Question

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

Answer 1

Answer:

$200,000

Explanation:

Hawk Corporation purchased 10,000 shares at $50 per share of Diamond Corporation. The share were sold in 2019 at price of $70 per share to Diamond Corporation by Hawks Corporation. The net gain per share was $20 ($70 - $50)

The total gain from this investment : $20 per share * 10,000 shares

= $200,000 gain to Hawk Corporation from investment in Diamond Corporation.