VisionClear, Inc. purchased a 25% share of Specs, Inc. (2,000 shares) in 2019. The investment was properly reported under the equity method. In 2022, one of the investors in Specs acquired a 60% interest in the company through a large stock purchase. As a result, VisionClear now has minimal influence over the operating and financial decisions of Specs, Inc.

VisionClear elects to change the investment classification and report the investment at fair value and recognize unrealized gains and losses in net income. As of the transfer date, the balance in the Investment account was $120,000; the fair value of Specs stock was $70 per share.

VisionClear should reclassify the Investment account,

Group of answer choices

A) adjust the account balance to $140,000 as of the date of the transfer, and record the $20,000 unrealized gain as other comprehensive income.

B) and leave the account balance at $120,000 as of the date of the transfer. Any gain or loss on the investment would be recognized when the stock is sold.

C) leave the account balance at $120,000 as of the date of the transfer, and derecognize any balance in the Fair Value Adjustment account.

D) and leave the account balance at $120,000 as of the date of the transfer. The account balance should be adjusted to fair value at the next reporting date.