a year-end market value of $92,000. During Year 2, all of these securities were sold for $104,500. At the end of Year 2, Lane had acquired additional trading securities that cost $73,000 and had a year-end market value of $71,000. What is the impact of these stock activities on Lane

Explanation / Answer

Hi,

Please find the answer as follows:

Gain on Sale of Year 1 Securities = Sales Value in Year 2 - Market Value at Year 1 End = 104500 - 92000 = 12500

- Decline in the Value of Securities Purchased in Year 2 = Purchase Value - Market Value = 73000 - 71000 = 2000

Total Gain = 12500 - 2000 = 10500

Option B (10500) is the correct answer.

Thanks.

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