Available for sale
Encyclopedia
Available for sale is an accounting term
used to classify financial assets.
AFS is one of the three general classifications, along with held for trading and held to maturity, under the U.S. Generally Accepted Accounting Principles (US GAAP), specifically, the FASB 115. The IFRS
also includes a fourth classification: loans and receivables
.
each period) are not included in net income (unlike the gains and losses associated with "trading" investments) but in other comprehensive income (income statement/retained earnings) and accumulated other comprehensive income (balance sheet) until they are realized (i.e. sold).
, paragraph 58 or if the asset is sold or otherwise disposed of. If the asset is impaired, sold or otherwise disposed of the revaluation gain or loss implicit in the transaction is recognised as a revenue or expense.
Technical terminology
Technical terminology is the specialized vocabulary of any field, not just technical fields. The same is true of the synonyms technical terms, terms of art, shop talk and words of art, which do not necessarily refer to technology or art...
used to classify financial assets.
AFS is one of the three general classifications, along with held for trading and held to maturity, under the U.S. Generally Accepted Accounting Principles (US GAAP), specifically, the FASB 115. The IFRS
International Financial Reporting Standards
International Financial Reporting Standards are principles-based standards, interpretations and the framework adopted by the International Accounting Standards Board ....
also includes a fourth classification: loans and receivables
Receivables
Receivables may refer to the amount due from individuals and companies. Receivables are claims that are expected to be collected in cash. These are frequently classified as:...
.
US GAAP Treatment
Under US GAAP, AFS assets represent securities and other financial investments that are non-strategic, that are neither held for trading, nor held to maturity, nor held for strategic reasons, and that have a readily available market price. As such, the gains and losses resulting from marking AFS investments to market (revaluing them to market price / fair valueFair value
Fair value, also called fair price , is a concept used in accounting and economics, defined as a rational and unbiased estimate of the potential market price of a good, service, or asset, taking into account such objective factors as:* acquisition/production/distribution costs, replacement costs,...
each period) are not included in net income (unlike the gains and losses associated with "trading" investments) but in other comprehensive income (income statement/retained earnings) and accumulated other comprehensive income (balance sheet) until they are realized (i.e. sold).
IFRS Treatment
Under IFRS AFS assets are defined as being all financial assets that do not fall into one of the other categories. As such, the treatment closely follows that of US GAAP. Gains or losses from revaluation of the asset are put through a reserve in Shareholders' equity, except to the extent that any losses are assessed as being permanent, and the asset is therefore impaired, under IAS 39IAS 39
IAS 39: Financial Instruments: Recognition and Measurement is a measure of instrument of the International Accounting Standards Board ....
, paragraph 58 or if the asset is sold or otherwise disposed of. If the asset is impaired, sold or otherwise disposed of the revaluation gain or loss implicit in the transaction is recognised as a revenue or expense.