Truck Company purchases an investment in Equipment Products, Inc. at a purchase price of $900,000, representing 15% of the book value of Equipment Products. During the year, Equipment Products reports a net income of $300,000 and pays cash dividends of $80,000. The fair value of Truck Company's investment at the end of the year is $1,600,000.
A. Using the fair value method, at what amount is the investment account reported at the end of the year?
B. How would fair value changes be treated if the marketable securities are classified as available-for-sale investments?
C. How would fair value changes be treated if the marketable securities are classified as trading investments?
D. How are dividends and gains/losses on security sales treated for trading and available-for-sale securities?

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The Answer of Truck Company purchases an investment in Equipment Products, Inc. at a purchase price of $900,000, representing 15% of the book value of Equipment Products. During the year, Equipment Products reports a net income of $300,000 and pays cash dividends of $80,000. The fair value of Truck Company's investment at the end of the year is $1,600,000.
A. Using the fair value method, at what amount is the investment account reported at the end of the year?
B. How would fair value changes be treated if the marketable securities are classified as available-for-sale investments?
C. How would fair value changes be treated if the marketable securities are classified as trading investments?
D. How are dividends and gains/losses on security sales treated for trading and available-for-sale securities?

Truck Company Purchases an Investment in Equipment Products, Inc