On June 1,2016,Blue Co

question 10

Multiple Choice

On June 1,2016,Blue Co.distributed to its common stockholders 200,000 outstanding common shares of its investment in Red,Inc. ,an unrelated party.The book value on Blue's books of Red's $1 par common stock was $2 per share.Immediately after the declaration,the market price of Red's stock was $2.50 per share.In its income statement for the year ended June 30,2016,what amount should Blue report as gain before income taxes on disposal of the stock?

• A)$ 0.
• B)$100,000.
• C)$400,000.
• D)$500,000.

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Right Course

The correct or most appropriate path or direction to follow in a particular situation.

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A situation where necessary or desired information is limited or hard to obtain.