Impairment and sale considerations for debt securities
FINANCIAL REPORTING INSIGHTS |
The recent increase in interest rates has in many cases caused unrealized losses on fixed-rate debt securities to increase significantly, and has caused securities that were in a gain position to move to an unrealized loss position. This movement to an unrealized loss position or more significant unrealized loss position has triggered questions regarding when impairment should be recognized in the income statement and the ramifications if management decides to sell impaired securities. McGladrey recently issued Impairment and sale considerations for debt securities to address some of these commonly asked questions in the context of debt securities. Our guidance also includes a summary of the circumstances in which impairment of a debt security is deemed other than temporary and the required accounting in such circumstances.