A State Determines That One of Its Swaps, Reported in Its

Multiple Choice

A state determines that one of its swaps, reported in its enterprise fund, is no longer effective as a hedge of interest rate risk, and therefore hedge accounting is no longer appropriate. The swap was reported as an asset of $2 million. What is one of the effects of reclassifying the swap on the proprietary funds financial statements?

A) Investment income increases by $2 million on the proprietary funds operating statement.
B) Investment loss increases by $2 million on the proprietary funds operating statement.
C) The investment is reclassified from the asset to the net position section of the proprietary funds statement of net position.
D) Deferred outflows is reduced by $2 million on the proprietary funds statement of net position.