Colorado Exchange Company completed the following long-term investment transactions during 20X6: i (Click the icon to...

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Colorado Exchange Company completed the following long-term investment transactions during 20X6: i (Click the icon to view the transactions.) At year-end the fair value of the Portage shares is $30,100. The fair value of the Woburn shares is $657,000. Requirements 1. For which investments is fair market value used in the accounting? Why is fair market value used for one investment and not the other? 2. Show what Colorado 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 Long-Term Investment in Woburn account. Ignore income tax. Requirement 1. For which investments is fair market value used in the accounting? Why is fair market value used for one investment and not the other? Fair market value is used to account for the available-for-sale investment because the investor expects to sell the shares at its fair value. Fair market value is not used for the equity-method investment because the investor holds the shares to influence the operations of the investee company Requirement 2. Show what Colorado 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 Long-Term Investment in Woburn account. Ignore income tax. (Leave any unused cells blank.) Before completing the year-end balance sheet and income statement, we will first prepare the T-account for Long-Term Investments in Woburn Shares. Purchase Net income Long-Term Investment in Woburn Shares 340,000 Dividends received 234,000 Balance 551,250 Now, show what Colorado would report on its year-end balance sheet. (Use parentheses or a minus sign for losses.) Balance sheet: Assets Total current assets Long-term investments, at equity Long-term investments, at fair value Property, plant, and equipment, net Shareholders' equity Share capital Retained earnings () $ XXX 551,250 30,100 XXX 22,750 XXX YYY More info 20X6 May 12 Jul 9 Sep 16 Oct 30 Dec 31 Purchased 18,200 shares, which make up 45% of the ordinary shares of Woburn Corporation at total cost of $340,000. Received annual cash dividend of $1.25 per share on the Woburn investment. Purchased 900 shares of Portage, Inc., ordinary shares as an available-for-sale investment, paying $40.00 per share. Received cash dividend of $0.35 per share on the Portage investment. Received annual report from Woburn Corporation. Net income for the year was $520,000. Print Done - X Colorado Exchange Company completed the following long-term investment transactions during 20X6: i (Click the icon to view the transactions.) At year-end the fair value of the Portage shares is $30,100. The fair value of the Woburn shares is $657,000. Requirements 1. For which investments is fair market value used in the accounting? Why is fair market value used for one investment and not the other? 2. Show what Colorado 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 Long-Term Investment in Woburn account. Ignore income tax. Requirement 1. For which investments is fair market value used in the accounting? Why is fair market value used for one investment and not the other? Fair market value is used to account for the available-for-sale investment because the investor expects to sell the shares at its fair value. Fair market value is not used for the equity-method investment because the investor holds the shares to influence the operations of the investee company Requirement 2. Show what Colorado 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 Long-Term Investment in Woburn account. Ignore income tax. (Leave any unused cells blank.) Before completing the year-end balance sheet and income statement, we will first prepare the T-account for Long-Term Investments in Woburn Shares. Purchase Net income Long-Term Investment in Woburn Shares 340,000 Dividends received 234,000 Balance 551,250 Now, show what Colorado would report on its year-end balance sheet. (Use parentheses or a minus sign for losses.) Balance sheet: Assets Total current assets Long-term investments, at equity Long-term investments, at fair value Property, plant, and equipment, net Shareholders' equity Share capital Retained earnings () $ XXX 551,250 30,100 XXX 22,750 XXX YYY More info 20X6 May 12 Jul 9 Sep 16 Oct 30 Dec 31 Purchased 18,200 shares, which make up 45% of the ordinary shares of Woburn Corporation at total cost of $340,000. Received annual cash dividend of $1.25 per share on the Woburn investment. Purchased 900 shares of Portage, Inc., ordinary shares as an available-for-sale investment, paying $40.00 per share. Received cash dividend of $0.35 per share on the Portage investment. Received annual report from Woburn Corporation. Net income for the year was $520,000. Print Done - X

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Colorado Exchange Company Balance Sheet December 31 20X6 Assets C... View the full answer