In 2009 Nichol Industries acquired common stock of Crest View Inc. as an investment. Consider the following transactions.
2009:
Purchase 5,000 (15%) of the common shares of Crest View, Inc. for $10 cash per share plus a $800 brokerage commission
Crest View Inc. reports net income of $54,600.
Nichol receives a cash dividend of $1.20 per share from Crest View, Inc.
Year-end market price of Crest View is $10.75 per share
2010:
Sell all 5,000 shares for $9.50 per share.
Complete the table below to show what Nichol Industries would report on its balance sheet in 2009 and on its income statement in 2009and 2010 if the investment is classified as Trading, available-for-sale or as an equity method investment. Show an increase as a positive amount and a decrease as a negative amount.
2009 Balance
Sheet
2009 Income
Statement
2010 Income
Statement
Trading securities
[a]
[b]
[c]
Available-for-sale securities
[d]
[e]
[f]
Equity method investment
[g]
[h]
[i]