On January 7, 2018, Webb Industries purchased 1,000 shares of Class A common stock in Bloomberg Corporation for $50,000. Webb does not have significant influence or control over Bloomberg. Although Class A shares are not actively traded, Class B shares are traded and are nearly identical aside from being publicly traded. At the end of 2018, Class B shares are trading for $59 per share. Webb makes the appropriate election to measure the investment based on observable price changes for similar securities. On December 12, 2019, Webb Industries sells the Bloomberg stock for $63,000. What is the gain that is reported on the sale of Bloomberg Corporation in 2019?

Question

Quizplus · Accepted Answer

The gain is calculated as the difference between the sale price and the adjusted fair value of the investment. The fair value at the end of 2018 is $59,000 (1,000 shares x $59), and the sale price in 2019 is $63,000. Therefore, the gain is $63,000 - $59,000 = $4,000.

On January 7, 2018, Webb Industries Purchased 1,000 Shares of Class