glacier products inc. is a wholesaler of rock climbing gear. the company began operations on january 1, year 1. the following transactions relate to securities acquired by glacier products inc., which has a fiscal year ending on december 31: year 1 jan. 18 purchased 9,000 shares of malmo inc. as an available-for-sale investment at $40 per share, including the brokerage commission. july 22 a cash dividend of $3 per share was received on the malmo stock. oct. 5 sold 500 shares of malmo inc. stock at $58 per share less a brokerage commission of $100. dec. 18 received a regular cash dividend of $3 per share on malmo inc. stock. dec. 31 malmo inc. is classified as an available-for-sale investment and is adjusted to a fair value of $36 per share. use the valuation allowance for available-for-sale investments account in making the adjustment. year 2 jan. 25 purchased an influential interest in helsi co. for $800,000 by purchasing 75,000 shares directly from the estate of the founder of helsi. there are 250,000 shares of helsi co. stock outstanding. july 16 received a cash dividend of $3 per share on malmo inc. stock. dec. 16 received a cash dividend of $3 per share plus an extra dividend of $0.20 per share on malmo inc. stock. dec. 31 received $38,000 of cash dividends on helsi co. stock. helsi co. reported net income of $170,000 in year 2. glacier products inc. uses the equity method of accounting for its investment in helsi co. dec. 31 malmo inc. is classified as an available-for-sale investment and is adjusted to a fair value of $44 per share. use the valuation allowance for available-for-sale investments account in making the adjustment for the increase in fair value from $36 to $44 per share.
