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PART 6: Investments In early 2017, for the first time, HTSM Corp. invested in the common shares of another Canadian company. It acquired 5,000 shares

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PART 6: Investments In early 2017, for the first time, HTSM Corp. invested in the common shares of another Canadian company. It acquired 5,000 shares of Toronto Stock Exchange-traded Bayscape Ltd. at a cost of $68,750. Bayscape is projected to reach a value of $18.00 per share by the end of 2017 and $19.00 be I the end of 2018 and has consistently paid an annual dividend of $0.60 per share. HTSM is also a Canadian public corporation with a December 31 year end. The controller of HTSM is uncertain about which accounting method to use. The company is interested in establishing a closer relationship with Bayscape, but if that fails, HTSM considers the investment a good opportunity to make a gain on its sale in the future. The controller has been advised that the investment could be accounted for at cost or at fair value. If at fair value, a decision would have to be made about whether to put the changes in fair value through net income or other comprehensive income. As one step in making a decision, the controller would like to know what the effect would be on total assets and net income in each of 2017 and 2018 if the predictions about Bayscape's share prices and dividends are correct. Assume there would be no recycling of realized investment gains and losses. Instructions (a) (20 marks) Complete the table below for each of the three accounting alternatives indicated for (1) the 2017 dividend. (2) any December 31, 2017 adjustments, (3) the 2018 dividend, and (4) any December 31, 2018 adjustments Cost Debit Credit FV-NI Debit Credit FV-OCI Debit Credit (1) Cash Investment Income or Loss (2) FV-NI Investments Investment Income or Loss** FV-OCI Investments Unrealized Gain or Loss - OCI (3) Cash Investment Income or Loss (4) FV-NI Investments Investment Income or Loss** FV-OCI Investments Unrealized Gain or Loss - OCI "This could be credited to Dividend Revenue in the FV-Ni columns ** This could be credited to Unrealized Gain or Loss in the FV-Nl columns

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