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$1$ Bazar Company purchased $5\%$ of the equity securities of another company for $$100,000.$ At the end of the year, the fair value of the securities was $$105,000.$ How should the investment be reported in Bazar's year$-$end financial statements?

Multiple Choice

The investment in equity securities would be reported in the balance sheet at its $$105,000$ fair value; an unrealized holding gain of $$5,000$ would be reported in net income.

The investment in equity securities would be reported in the balance sheet at its $$100,000$ purchase cost; an unrealized holding gain of $$5,000$ would be reported in net income.

The investment in equity securities would be reported in the balance sheet at its $$100,000$ cost$.$

An unrealized holding gain of $$5,000$ would be reported as a separate component of stockholders' equity.