At the End of Its First Year, the Securities Portfolio

question 48

Multiple Choice

At the end of its first year, the securities portfolio consisted of the following common stocks, all of which represent les then 20% ownership. In the following year, the Edmunds common stock is sold for cash proceeds of $57,000.The gain or loss to be recognized on the sale is a

• A)gain of $1,200.
• B)loss of $3,000.
• C)gain of $10,600.
• D)loss of $1,200.

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Definitions:

Penalty

A punishment imposed for breaking a law, rule, or contract.

Shareholders Rights

Legal entitlements that allow shareholders to have a say in the corporation's management, actions, and decisions, typically through voting rights and the ability to sue for wrongful acts.

Voting Power

The ability or right of an individual or group to cast a vote in an election or decision-making process.

Transfer Ownership

The act of transferring the rights, title, and interest in property or assets from one party to another, usually through sale, gift, or inheritance.