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

Multiple Choice

McGinn Company purchased 10% of RJ Company's common stock during 2014 for $100,000. The 10% investment in RJ had a $90,000 fair value at the end of 2014 and a $105,000 fair value at the end of 2015. Which of the following statements is incorrect if McGinn classifies the investment as an available-for-sale security?

A) The 2014 unrealized loss is $10,000, but is not included in McGinn's 2014 net income.
B) The 2015 unrealized gain is $15,000, but is not included in McGinn's 2015 net income.
C) The 2015 unrealized gain is $10,000 and is included in McGinn's 2015 net income.
D) The 2014 unrealized loss is $10,000 and is reported on McGinn's balance sheet as a component of stockholders' equity.