Winnipeg Exchanges Ltd. completed the following long-term investment transactions during 2017:

2017

May 12 Purchased 20,000 shares, which make up 35% of the common shares of Fellingham

Corporation at a total cost of $370,000

July 9 Received annual cash dividend of $1.26 per share on the Fellingham investment

Sept. 16 Purchased 800 common shares of Tomassini Inc. as a non-strategic investment, paying $41.50 per share

Oct. 30 Received cash dividend of $0.30 per share on the Tomassini investment

Dec. 31 Received annual report from Fellingham Corporation. Net income for the year was

$510,000.

At year-end the current fair value of the Tomassini shares is $30,600. The fair value of the Fellingham shares is $652,000. The company reports changes in fair value through other comprehensive income.

Requirements

1. For which investment is current fair value used in the accounting? Why is fair value used for one investment and not the other?

2. Show what Winnipeg Exchanges Ltd. would report on its year-end balance sheet and income statement for these investment transactions. It is helpful to use a T-account for the Long-Term Investment in Fellingham Shares account. Ignore income tax.