A decline in the fair value of a trading security is recorded by debiting an unrealized loss account and crediting the Fair Value Adjustment account.

Trading Security

A financial instrument that is bought and sold for short-term profit within the same accounting period.

Unrealized Loss Account

An account on financial statements representing losses that have been recognized but not yet realized through a transaction.

Fair Value Adjustment

An accounting adjustment made to update the reported value of a financial asset or liability to its current market value or fair value.