Thomas Corporation bought 25,000 shares of Powers Company stock for $250,000 on April 17.The market value of the stock declined to $195,000 by December 31.Thomas reclassified the investment as trading securities in December of the following year when the market value had risen to $215,000.What amount should be reported on the Year 2 income statement for the Powers shares?

Question

Quizplus · Accepted Answer

The correct answer is B: $35,000 net loss. When the investment was reclassified as trading securities, the unrealized loss of $35,000 ($250,000 - $215,000) was recognized on the income statement.

Thomas Corporation Bought 25,000 Shares of Powers Company Stock for $250,000