On October 1, 2014, White Company declared a property dividend payable in the form of marketable equity securities classified as "available for sale" for financial accounting purposes. The marketable equity securities will be distributed to the common stockholders on December 1, 2014. The investment in equity securities originally cost White $510,000 on August 1, 2014. The investment's fair value on various dates is as follows:
The amount credited to Gain on Disposal of Investments resulting from this dividend transaction should be

Question

On October 1, 2014, White Company declared a property dividend payable in the form of marketable equity securities classified as "available for sale" for financial accounting purposes. The marketable equity securities will be distributed to the common stockholders on December 1, 2014. The investment in equity securities originally cost White $510,000 on August 1, 2014. The investment's fair value on various dates is as follows:  
The amount credited to Gain on Disposal of Investments resulting from this dividend transaction should be

Quizplus · Accepted Answer

The fair value of the securities on October 1, 2014, the date of declaration, is irrelevant. The important date is the date of distribution, which is December 1, 2014. On December 1, 2014, the fair value of the securities is $530,000 ($20,000 more than the cost). Therefore, White Company will increase its Gain on Disposal of Investments by $20,000 ($530,000 fair value minus $510,000 cost).

On October 1, 2014, White Company Declared a Property Dividend