In fact my real question behind is the following:

If US or German bonds decrease by say 5% over a quarter, and a publicly traded company owns the bonds, do they have to reflect the price change every quarter in their financial statements?

In the title I tried to make it more generic. I hope the two questions are not too distant from each other.

2 Answers 2


Public companies in the US are supposed to follow accounting standards established by the Financial Accounting Standards Board (FASB) when publishing financial statements. These standards require that assets be valued at current market rates.

During the 2008 financial crisis, banks pressured Congress to pass legislation to suspend mark-to-market accounting since many banks were holding assets that had severely dropped in value after the crisis. Congress passed the Emergency Economic Stabilization Act (EESA) which required the Securities and Exchange Commission (SEC) to examine "Alternative accounting standards to those provided in [Financial Accounting Standards Board] Statement Number 157".

At the time the SEC decided not to suspend mark-to-market. However, the EESA reaffirmed that the SEC has the authority to suspend mark-to-market if they choose.


Mark to Market is done for bonds and quite a few other instruments. So if the price has gone down, the companies / banks who hold these bonds reflect this as provisional loss [as they have not yet sold the bond, it is notional]. If the price goes up, then the provisional loss is shown as profit.

  • Is MTM done for OTC products as well?
    – user6259
    Apr 27, 2012 at 18:48

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