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 correct if McGinn classified the investment as an available-for-sale security and sold it at the beginning of 2016 for $102,000?

A) The 2016 realized loss reported on the income statement is $3,000.
B) The 2016 realized gain reported on the income statement is $2,000.
C) The 2016 unrealized gain reported on the income statement is $2,000.
D) The 2016 unrealized loss reported on the income statement is $3,000.