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Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please Introduction and show work please no plagiarism check I request
![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?
The 2019 unrealized loss is $10,000, but is not included in McGinn's 2019 net
income.
The 2020-unrealized gain is $5,000, and is included in McGinn's 2020 net income.
O The 2019 unrealized loss is $10,000 and is reported on McGinn's balance sheet as a
component of stockholders' equity.
O The 2020 unrealized gain is $15,000 and is included in McGinn's 2020 net income.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe0b773db-29ad-4d9a-914b-6d0769b81601%2Fd0d1a1f3-ad14-4fcd-b786-144c842f4245%2F3kzeu3_processed.png&w=3840&q=75)
Transcribed Image Text: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?
The 2019 unrealized loss is $10,000, but is not included in McGinn's 2019 net
income.
The 2020-unrealized gain is $5,000, and is included in McGinn's 2020 net income.
O The 2019 unrealized loss is $10,000 and is reported on McGinn's balance sheet as a
component of stockholders' equity.
O The 2020 unrealized gain is $15,000 and is included in McGinn's 2020 net income.
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