Central Investments bought 4,000 shares of Benet Company common stock on January 1, 2018, for $20,000, and 4,000 shares of Roy Company common on July 1, 2018, for $24,000. Benet declared dividends on December 31, 2018 of $3,000. At the end of 2018, the fair value of Roy was $30,000 and the fair value of Benet was $28,000. At the end of 2019, the fair value of Roy was $32,000 and the fair value of Benet was $24,000. These investments are reported in the long-term asset section of Central's balance sheet. Central owns 8% of Benet Company and 12% of Roy Company. Assume that the Roy Company stock was sold during 2020 for $31,000. The proper accounting recognition at the date of sale was
A. a realized gain of $6,000.
B. an unrealized loss $1,000.
C. a realized gain of $7,000.
D. a realized loss of $1,000.
Answer: C
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