Dim Corporation purchased 1,000 shares of Witt Corporation stock in 2010 for $800 per share and classified the investment as securities available for sale. Witt's market value was $400 per share on December 31, 2011, and $300 on December 31, 2012. During 2013, Dim sold all of its Witt stock at $350 per share. In its 2013 income statement, Dim would report:

Question

Quizplus · Accepted Answer

Since Dim sold all of its Witt stock in 2013 at $350 per share, the realized loss is calculated as follows:
- Purchase price: 1,000 shares x $800 = $800,000 
- Sale price: 1,000 shares x $350 = $350,000 
- Realized loss: $800,000 - $350,000 = $450,000 
Therefore, the answer is C, which states that Dim would report a loss on the sale of investments of $450,000 in its 2013 income statement. The other choices are not accurate because there is no indication of a realized gain or a trading gain, and the unrealized losses refer to the changes in the market value of the securities during the holding period, which would be reported as a separate component of comprehensive income.

Dim Corporation Purchased 1,000 Shares of Witt Corporation Stock in 2010