The Stevens Company purchased a debt investment that meets the characteristics of a simple debt instrument. Stevens is holding the debt for purposes of managing risk. Might Stevens have to recognize an impairment loss on the debt?
A) Yes.
B) No, because the debt is accounted for at FV-NI, so any fair value changes are already recognized as unrealized gains and losses.
C) No, because the debt is accounted for at amortized cost, so fair value changes are not included in earnings.
D) Insufficient information is available to answer this question.
Correct Answer:
Verified
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