Requirement 2. What effect does the derecognition have on the financial statements ? What effect does the derecognition have on the income statement? O A. The gain is treated as an adjustment to liabilities and income will be higher. OB. The loss is treated as an expense and net income will be higher. C. The gain is treated as an adjustment to retained earnings and income will be higher. e D. The loss is treated as an expense and net income will be lower