Adam Corporation Owns 1,000 Shares of Common Stock of Rosen,Inc

question 59

Multiple Choice

Adam Corporation owns 1,000 shares of common stock of Rosen,Inc. ,a large publicly traded company listed on a major stock exchange.If Rosen issues a 20 percent stock dividend when the par value is $10 per share and the market value is $70 per share,how much and what type of income should Adam report?

• A) $0
• B) $2,000 ordinary income
• C) $14,000 ordinary income
• D) $2,000 ordinary income and $12,000 extraordinary income

---

Definitions:

Sales Contracts

Legal agreements that define the terms of sale of goods or services from a seller to a buyer.

Uniform Commercial Code

A comprehensive set of laws governing commercial transactions in the United States, designed to standardize laws across states and simplify the legal aspects of buying and selling goods.

Ex-Ship

A shipping term indicating the seller's responsibility ends when the goods are made available to the buyer on board the ship at the destination port.

Risk of Loss

The potential for losing ownership or value in an asset, often discussed in the context of goods during shipment or transactions.