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What does “other than temporary” mean for an available-for-sale investment?

When the investment is classified as available-for-sale, then any unrealized losses are recorded to OCI because management believes the fair value will increase in the long term. Therefore, the loss is considered temporary. However, if management decides that the loss is “other than temporary”, that means that the decline in fair value is permanent, and the company should write-down the investment to the current fair-market-value. Therefore, the company would recognize a realized loss in the income statement.


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