On January 2, 2019, All Good Company purchased 11,000 shares of the stock of Big Bad...

On January 2, 2019, All Good Company purchased 11,000 shares of the stock of Big Bad Company, and DID NOT obtain significant influence. The investment is intended as a long-term investment. The stock was purchased for $16 per share, and represents a 10% ownership stake. Big Bad Company made $400,000 of net income in 2019, and paid dividends to All Good Company of $5,000 on December 15, 2019. On December 31, 2019, Big Bad Company's stock was trading on the open market for $10.50 per share at the end of the year. Use this information to determine the unrealized gain or loss on the investment that should be reported at year end by All Good Company. If it is a loss, enter as a negative number. Round to nearest whole dollar.

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Expert Solution

All Good Company purchased 11,000 shares @ $16 of the stock of Big Bad Company and DID NOT obtain significant influence.

All Good Company will recognise unrealized loss of $5.50 ($16-$10.5)

So,total unrealised loss is $60,500 ($5.50 * 11,000 shares)

ekkarill92 answered 2 years ago

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