Eleston Printing Acquired the Following Short-Term Equity Securities on January

question 38

Multiple Choice

Eleston Printing acquired the following short-term equity securities on January 1,2X12: $\begin{array}{lcccc}\text { Company. } & \text { \# of Shares } & \text { Price/share } & & \text { Total Cost } \\\text { Color, Inc. }& 250 & \$ 22 & & \$ 5,500 \\\text { Black, Inc. } & 300 & 22 & & 6,600 \\\text { White, Inc. } & 500 & 14 & & \underline{7,000} \\& & & & \$ 19,100\end{array}$ The quarter-end prices per share were as follows:
$\begin{array}{lcc}\text { Company } & 03 / 31 / 2X12 & 06 / 30 / 2X12 & 09 / 31 / 2X12 & 12 / 30 / 2X12\\\text { Color, Inc. } & \$ 23 & \$ 21&\$22&\$21 \\\text { Black, Inc. } & 24 & 20 &23&24\\\text { White. Inc. } & 15 & 14&13&13\end{array}$ Eleston Printing considers Color,Inc.stock to be a trading security and Black,Inc.and White,Inc.to be available-for-sale securities.
What will be the net gain or loss reported on the income statement of Eleston Printing for the 3 month period ending December 31,2X12?

• A)$(500)
• B)$-0-
• C)$(250)
• D)$300
• E)$500

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Definitions:

Overvalued

A descriptor for an asset or stock whose price is believed to be higher than its intrinsic value.

Trademark

A distinguishable symbol, pattern, or phrase that serves to differentiate the goods or services of one origin from those of another.

Par Value

The face value of a bond or stock as stated on the certificate or instrument.

Fair Value

An estimate of the market value of an asset or liability, based on current conditions and knowledge, used in financial reporting and analysis.