Question: 1 1 . During the current year, Davis Company s common stock suffers a permanent drop in market value. In the past, Davis has made

11. During the current year, Davis Companys common stock suffers a permanent drop in market
value. In the past, Davis has made a significant portion of its sales to one customer. This buyer
recently announced its decision to make no further purchases from Davis Company, an action that
led to the loss of market value. Hawkins, Inc., owns 35 percent of the outstanding shares of Davis,
an investment that is recorded according to the equity method. How would the loss in value affect
this investors financial reporting?

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