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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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In 2021, Cromwell Corporation purchased bonds of Oliver Company at par for $300,000 and classified the investment as available-for-sale. In 2022, the market value declined to $200,000. In 2023, the market value of the investment rose to $230,000, and the investment was sold. How much should Cromwell record as a realized gain or loss in its determination of net income for 2023?

  1. a. $0
  2. b. $30,000 gain
  3. c. $70,000 loss
  4. d. $100,000 loss

To determine

Calculate the amount that should be recorded by Corporation C as a realized gain or loss while determining the net income for the year 2023.

Explanation

Investment: It refers to the process of using the currently held excess cash to earn profitable returns in future. The investments can be made in equity securities such as shares or debt securities such as bonds.

Calculate the amount that should be recorded by Corporation C as a realized gain or loss while determining the net income for the year 2023.

Realized gian or loss=(Selling price of the investment

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