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

question 111

Multiple Choice

McGinn Company purchased 10% of RJ Company's common stock during 20X2 for $100,000. The 10% investment in RJ had a $90,000 fair value at the end of 20X2 and a $105,000 fair value at the end of 20X3.
- 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 20X4 for $102,000?

• A) The 20X4 realized loss reported on the statement of earnings is $3,000.
• B) The 20X4 realized gain reported on the statement of earnings is $2,000.
• C) The 20X2 unrealized gain reported on the statement of earnings is $2,000.
• D) The 20X2 unrealized loss reported on the statement of earnings is $3,000.

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