Delaware Exchange Company completed the following long-term investment transactions during 2012:

At year-end, the fair value of the Detroit stock is $30,500. The fair value of the Brentwood stock is $656,000.

Requirements
1. For which investment is fair value used in the accounting? Why is fair value used for one investment and not the other?
2. Show what Delaware would report on its year-end balance sheet, income statement, and statement of other comprehensive income for these investment transactions. It is helpful to use a T-account for the Long-Term Investment in Brentwood Stock account. Ignore incometax.

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2012 May 12 Jul 9 Sep 16 Oct 30 Dec 31 Purchased 28,000 shares, which make up 35% of the common stock of Brentwood Corporation at total cost of $390,000. Received annual cash dividend of $1.23 per share on the Brentwood investment. Purchased 800 shares of Detroit, Inc., common stock as an available-for-sale investment, paying $41.75 per share. Received cash dividend of $0.35 per share on the Detroit investment Received annual report from Brentwood Corporation. Net income for the year was $510,000.