HMS Motor Services Company (HMS) is a European corporation that manufactures commercial vehicles and passenger cars in many countries in North America, South America, Asia and Europe. It also provides automotive financing services through its wholly owned HMS Financial. HMS has raised capital from share issues and external bonds issues to finance its operations. Its shares are listed on the London Stock Exchange. It has been using IFRS for financial reporting purposes. The compensation provided to HMS's top executives is guided by pay-for-performance and includes base salary, short-term incentives, and long-term incentives. The short-term incentives are linked to HMS's GAAP-based net income, among other financial metrics. Despite the compensation structure, HMS's top executives set a tone at top that the company endeavors to maintain a reliable and ethical financial reporting. It is now February 2021. HMS is in the process of finalizing its financial statements for the year ended December 31, 2020. The chief financial officer (CFO) is preparing for a planning meeting with HMS's auditors. Before the meeting, the CFO would like his assistant to prepare an analysis of all financial reporting issues. All values in the following information memo are in thousands of US dollars. HMS has an investment portfolio, mainly in marketable securities of corporate bonds or share investments. Within the portfolio, HMS holds a 5% ownership of shares in a public energy-producing company (ACH Corporation) and the fair value model has been used to account for the investment with holding gains or losses booked through net income. A significant loss was recorded on this investment at the end of 2020 when the fair value adjustment was conducted. As the loss is not expected to be temporary, management is considering the disposal of this investment in the near future. In February 2021, ACH's share price dropped further due to an undesired operating outcome, 1 and around another $800,000 loss would be recorded if HMS decides to sell this investment very soon. The CFO would like his assistant to analyze whether this situation has an effect on its financial reporting for its 2020 fiscal year.