On January 1, 2016, a Company Purchased Long-Term Available-For-Sale Securities

Multiple Choice

On January 1, 2016, a company purchased long-term available-for-sale securities in one company. The cost was $91,000 and the investor owns 5% of the outstanding common stock of the investee. The investor does not use an allowance account to adjust the investment. At December 31, 2016, the fair value of the investment is $87,000. What journal entry is needed on December 31, 2016?

A) debit Unrealized Loss on Investment in Available-for-Sale Securities for $4000 and credit Investment in Available-for-Sale Securities for $4000
B) debit Investment in Available-for-Sale Securities for $4350 and credit Unrealized Gain on Investment in Available-for-Sale Securities for $4350
C) debit Investment in Available-for-Sale Securities for $4550 and credit Unrealized Gain on Investment in Available-for-Sale Securities for $4550
D) debit Investment in Available-for-Sale Securities for $4000 and credit Unrealized Gain on Investment in Available-for-Sale Securities for $4000