Oregon Exchange Company completed the following long term investment transactions during 2010 2010 May 12 Purchased 17,500 shares, which make up 30 of the common stock of Woburn Corporation at total cost of $380,000 Jul 9 Received annual cash dividend of $1 26 per share on the Woburn investment Sep...

Req 1 Current market value is used to account for the availableforsale investment because the invest ...

Oregon Exchange Company completed the following long-term investment transactions during 2010: 2010 May 12 Purchased 17,500 shares,

Question:

Oregon Exchange Company completed the following long-term investment transactions during 2010:
2010
May 12 Purchased 17,500 shares, which make up 30% of the of Woburn at total cost of $380,000.
Jul 9 Received annual cash of $1.26 per share on the Woburn investment.
Sep 16 Purchased 900 share of Columbus, Inc., as an available-for-sale investment, paying $41.00 per share.
Oct 30 Received cash of $0.38 per share on the Columbus investment.
Dec 31 Received annual report from Woburn Net income for the year was $580,000.
At year-end the fair market value of the Columbus stock is $30,000. The fair market value of the Woburn stock is $658,000.

Requirements
1. For which investment is fair market value used in the accounting? Why is fair market value used for one investment and not the other?
2. Show what Oregon would report on its year-end and income statement for these investment transactions. It is helpful to use a T-account for the Long-Term Investment in Woburn Stock 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...