(1) (1) (1) (2) (2) (2) Account Titles and Explanation Cost FV-NI FV-OCI Cost FV-NI FV-OCI (3) Cost (3) FV-NI FV-OCI (3) (4) (4) (4) Cost FV-NI FV-OCI Debit Credit
In early 2023, for the frst time, Ayayai Corp. invested in the common shares of another Canadian company. It acquired 4,000 shares
of Toronto Stock Exchange-traded Bayscape Ltd. at a cost of $55,000. Bayscape is projected to reach a value of $15.50 per share by
the end of 2023 and $17 by the end of 2024, and has consistently paid an annual dividend of $0.90 per share. Ayayai is also a
Canadian public corporation with a December 31 year end.
The controller of Ayayai is uncertain about which accounting method to use. The company is interested in establishing a closer
relationship with Bayscape, but if that fails, Ayayai considers the investment a good opportunity to make a gain on its sale in the
future. The controller has been advised that the investment could be accounted for at cost or at fair value. If at fair value, a decision
would have to be made about whether to put the changes in fair value through net income or other comprehensive income. As one
step in making a decision, the controller would like to know what the effect would be on total assets and net income in each of 2023
and 2024 if the predictions about Bayscape's share prices and dividends are correct. Assume there would be no recycling of realized
investment gains and losses.
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