On June 15, 2020, Brainiac Company purchased 8 shares of Lovely Company for $6 per share. The investment represented less than 20% of the shares outstanding so it was a passive investment. Brainiac held the investment for the remainder of 2020, and at December 31 the market value was $4 per share. During 2021, Whiz sold 3 shares of Lovely for $7 each and at the end of 2021, the market value of the remaining 5 shares was $9 each. What was the gain or loss on the 2020 income statement? Select one: a. $16 unrealized loss b. $16 realized loss c. $16 realized gain d. $16 unrealized gain
On June 15, 2020, Brainiac Company purchased 8 shares of Lovely Company for $6 per share. The investment represented less than 20% of the shares outstanding so it was a passive investment. Brainiac held the investment for the remainder of 2020, and at December 31 the market value was $4 per share. During 2021, Whiz sold 3 shares of Lovely for $7 each and at the end of 2021, the market value of the remaining 5 shares was $9 each. What was the gain or loss on the 2020 income statement? Select one: a. $16 unrealized loss b. $16 realized loss c. $16 realized gain d. $16 unrealized gain
Chapter7: Corporations: Reorganizations
Section: Chapter Questions
Problem 44P
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On June 15, 2020, Brainiac Company purchased 8 shares of Lovely Company for $6 per share. The investment represented less than 20% of the shares outstanding so it was a passive investment. Brainiac held the investment for the remainder of 2020, and at December 31 the market value was $4 per share. During 2021, Whiz sold 3 shares of Lovely for $7 each and at the end of 2021, the market value of the remaining 5 shares was $9 each.
What was the gain or loss on the 2020 income statement?
Select one:
a. $16 unrealized loss
b. $16 realized loss
c. $16 realized gain
d. $16 unrealized gain
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