The Following Information Is Available for an Enterprise's Security Investments

question 21

Multiple Choice

The following information is available for an enterprise's security investments as of December 31, 2011:

In June 2012, the enterprise decided to reclassify the Costco stock as trading securities. The stock had a market value of $41,000 at the time of the reclassification.
What amount of holding gain or loss is immediately recognized in 2012 earnings?

• A) $2,000 gain
• B) $1,000 gain
• C) $3,000 gain
• D) $1,000 loss

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Definitions:

Industry Demand

The total demand for the products or services provided by a specific industry, represented as the sum of individual demands within a market.

Perfect Competition

A market structure characterized by many buyers and sellers, homogeneous products, and no barriers to entry or exit, leading to efficient pricing and output decisions.

Monopoly

A market structure characterized by a single seller, selling a unique product in the market with no close substitutes, leading to high control over market prices.

Marginal Revenue

The boost in revenue achieved by selling one more unit of a good or service.