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

question 37

Multiple Choice

McGinn Company purchased 10% of RJ Company's common stock during 2019 for $100,000.The 10% investment in RJ had a $90,000 fair value at the end of 2019 and a $105,000 fair value at the end of 2020. Which of the following statements is correct?

• A)The 2019 unrealized loss is $10,000,but is not included in McGinn's 2019 net income.
• B)The 2020 unrealized gain is $5,000,and is included in McGinn's 2020 net income.
• C)The 2020 unrealized gain is $15,000 and is included in McGinn's 2020 net income.
• D)The 2019 unrealized loss is $10,000 and is reported on McGinn's balance sheet as a component of stockholders' equity.

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Definitions:

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