Willow Corp. is a real estate developer with its headquarters in Burlington, Ontario.
As a result of recent increases in land prices, Willow has accumulated a substantial amount of excess cash. It is looking to invest in a building supply company, but has not yet found a suitable company. To earn a reasonable return and to minimize risk, Willow invests its excess cash in common shares of large, stable corporations.
1. On Jan 1, 2011, Willow paid $1,080,000 to purchase 120,000 common shares of North Line.
2. On December 27, 2011, North Line declared and paid a dividend of $0.25 per common share.
3. On December 31, 2011, the market value of the common shares was $1,200,000.
4. On June 30, 2012, Willow sold the common shares for $1,620,000.
Required:
Using the following table, indicate the amounts to be reported in the balance sheet, through profit or loss, and through other comprehensive income for 2011 and 2012 under two scenarios:
a. Willow designates the common shares as an available-for-sale (AFS)investment.
b. Willow designates the common shares as a held-for-trading (HFT)investment.

Question

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The Answer of Willow Corp. is a real estate developer with its headquarters in Burlington, Ontario.
As a result of recent increases in land prices, Willow has accumulated a substantial amount of excess cash. It is looking to invest in a building supply company, but has not yet found a suitable company. To earn a reasonable return and to minimize risk, Willow invests its excess cash in common shares of large, stable corporations.
1. On Jan 1, 2011, Willow paid $1,080,000 to purchase 120,000 common shares of North Line.
2. On December 27, 2011, North Line declared and paid a dividend of $0.25 per common share.
3. On December 31, 2011, the market value of the common shares was $1,200,000.
4. On June 30, 2012, Willow sold the common shares for $1,620,000.
Required:
Using the following table, indicate the amounts to be reported in the balance sheet, through profit or loss, and through other comprehensive income for 2011 and 2012 under two scenarios:
a. Willow designates the common shares as an available-for-sale (AFS)investment.
b. Willow designates the common shares as a held-for-trading (HFT)investment.