Hawk Corporation purchased 10,000 shares of Diamond Corporation stock in 2010 for $50 per share and classified the investment as securities available for sale. Diamond's market value was $60 per share on December 31, 2011, and $65 on December 31, 2012. During 2013, Hawk sold all of its Diamond stock at $70 per share. In its 2013 income statement, Hawk would report:

Question

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Hawk would report a gain of $200,000 on the sale of its Diamond stock. The gain is calculated as the difference between the selling price and the cost of the investment. The cost of the investment is $500,000 (10,000 shares x $50 per share). The selling price is $700,000 (10,000 shares x $70 per share). The gain is $200,000 ($700,000 - $500,000).

Hawk Corporation Purchased 10,000 Shares of Diamond Corporation Stock in 2010