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If we classify a debt investment as held-to-maturity (HTM), we're that we have invested in debt with the "positive intent and ability" to hold the debt to maturity (i.e., the end of the loan term).
What do we do with unrealized holding gains and losses?Â
What do we do with unrealized holding gains and losses?Â
Sale of held-to-maturity investments
Sale of held-to-maturity investments
What is considered an "unforseen circumstance"?
Impairment of held-to-maturity investments
Impairment of held-to-maturity investments
There is one exception to the general rule that companies do not recognize unrealized gains and losses for held-to-maturity investments. If events and circumstances suggest that the value of a held-to-maturity investment has been permanently impaired, GAAP requires the company to record an impairment loss immediately.
Like, accounting for bad debts, we use the Current Expected Credit Loss (CECL) model.
Example of impairment
Financial statement presentation
Financial statement presentation
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