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How are unrealized gains or losses recorded for available-for-sale debt securities?

If a company classifies a debt security as available-for-sale, any unrealized gains or losses are recorded to other comprehensive income (“OCI”), which is a component of equity on the balance sheet. Unrealized gains or losses are calculated based on the change in fair value over a reporting period (e.g. January 1st to December 31st). Gains or losses are only recorded in the income statement when the debt security is sold, and the gain/loss can be “realized”.

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