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

Multiple Choice

McGinn Company purchased 10% of RJ Company's common stock during 2010 for $100,000.The 10% investment in RJ had a $90,000 fair value at the end of 2010 and a $105,000 fair value at the end of 2011.Which of the following statements is incorrect if McGinn classifies the investment as available-for-sale security?

A) The 2010 unrealized loss is $10,000, but is not included in McGinn's 2010 net income.
B) The 2011 unrealized gain is $15,000, but is not included in McGinn's 2011 net income.
C) The 2011 unrealized gain is $10,000 and is included in McGinn's 2011 net income.
D) The 2010 unrealized loss is $10,000 and is reported on McGinn's balance sheet as a component of stockholders' equity.