Question

Hawk Corporation purchased 10,000 shares of Diamond Corporation common stock in 2016 for $50 per share. Hawk Corporation does not have significant influence over Diamond Corporation. Diamond's market value was $60 per share on December 31, 2017 and $65 on December 31, 2018. During 2019, Hawk sold all of its Diamond stock at $70 per share. In its 2019 income statement, Hawk would report a gain from this investment of:'_______

Answer 1

Answer:

Gain reported in 2019 is $200,000

Explanation:

The amount gained on Diamond's shares in 2017= (60-50)* 10,000= $100,000

Amount gained on Diamond's shares in 2018= (65-60)* 10,000= $50,000

Amount gained in 2019= (70-65)* 10,000= $50,000

So total gain reported in 2019= 100,000+ 50,000+ 50,000= $200,000