When an available-for-sale security is sold, any unrealized gains or losses would need to be reclassified from the Allowance for Change in Fair Value of Investments account in order to avoid double counting any gains or losses recorded in comprehensive income.

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When an available-for-sale security is sold, any previously unrealized gains or losses that were recorded in other comprehensive income must be reclassified out of the equity section (specifically, from accumulated other comprehensive income) and recognized in the income statement to ensure that the gains or losses are not counted twice. This process adjusts for the fact that the gains or losses are now realized upon the sale of the security.

When an Available-For-Sale Security Is Sold, Any Unrealized Gains or Losses