Pink Partners holds an available-for-sale equity investment with a carrying value of $40,000. The current fair value of the investment is $24,000. There is objective evidence of this impairment and the impairment is other-than-temporary. Should an impairment loss be recorded? How much of this loss should be classified in net income and how much should be classified in other comprehensive income?
A) Yes, the $16,000 impairment loss should be reported as part of net income.
B) No, an impairment loss should not be recorded because this is an equity investment.
C) Yes, the $16,000 impairment loss should be split evenly between net income and other comprehensive income.
D) Yes, there is an impairment loss of $16,000. However, there is not enough information to determine if this loss should be recorded in Net Income or as part of Other Comprehensive Income.
Answer: A
Explanation: A) Impairment Loss = $40,000 - $24,000 = $16,000
You might also like to view...
The 5-number summary divides a set of data into four subsets, with one quartile of the data in each subset
Indicate whether the statement is true or false
When may an employer require an employee to submit to a lie detector test?
a. When the employee has been hired for less than 90 days b. When the test is part of an on-going investigation into crimes that have occurred c. When the employer has reason to believe the employee is using illegal drugs on the job d. When all employees are being questioned using a lie detector