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  3. the "expert" from my last question stated: "the ra

The "expert" from my last question stated: "The rationale behind recognizing credit losses on AFS...

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Accounting

The "expert" from my last question stated: "The rationale behind recognizing credit losses on AFS securities when the fair value is less than the amortized cost is based on the principle of conservatism and the need for transparent financial reporting." My rebuttle to that is not reporting credit losses on securities just because the fair value is more than the amortized cost is a violation of this principle. Based on conservatism, the loss should be reported because the loss is probable, period. Conservatism doesn't say anything about not reporting if the fair value is less than amortized cost. So, again, My question is: Why do companies only recognize credit losses on an available-for-sale security when the security's fair value is less than amortized cost?

PS***My last question should be refunded.

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