On January 10, 2006, Box, Inc. purchased marketable equity securities of Knox, Inc. and Scot, Inc., neither of which Box could significantly influence. Box classified both securities as available-for-sale. At December 31, 2006, the cost of each investment was greater than its fair market value. The loss on the Knox investment was considered other-than-temporary and that on Scot was considered temporary. How should Box report the effects of these investing activities in its 2006 income statement?
- I. Excess of cost of Knox stock over its market value.
- II. Excess of cost of Scot stock over its market value.
- a. An unrealized loss equal to I plus II.
- b. An unrealized loss equal to I only.
- c. A realized loss equal to I only.
- d. No income statement effect.