Has anyone come across using ‘effective interest rate’ for Available for Sale securities. I thought it does not make sense since the profit/loss is taken to OCI, efffective interest rate method is not required. It is only required for ‘Held to Maturity’ so that the book value represents the par value if held to maturity.
Konvexity has a problem which uses ‘effective interest method’ for availale for sale security. BTW, they also have a solution where they allow revaluation of a fixed asset under US GAAP. (God help us!!)