Permanent value declines in available-for-sale securities should be

Question

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Permanent value declines in available-for-sale securities should be included in income as a realized loss. This is because available-for-sale securities are not held until maturity and therefore any declines in their value should be recognized in the income statement. The allowance account is used for temporary declines in value, while amortization over the remaining life of the security is not appropriate for permanent declines in value.

Permanent Value Declines in Available-For-Sale Securities Should Be