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Accounting | Accounting homework help

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Utah Exchange Company completed the following long-term investment transactions during 2016:
May 12 ……… Purchased 21,000 shares, which make up 45% of the common stock of Exeter Corporation at total cost of $340,000.
Jul 9 …….. Received annual cash dividend of $1.21 per share on Exeter investment.
Sep 16 ….. Purchased 1,100 shares of Amsterdam, Inc., common stock as an available-for sale investment, paying $42.25 per share.
Oct 30 …… Received cash dividend of $0.34 per share on the Amsterdam investment.
Dec 31 …… Received annual report from Exeter Corporation. Net income for the year was $580,000.
At year-end, the fair value of the Amsterdam stock is $30,900. The fair value of the Exeter stock is $652,000.
1. For which investment is fair value used in the accounting? Why is fair value used for one investment and not the other?
2. Show what Utah Exchange would report on its year-end balance sheet, income statement, and statement of comprehensive income for these investment transactions. It is helpful to use a T-account for the Equity-method Investment account. Ignore income tax.


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