Available-for-sale (AFS)
Financial Accounting glossary · The Accounting Cycle & Financial Statements
Definition
Debt security classification carried at fair value, with unrealized fair-value changes flowing to OCI/AOCI and reclassified to net income on sale. Expected credit losses are recognized in net income through an allowance under ASC 326, even while held.
Available-for-sale (AFS) in plain English
Imagine you buy a share of a company's loan (a "debt security") not to hold forever and not to flip tomorrow, but just to keep your options open — you might sell if you need cash. That's "available-for-sale." Each period you re-mark it to its current market price ("fair value"), but here's the twist: those up-and-down price swings don't hit your regular profit yet — they park in a special holding bin called OCI (other comprehensive income) until you actually sell, at which point the gain or loss finally counts as real profit. One exception: if you think the borrower might genuinely not pay you back, that expected loss gets charged to profit right away, even while you're still holding it.
Also called: AFS
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