During January 2011, Pareto Glass Company purchased the following securities as its long-term securities available for sale investment portfolio:

D Corporation Common Stock: 11,000 shares (95,000 outstanding) at $9 per share

F Corporation Bonds: $300,000 (20-year, 8 percent) purchased at par (not to be held to maturity)

Subsequent to acquisition, the following data were available:

Required:
1. What accounting method should be used for the investment in D common stock? F bonds? Why?
2. Give the journal entries for the company for each year in parallel columns (if none, explain why) for each of the following:
a. Purchase of the investments.
b. Income reported by D and F Corporations.
c. Dividends and interest received from D and F Corporations.
d. Fair value effects at year-end.
3. For each year, show how the following amounts should be reported on the financial statements:
a. Long-term investments.
b. Stockholders' equity'net unrealized losses/gains.
c.Revenues.

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2011 2012 Net income reported at December 31: D Corporation F Corporation $ 31,000 $ 41,000 $360,000 $550,000 Dividends and interest paid during the year: D Corporation common stock dividends (per share) F Corporation bonds interest Fair value at December 31: D Corporation common stock (per share) F Corporation bonds 0.80 0.70 $ 24,000 $ 24,000 8.00 9.50 $280,000 $290,000