Rye Company purchased 15% of Lena Company's common stock during 2016 for $150,000. The Investment in Lena had a $160,000 fair value at the end of 2016 and a $140,000 fair value at the end of 2017. Which of the following statements is correct if Rye classifies the investment as a trading security?
A) The 2016 unrealized gain is $10,000 and is included in Rye's 2016 net income.
B) The 2017 unrealized loss is $20,000, but is not included in Rye's 2017 net income.
C) The 2017 unrealized loss is $10,000 and is included in Rye's 2017 net income.
D) The 2016 unrealized gain is $10,000 and is reported on Rye's balance sheet as a component of other comprehensive income.
Correct Answer:
Verified
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