Question

Hawk Corporation purchased 10,000 shares of Diamond Corporation stock in 2010 for $50 per share and classified the investment as securities available for sale. Diamond's market value was $60 per share on December 31, 2011, and $65 on December 31, 2012. During 2013, Hawk sold all of its Diamond stock at $70 per share. In its 2013 income statement, Hawk would report

Answer 1

Hawk Corporation would report a capital gain of $20 per share for the sale of the Diamond Corporation stock in its 2013 income statement.

Step-by-step explanation:

In its 2013 income statement, Hawk Corporation would report a capital gain of $20 per share for the sale of the Diamond Corporation stock.

To calculate this, we subtract the purchase price per share ($50) from the selling price per share ($70). So, the capital gain per share is $70 - $50 = $20.

Since Hawk sold all 10,000 shares, the total capital gain reported in its income statement would be $20 per share * 10,000 shares = $200,000.