What is the journal entry to reclass an unrealized loss from OCI to the income statement?
If a company has an unrealized loss on an AFS security that is considered temporary, then the unrealized loss would be recorded to OCI. However, if the unrealized loss seems like it will be permanent (other than temporary), then the unrealized loss should be removed from OCI and recognized to the income statement.
The journal entry below illustrates the Year 1 entry and the entry to reclass the loss to the income statement in Year 2.
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