On November 17, Tasty Foods purchased 1,000 shares (10%) of Eco-Safe Packaging's voting stock for $12 per share. Because Tasty Foods has no immediate plans to sell the stock, the investment is classified as an available-for-sale security. By the end of the year, Eco-Safe Packaging's stock price has dropped to $10 per share. How would the drop in stock price affect Tasty Foods' net income for the year? (LO D-2) a. Decrease net income by $12,000. b. Decrease net income by $10,000. c. Decrease net income by $2,000. d. No effect.

On November 17, Tasty Foods purchased 1,000 shares (10%) of Eco-Safe Packaging's voting stock for $12 per share. Because Tasty Foods has no immediate plans to sell the stock, the investment is classified as an available-for-sale security. By the end of the year, Eco-Safe Packaging's stock price has dropped to $10 per share. How would the drop in stock price affect Tasty Foods' net income for the year? (LO D-2) a. Decrease net income by $12,000. b. Decrease net income by $10,000. c. Decrease net income by $2,000. d. No effect.

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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