Question #2

(15 marks)

Consider the following data for intercorporate investments:

YearShares Purchased (Sold) Price/SharePrice/Share

Jan 1Dec 31

20x1200$80$76

20x2(80)6681

All sales and purchases are assumed to occur on January 1. Price may vary from price on previous day (December 31).

20x120x2

Investee earnings per share$8$9

Investee dividend per share33

Consider Trading, AFS and the Equity method for classifying investment

Required:

A. Show the B/S carrying amount for each of the 2 years if the investment is classified as TRADING, AFS and EQUITY METHOD (Show calculations) (6 marks)

B. Show the total income recognized for each of the 2 years if the investment is classified as TRADING, AFS and EQUITY METHOD(Show calculations)(9 marks)