The transfer between categories of investments should be accounted for at fair value. ASC 320-10-35-10 indicates how the security's unrealized holding gain or loss should be treated at the date of the transfer. The treatment of the unrealized gain or loss at the transfer date is outlined in the chart below.

The use of fair value for debt securities transferred into the held-to-maturity category may create a premium or discount that should be amortized thereafter as an adjustment of yield. For debt securities transferred into the held-to-maturity category from the available-for-sale category, the difference between the amortized cost and its fair value at the date of the transfer is amortized as a yield adjustment in accordance with the effective interest method described in ASC 310. However, amortization of the unrealized holding gain or loss reported in equity will offset or mitigate the effect on interest income of the amortization of the premium or discount for that held-to-maturity security.

When a security is transferred from held-to-maturity to available-for-sale, the security's amortized cost basis carries over to the available-for-sale category for the following purposes: subsequent amortization or accretion of the historical premium or discount, comparison of fair value and amortized cost for the purpose of determining unrealized holding gains and losses, and required disclosure of amortized cost.