How Should a Permanent Loss in Value of an Investment

question 111

Multiple Choice

How should a permanent loss in value of an investment using the equity method be treated?

• A) The equity in investee income is reduced.
• B) A loss is reported the same as a loss in value of other long-term assets.
• C) The investor's stockholders' equity is reduced.
• D) No adjustment is necessary.
• E) An extraordinary loss would be reported.

---

Definitions:

Expectancy Effect

The tendency for someone to become the kind of person others expect him or her to be; also known as a self-fulfilling prophecy and behavioral confirmation.

Expectancy Effect

The phenomenon where people's expectations or beliefs influence their own or others' behavior, often leading to those expectations being fulfilled.

Priming Study

An experimental procedure used to influence participants' subsequent thoughts and behaviors by exposing them to specific stimuli beforehand.

Laboratory B

often refers to a designated experimental or research setting in scientific studies, sometimes used in sequence with other labs (e.g., Laboratory A, Laboratory C) for comparative purposes.