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Unrealized Gains (FVPL)

Why do you subtract the amortized discount when calculating unrealized gain via fair value through profit or loss classification?

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Because that’s already included on the income statement.

Simplify the complicated side; don't complify the simplicated side.

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Thank you for your response s2000magician. Can you expand on that (it still hasn’t clicked for me yet)?

When you have a bond designated as held to maturity, you amortize any premium / discount and the amortized amount goes into the interest income you show on the income statement.

The same thing happens when you amortize a premium / discount on a bond designated as FVPL.  The amortized amount goes into the interest income on the income statement, and the remainder of the price change is the unrealized gain/loss.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/

S2000magician, thank you so much.

My pleasure.

Simplify the complicated side; don't complify the simplicated side.

Financial Exam Help 123: The place to get help for the CFA® exams
http://financialexamhelp123.com/