Hawk Corporation purchased 10,000 shares of Diamond Corporation stock in 2013 for $50 per share and classified the investment as securities available for sale.Diamond's market value was $60 per share on December 31,2014,and $65 on December 31,2015.During 2016,Hawk sold all of its Diamond stock at $70 per share.In its 2016 income statement,Hawk would report:

Question

Quizplus · Accepted Answer

Hawk purchased the shares for $50 per share in 2013, and sold all of them for $70 per share in 2016. The gain on the sale of the Diamond Corporation stock is calculated as follows:
Purchase price per share = $50
Selling price per share = $70
Gain per share = Selling price per share - Purchase price per share = $70 - $50 = $20
Total gain on sale = Gain per share x Number of shares sold = $20 x 10,000 = $200,000.
Therefore, the answer is C - a gain of $200,000.

Hawk Corporation Purchased 10,000 Shares of Diamond Corporation Stock in 2013