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

Multiple Choice

McGinn Company purchased 10% of RJ Company's common stock during 2016 for $100,000. The 10% investment in RJ had a $90,000 fair value at the end of 2016 and a $105,000 fair value at the end of 2017. Which of the following statements is incorrect if McGinn classifies the investment as an available-for-sale security?

A) The 2016 unrealized loss is $10,000, but is not included in McGinn's 2016 net income.
B) The 2017 unrealized gain is $15,000, but is not included in McGinn's 2017 net income.
C) The 2017 unrealized gain is $10,000 and is included in McGinn's 2017 net income.
D) The 2016 unrealized loss is $10,000 and is reported on McGinn's balance sheet as a component of stockholders' equity.