cpa and cma review questions 460911

On both December 31, 2010, and December 31, 2011, Kopp Co.’s only equity security investment had the same fair value, which was below its original cost. Kopp considered the decline in value to be temporary in 2010 but other-than-temporary in 2011. At the end of both years the security was classified as a noncurrent asset. Kopp could not exercise significant influence over the investee. What should be the effects of the determination that the decline was other-than-temporary on Kopp’s 2011 net noncurrent assets and net income?

A) Decrease in both net noncurrent assets and net income.

B) No effect on both net noncurrent assets and net income.

C) Decrease in net noncurrent assets and no effect on net income.

D) No effect on net noncurrent assets and decrease in net income.