Delaware Exchange Company completed the following long term investment transactions during 2016 2016 May 12 Purchased 18,200 shares, which make up 25 of the common stock of Nashua Corporation at total cost of $340,000 Jul 9 Received annual cash dividend of $1 23 per share on the Nashua investment S...

Req 1 Current fair value is used to account for the availableforsale investment in Columbus Inc beca ...

Delaware Exchange Company completed the following long-term investment transactions during 2016: 2016 May 12 ....... Purchased 18,200

Question:

Delaware Exchange Company completed the following long-term investment transactions during 2016:
2016
May 12 ....... Purchased 18,200 shares, which make up 25% of the of Nashua at total cost of $340,000.
Jul 9 ......... Received annual cash of $1.23 per share on the Nashua investment.
Sep 16 ..... Purchased 1,000 shares of Columbus, Inc., as an available-for-sale investment, paying $41.50 per share.
Oct 30 ....... Received cash of $0.33 per share on the Columbus investment.
Dec 31 ....... Received annual report from Nashua Net income for the year was $540,000.
At year-end, the fair value of the Columbus stock is $30,100. The fair value of the Nashua stock is $658,000.
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 Exchange would report on its year-end balance sheet, income statement, and statement of comprehensive income for these investment transactions. It is helpful to use a T-account for the Equity-method Investment account. Ignore income tax?
Common Stock
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A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...