McGinn Company Purchased 10% of RJ Company's Common Stock During

Multiple Choice

McGinn Company purchased 10% of RJ Company's common stock during 20X3 for $100,000. The 10% investment in RJ had a $90,000 fair value at the end of 20X3 and a $105,000 fair value at the end of 20X4. Which of the following statements is incorrect if McGinn classifies the investment as available-for-sale security?

A) The 20X3 unrealized loss is $10,000, but is not included in McGinn's 20X3 net earnings.
B) The 20X4 unrealized gain is $15,000, but is not included in McGinn's 20X4 net earnings.
C) The 20X4 unrealized gain is $10,000 and is included in McGinn's 20X4 net earnings.
D) The 20X3 unrealized loss is $10,000 and is reported on McGinn's statement of financial position as a component of stockholders' equity.