Wang Corporation purchased $170,000 of Hales Inc. 8% bonds at par with the intent and ability to hold the bonds until they matured in 2020, so Wang classifies its investment as held to maturity. Unfortunately, a combination of problems at Hales and in the debt market caused the fair value of the Hales investment to decline to $136,000 during 2016. Wang views this decline as an other-than-temporary (OTT) impairment. Wang calculates that, of the $34,000 drop in fair value, $13,000 of it relates to credit losses and $21,000 relates to non-credit losses. If Wang accounts for the Hales bonds under IAS No. 39, before-tax net income for 2016 will be reduced by:

$34,000.

$13,000.

$0.

$21,000.