Oregon Exchange Company completed the following long-term investment transactions during 2021: 

At year-end, the fair value of the Columbus stock is $30,100. The fair value of the Nashua stock is $658,000. 

Requirements

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 Oregon Exchange would report on its year-end balance sheet and income statement for these investment transactions. It is helpful to use a T-account for the Equitymethod Investment account. Ignore income tax.

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2021 May 12 Jul 9 Sep 16 Oct 30 Dec 31 Purchased 18,200 shares, which make up 25% of the common stock of Nashua Corporation at total cost of $340,000. Received annual cash dividend of $1.23 per share on the Nashua investment. Purchased 1,000 shares of Columbus, Inc., common stock (less than 5% of its outstanding stock) paying $41.50 per share. Received cash dividend of $0.33 per share on the Columbus investment. Received annual report from Nashua Corporation. Net income for the year was $540,000.