{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/320/10/#40-derecognition","source":"FASB Accounting Standards Codification, Basic View","usage":"Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective.","topic":"320","topic_title":"Investments—Debt Securities","subtopic":"320-10","subtopic_title":"Overall","section":{"number":"40","label":"40 Derecognition","anchor":"40-derecognition","is_sec":false,"groups":[{"block":null,"heading":"Accounting for Sales of Securities","paragraphs":[{"citation":"320-10-40-1","para":"40-1","html":"Section 860-10-40 provides guidance on determining whether a transfer of securities shall be accounted for as a sale. With respect to trading securities, because all changes in a trading security's fair value are reported in earnings as they occur, the sale of a trading security does not necessarily give rise to a gain or loss. Generally, a debit to cash (or trade date receivable) is recorded for the sales proceeds, and a credit is recorded to remove the security at its fair value (or sales price). If the entity is not taxed on the changes in fair value, the deferred tax accounts would be adjusted. Some adjustment to this procedure will be necessary for entities that have not yet recorded the security's change in fair value up to the point of sale (perhaps because fair value changes are recorded at the end of each day). Although entities have different bookkeeping methods for available-for-sale securities, generally, a sale of an available-for-sale security shall be recorded by a debit to cash (or trade date receivable) for the sales proceeds, and a credit to remove the security at its fair value (or sales price). The amount recorded in other comprehensive income, representing the unrealized gain or loss at the date of sale, is reversed into earnings, and the deferred tax accounts are adjusted. Some adjustment to this procedure will be necessary for entities that have not yet recorded the security's change in fair value up to the point of sale (perhaps because fair value changes are recorded at the end of each interim period) or when write-downs have been recognized. As discussed in paragraph 320-10-25-20, if structured notes are acquired for the type of specified investment strategy described in paragraph 320-10-25-19, then the investor should account for the two structured note securities as a unit until one of the securities is sold, at which time the notes shall be measured in the same way as a participating interest in paragraph 860-20-40-1A.