Unrealized Gains and Losses


Can you pls advise where does unrealized gains and losses gets recorded in

a) Held for trading assets

b) Available for sale assets

c) Held till maturity assets

I understand, unrealized gains and losses does not get recorded under “Held till maturity” types and the same gets included as Profit or Loss under Other Comprehensive Income for “Available for Sale” types but what about “Held for Trading” ??

You are mixing a couple of terms up here:

For held to maturity investments, unrealised gains and losses are not recorded since such instruments are NOT carried in the balance sheet at fair value.

Available for sale and held for trading assets are both carried at fair value (usually equal to market value), which means unrealised gains and losses may arise. The difference between the accounting treatment of these categories is that if the asset is held for trading, all gains and losses (realised or unrealised) are recorded in P&L.

On the other hand, in the case of available-for-sale assets, unrealised gains and losses go to Other Comprehensive Income and get transferred to P&L only when realised (upon sale) or in the case of impairment.

Brilliantly explained.

Thanks man !

You are welcome!