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Market price adjustments are generally recorded at the end of the accounting period to adjust the Book Value of investments that are still held to their current Market Value.
The adjustment is based on the difference between the Market Value of the investment and its current Book Value:
Market Value Adjustment = Market Value − Current Book Value before the adjustment
- If the Market Value is higher than the Book Value, the difference is recorded as an Unrealized Gain on Investments.
- If the Market Value is lower than the Book Value, the difference is recorded as an Unrealized Loss on Investments.
The adjustment is recorded between the Investment Balance Sheet Account assigned to the Item and the appropriate Investment Value Adjustment Account.
The investment remains in the portfolio; the adjustment changes its Book Value without changing the Quantity held.
You can automatically create the required adjustment transactions using the Create adjustment transactions extension.
