xilinx_altera

I know OCI can be unwound. I’ve never heard of retained earnings being unwound (except through losses). And it just seems wrong to keep re-earning (even temporarily) the difference between the underlying amortized value and the fair value - surely it’s too distorting to be true.
Say I buy a bond with no premium or discount and I classify it as HFT. Because there’s no premium or discount there’s nothing to amortize, so my carrying value remains at par for as long as I keep it (as long as its going). Under interest income I straightforwardly enter the coupon (also the effective rate). All good so far. However, CP, you’re suggesting that if at the end of Year 1 my bond purchased ￡1m has a fair value of ￡1.2m, I should enter the gain of ￡200k as additional income (along with the coupon). This is fine too. But come the end of Year 2 with no movement in fair value and no movement in carrying value I’m supposed to enter another gain of ￡200k (as well as the coupon again)
This can’t be right, can it? Assuming my company consists of nothing but this single bond, and the situation persists for 10 years, at the end of year ten I have net assets of ￡3.2m plus the accumulated coupon (i.e. the fair value of the bond + the retained growth + the retained interest)!
I think it’s absurd if the growth is annually re-measured against the amortized carrying value (because it’s multiple accounting). Alternatively it’s odd to amortize the underlying carrying value for the sake of calculating interest whilst using fair value as the carrying value for calculating growth. I think the pre-correction CFAI and Schweser positions are more intuitive, with traded assets reporting total return (realized or not) to income - and that would consist of the coupon plus the capital growth.
I appreciate your explanations, CP - I’m just not convinced about this!