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In Year One, Waterloo Corporation makes an investment in the equity securities of another company for $53,000. The company then collects a cash dividend of
In Year One, Waterloo Corporation makes an investment in the equity securities of another company for $53,000. The company then collects a cash dividend of $2,000. At the end of Year One, this investment is valued at $58,000. In March of Year Two, the entire investment is sold for cash of $54,000. Waterloo reported this investment as being in available-for-sale securities. How would Waterloo's reported net income have been different in each of these two years if the investment had been reported as a trading security?
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