Available-for-sale (AFS) securities are investments that a company or an investor holds with the intention of selling them in the future, and not necessarily waiting until maturity. These securities are recorded on the balance sheet at their fair value, which is the current market price at the end of the reporting period — aka these assets are marked-to-market.
Unlike held-to-maturity securities (HTM), the value of available-for-sale securities is subject to daily market fluctuations and is revalued at the end of each reporting period to reflect the current market price. Any changes in the fair value of these securities are recorded as unrealized gains or losses on the balance sheet, which can impact the company’s net income and shareholders’ equity.
Examples of available-for-sale securities include stocks, bonds, and other debt securities.