Bramble Inc. acquired 20% of the outstanding common stock of Theresa Kulikowski Inc. on December 31, 2020. The purchase price was $ 1,294,800 for  49,800 shares. Kulikowski Inc. declared and paid an $ 0.75 per share cash dividend on June 30 and on December 31, 2021. Kulikowski reported net income of $ 764,000 for 2021. The fair value of Kulikowski’s stock was $ 29 per share at December 31, 2021.   At what amount is the investment in securities reported on the balance sheet under each of these methods at December 31, 2021? What is the total net income reported in 2021 under each of these methods?     Fair Value Method   Equity Method Investment amount (balance sheet)   $    $  Dividend revenue (income statement)         Unrealized holding gain (income statement)         Investment income (income statement)

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.