ABC Ltd. acquired 65 percent of TYU Ltd.s common shares and 65 percent of its preferred shares. ABC reports under ASPE and has opted not to present consolidated financial statements. The preferred shares are not actively traded. ABC should report its investment in TYU's preferred shares at

1. Cost less any impairment lossess and theses losses should be reported in net income

2. Fair value , and any adjustments to fair value should be reported in contributed surplus

3. Fair value and any adjustments to fair value should be reported in net income.

4. cost at the time of acquisition.