Fox Co. bought 1,000 shares of Owl Co. common stock, after which Owl had 10,000

Question

Fox Co. bought 1,000 shares of Owl Co. common stock, after which Owl had 10,000 shares authorized, 9,000 shares issued, and 8,000 shares outstanding. Fox expects to hold this stock for at least 9 months. When could Fox report a gain on its income statement? When Owl reports net income When Fox sells Owl common stock When Owl declares common stock dividends When the market price of Owl common stock increases Fox Co. bought 1,000 shares of Owl Co. common stock, after which Owl had 10,000 shares authorized, 9,000 shares issued, and 8,000 shares outstanding. Fox expects to hold this stock for at least 9 months. When could Fox report a gain on its income statement? When Owl reports net income When Fox sells Owl common stock When Owl declares common stock dividends When the market price of Owl common stock increases Fox Co. bought 1,000 shares of Owl Co. common stock, after which Owl had 10,000 shares authorized, 9,000 shares issued, and 8,000 shares outstanding. Fox expects to hold this stock for at least 9 months. When could Fox report a gain on its income statement? When Owl reports net income When Fox sells Owl common stock When Owl declares common stock dividends When the market price of Owl common stock increases

Explanation / Answer

The Fox could report the gain on its statement only when it sells the owl common stock.

Correct option is B.

When owl reports net income, it won't impact fox income gain.

When owl declare common stock dividends, again it will be dividend income not the gain

When market price of owl stock increases, the value of fox's Holdings will increase but they can't show it as a gain till they sell it.

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