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Available-for-Sale (AFS) Securities definitions

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  • Available-for-Sale Securities
    Equity or debt investments intended to be sold in the future, but not actively traded or held to maturity.
  • Fair Value
    Current market price used to measure the carrying amount of investments after initial recognition.
  • Other Comprehensive Income
    Equity section where unrealized gains or losses from certain investments are reported, separate from net income.
  • Unrealized Gain
    Increase in investment value not yet sold, reported in equity but not affecting net income.
  • Unrealized Loss
    Decrease in investment value not yet sold, reducing equity through a separate account from retained earnings.
  • Dividend Revenue
    Income from dividends received on investments, reported as non-operating income in the income statement.
  • Comprehensive Income Statement
    Financial statement showing net income plus items like unrealized gains or losses affecting equity.
  • Journal Entry
    Accounting record documenting transactions such as purchases, dividends, and fair value adjustments.
  • Carrying Value
    Amount at which an investment is reported on the balance sheet, adjusted for fair value changes.
  • Realized Gain
    Profit recognized in the income statement when an investment is sold for more than its carrying value.
  • Realized Loss
    Loss recognized in the income statement when an investment is sold for less than its carrying value.
  • Equity
    Owner's residual interest in assets, increased or decreased by items in other comprehensive income.
  • Retained Earnings
    Accumulated net income not distributed as dividends, unaffected by unrealized gains or losses in AFS securities.
  • T Account
    Visual tool used to track changes in account balances, such as investments and unrealized gains or losses.
  • Non-Operating Income
    Income not related to core business activities, such as dividend revenue from investments.