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These securities were properly classified as available-for-sale. On December31, Year1, the market price of Mill’s stock was $35 a share, reflecting a temporary decline in market price. On January28, Year2, XYZ sold8,000 shares of Mill stock for $30 a share. For the year ended December31, Year2, XYZ should report a realized loss on disposal of a long-term investment of
A. $100,000
B. $80,000
C. $60,000
D. $40,000
The Correct option is D)40,,000
The rational of the option is that total loss realized by XYZ co is ${(40-30)*8000=80,000}.The unrealized loss of {(40-35)*8000=40,000) reported in the comprehensive income of Year1 and also shareholders equity reduced by this loss..So that remaining unrealized loss amounting ${(35-30)*8000=40,000) will be reported in the year2.
Answer: D. $40,000
The Market Prince per share less the Selling price per share multiply by the number of shares.
($35 - $30 =$5 x8,000 shares = $40,000 LOSS
D -40,000 = (30-35)*8000 realized loss
