During January 2014, Optimum Glass Company purchased the following securities as its long-term available-for-sale securities investment portfolio:
D Corporation Common Stock: 14,000 shares (95,000 outstanding) at $11 per share
F Corporation Bonds: $400,000 (20-year, 7 percent) purchased at par (not to be held to maturity) Subsequent to acquisition, the following data were available:

Required:
1. What accounting method should be used for the investment in D common stock? F bonds? Why?
2. Give the journal entries for the company for each year in parallel columns (if none, explain why) for each of the following:
a. Purchase of the investments.
b. Income reported by D and F Corporations.
c. Dividends and interest received from D and F Corporations.
d. Fair value effects at year-end.
3. For each year, show how the following amounts should be reported on the financial statements:
a. Long-term investments.
b. Stockholders€™ equity€”net unrealized losses/gains.
c.Revenues.

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2014 2015 Net income reported at December 31 D Corporation F Corporation 31,000 41,000 $360,000 $550,000 Dividends and interest paid during the year D Corporation common stock cash dividends (per share) F Corporation bonds interest $ 0.500.70 28,000 28,000 Fair value at December 31 D Corporation common stock (per share) F Corporation bonds $ 10.00 11.50 $375,000 $385,000