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Available for sale (AFS) is an accounting term that is used to describe assets that are purchased with the expressed intention of holding onto them for a limited period of time before offering them for resell. This approach is often utilized with different types of stock and bonds, and involves timing the sale to allow the investor to gain the greatest level of benefit from the investment before the sale takes place. While similar in nature, an asset that is classed as available for sale is not quite the same as one that is held for trading or held to maturity.
With an asset that is designated as available for sale, the idea is normally to time the sale of the asset at some point before maturity is reached. This is different from held to maturity assets, such as bond issues that are retained by the owner until they reach maturity. Available for sale even differs from assets that are classified as held for trading, in that the time frame that the investment is held is often shorter for the AFS approach.
The concept of classifying certain assets as available for sale is to distinguish them from assets that are earmarked for retention over a longer period of time. In the case of bond issues, a bond classed as an AFS asset would be scheduled to offer for sale at a particular point during the life of the bond. For example, if the bond will take five years to mature, the holder may choose to put the bond up for sale after receiving annual interest payments for two years. In like manner, an investor may acquire shares of a particular stock with the intention of holding those shares for six months to a year then placing them up for sale, rather than holding onto them over the long-term.
Typically, the use of an available for sale strategy is one component in a larger investment scheme that the investor is attempting to use in order to accomplish specific goals or to reorganize the investment portfolio for a particular purpose. At any point in time, the investor may choose to change the approach, allowing the assets identified as available for sale to be reclassified to meet the new direction he or she has in mind. Typically, the term has meaning only as it relates to accounting for the financial assets involved in an orderly fashion.