medium · Financial Accounting statement-of-cash-flows
Kilo Corp. holds a 25% interest in Lima Inc. During Year 1, Lima reports a Net Loss of $1,000,000 and a $200,000 Unrealized Loss on Available-for-Sale (AFS) debt securities in OCI.
How should Kilo record its share of these items?
- A $250,000 reduction to Net Income and a $50,000 reduction to AOCI.
- A $300,000 total reduction to Net Income.
- A $300,000 reduction to the Investment account, with the entire offset recognized in Net Income.
- A $250,000 reduction to Net Income, while ignoring the OCI component until Lima sells the securities.
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