Rye Company Purchased 15% of Lena Company's Common Stock During

Multiple Choice

Rye Company purchased 15% of Lena Company's common stock during 2014 for $150,000. The 15% investment in Lena had a $160,000 fair value at the end of 2014 and a $140,000 fair value at the end of 2015. Which of the following statements is correct if Rye classifies the investment as a trading security?

A) The 2014 unrealized gain is $10,000 and is included in Lena's 2014 net income.
B) The 2015 unrealized loss is $20,000, but is not included in Lena's 2015 net income.
C) The 2015 unrealized loss is $10,000 and is included in Lena's 2015 net income.
D) The 2014 unrealized gain is $10,000 and is reported on Lena's balance sheet as a component of other comprehensive income.