Reference no: EM132850812

Question - A company holds an equity investment classified as AFS. At the beginning of 2017, this investment is reported at a value of $4,000,000. Gains of $500,000 have been previously reported, and no impairment losses have been reported. At the end of 2017, the market value of the investment is $2,000,000, and it is determined that the decline in value qualifies for treatment as an impairment loss.

How is this information reported on the company's 2017 income statement and statement of comprehensive income?

a. $500,000 reduction in other comprehensive income; $1,500,000 loss on the income statement

b. $2,000,000 loss on the income statement; no change in other comprehensive income

c. $2,000,000 reduction in other comprehensive income; not reported on the income statement

d. $1,500,000 reduction in other comprehensive income; not reported on the income statement