On January $10,$ Year $1,$ Box, Inc. purchased marketable equity securities of Knox, Inc. and Scot, Inc. Box classified both securities as available$-$for$-$sale assets over which it could not exercise significant influence. At December $31,$ Year $1,$ the cost of each investment was greater than its fair market value. The loss on the Knox investment was considered permanent and that on Scot was considered temporary. How should Box report the effects of these investing activities in its Year $1$ 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 only

B$)$ An unrealized loss equal to I plus II$.$

C$)$ A realized loss equal to I only.

D$)$ No income statement effect.