Regarding unrealized gains or losses on available-for-sale debt securities, how are they treated?

Unrealized gains or losses on available-for-sale debt securities are treated as adjustments to stockholders' equity directly. This treatment aligns with the accounting principles governing available-for-sale securities, which are not intended for immediate resale. Instead, any unrealized gains or losses affect other comprehensive income and are recorded in a separate component of equity, typically called "Accumulated Other Comprehensive Income." This approach allows the accounting records to reflect the current market value of these securities without impacting the income statement until the securities are actually sold, at which point the gains or losses become realized and affect net income. This method ensures that shareholders have an accurate and updated view of equity without the volatility that could come from reflecting these unrealized amounts in the income statement.