Homestead Financial Corporation owns numerous investments in the shares of other companies. Homestead Financial completed the following long-term investment transactions:

At year-end the current fair value of the Mercury shares is \(\$ 19,200\). The fair value of the Mars shares is \(\$ 740,000\). The company reports changes in fair value through net income {Requirements}
1. Using the facts provided, determine the methods used to record each of the investments and what basis you used to make that decision.
2. Show what Homestead Financial will report on its year-end balance sheet and income statement for these investments. Ignore income tax.

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2020 May 1 Sept. 15 Oct. 12 Dec. 14 31 Purchased 8,000 shares, which make up 25% of the common shares of Mars Company at total cost of $450,000 Received a cash dividend of $1.40 per share on the Mars investment Purchased 1,000 common shares of Mercury Corporation as a non-strategic investment, paying $22.50 per share Received a cash dividend of $0.75 per share on the Mercury investment Received annual report from Mars Company. Net income for the year was $350,000.