Final answer:
The North Company's financial statements for the current year should show a loss of $2,000 on the income statement and temporary investments of $10,000 on the balance sheet.
Step-by-step explanation:
The North Company's financial statements for the current year should show option D) a loss of $2,000 on the income statement and temporary investments of $10,000 on the balance sheet.
When the market value of the stock is lower than its cost, a loss on the investment is recognized. In this case, the North Company purchased 200 shares for $12,000 but the market value at the end of the year was only $10,000, resulting in a loss of $2,000. This loss would be reported on the income statement, while the temporary investment of $10,000 would be reported on the balance sheet.