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 an available-for-sale security and sold it at the beginning of 2018 for $148,000?
A) The 2018 realized loss is $2,000 and is included in Rye's 2018 income statement.
B) The 2018 realized gain is $8,000 and is included in Rye's 2018 income statement.
C) The 2018 unrealized gain is $8,000 and is included in Rye's 2018 income statement.
D) The 2018 unrealized loss is $2,000 and is included in Rye's 2018 income statement.
Correct Answer:
Verified
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