If market interest rates have changed materially since a firm issued a bond, and the

firm does not use the fair value reporting option, how is the change in the market value of the firm’s debt most likely to be reported in the firm’s financial statements？

A. The gain or loss in market value must be calculated and disclosed in the footnotes to the financial statements.

B. Net income and equity are unaffected, but the change is disclosed by the firm’s management.

C. Net income is unaffected, but the change in market value is recorded in other comprehensive income.