During 2017, crane company purchased 91000 shares of holmes corporation common stock for $137 as an equity investment. the fair value of these shares was $1299000 at december 31, 2017. crane sold all of the holmes stock for $16 per share on december 3, 2018, incurring $67000 in brokerage commissions. crane company should report a realized gain on the sale of stock in 2018 of

Gain on sale             19,000

Explanation:

Other comprehensive income for 2017

1.299.000 - 1,370,000 = -71,000

91,000 shares x $16 per share = 1,456,000

                                  commissions (67,000)

                             net proceeds   1,389,000

acquisition                                     (1,370,000)

                            Gain on sale         19,000

The joural entry should be:

Cash                   1,389,000

             OTI (loss)                    71,000

              Holmes shares    1,299,000

              Gain on sale             19,000

Retained profits have several major advantages: They are cheap (though not free) – effectively the "cost of capital" of retained profits is the opportunity cost for shareholders of leaving profits in the business (i.e. the return they could have obtained elsewhere)