Potter Company holds an available- for- sale debt invest-ment with a carrying value of $ 95,000. The current fair value of the investment is $ 87,000 and the present value of the future cash flows from the debt investment is $ 90,000. Potter does not intend to sell the investment, however, it does deem it more likely than not that it will have to sell the investment before the market recovers.
Required
a. Does impairment exist? If so, is it other than temporary?
b. I f impairment exists, what amount of loss will Potter report in net income? What amount of loss will it report in other comprehensive income?
c. What is the journal entry for the impairment loss, if needed?