On June 1, 2024, Blue Company distributed to its common stockholders 140,000 outstanding common shares of its investment in Red Incorporated which is an unrelated party. The book value on Blue’s books of Red's $1 par common stock was $1.40 per share. Immediately after the declaration, the market price of Red's stock was $2.90 per share. In its income statement for the year ended June 30, 2024, what amount should Blue report as gain before income taxes on disposal of the stock?

On June 1, 2024, Blue Company distributed to its common stockholders 140,000 outstanding common shares of its investment in Red Incorporated which is an unrelated party. The book value on Blue’s books of Red's $1 par common stock was $1.40 per share. Immediately after the declaration, the market price of Red's stock was $2.90 per share. In its income statement for the year ended June 30, 2024, what amount should Blue report as gain before income taxes on disposal of the stock?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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