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

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 28E

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Ponce Towers, Inc., had 50,000 shares of common stock and 10,000 shares of 100 par value, 8% preferred stock outstanding on January 1, 2011. Each share of preferred stock is convertible into four shares of common stock. The stock has not been converted. During the year, Ponce Towers issued additional shares of common stock as follows: For 2011, Ponce Towers, Inc., had income from continuing operations of 545,000 and a 72,000 loss from discontinued operations (net of tax). Open the file EPS from the website for this book at cengagebrain.com. Enter all input items (AF) in the appropriate cells in the Data Section. Enter all formulas in the appropriate cells in the Answer Section. Enter your name in cell A1. Save the completed file as EPS2. Print the worksheet when done. Also print your formulas. Check figure: Basic earnings per share from continuing operations (cell D29), 5.94.