On October 1 of last year, Hand Tools Corp.purchased 1,500 shares of the Bindo Bank for $72,000 as a trading investment.At year end, December 31, the fair value of these shares was $75,000.On February 1 of this year, Hand Tools sold all these shares for $73,000.The realized gain (loss) that Hand Tools will report this year is
A)a gain of $2,000.
B)a gain of $1,000.
C)a loss of $1,000.
D)a loss of $2,000.

Question

Quizplus · Accepted Answer

The realized loss is calculated based on the difference between the sale price ($73,000) and the purchase price ($72,000), resulting in a loss of $1,000. However, because the shares were valued at $75,000 at year-end and then sold for $73,000, the realized loss is actually $2,000, reflecting the decrease in value from the year-end valuation to the sale price.

On October 1 of Last Year, Hand Tools Corp