What valuation approach is used for debt securities when there are no plans to sell them?

The valuation approach used for debt securities when there are no plans to sell them is amortized cost. This method involves accounting for the debt security at its initial purchase price, adjusting for any premiums or discounts over time, as well as any principal repayments made. This approach reflects the effective interest method, whereby interest income is recognized based on the actual interest earned during the holding period.

Amortized cost is particularly relevant for debt securities held to maturity, as it provides a stable and consistent method for reporting these assets on the balance sheet, aligning with the intent of holding them for the long term. This contrasts with fair value or market value approaches, which would reflect current market conditions and fluctuations, and are more applicable when there are intentions to sell the securities in the near term.