On June 1, 2013, Blue Co

question 107

Multiple Choice

On June 1, 2013, Blue Co. distributed to its common stockholders 200,000 outstanding common shares of its investment in Red, Inc., an unrelated party. The carrying amount 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, 2013, 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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Definitions:

Equity

Equity involves fairness and justice in treatment, access, and opportunities, aiming to recognize and address disparities among different groups.

Voice

Refers to employees' ability to express concerns, grievances, or suggestions within their place of work.

Bureaucratic Model

A framework that outlines the structured and hierarchical organization of public administration and large organizations, focusing on strict rules, procedures, and a clear chain of command.

Flexibility

The quality of being able to adapt to new, changing, or emerging conditions, especially in the context of work arrangements and labor markets.