Final answer:
Unrealized holding gains and losses for securities available-for-sale are reported in the shareholders' equity section of the balance sheet, under other comprehensive income. They do not affect the income statement for the period in which they arise.
Step-by-step explanation:
Unrealized holding gains and losses for securities available-for-sale are reported as a separate component of the shareholders' equity section of the balance sheet. They are not included in the determination of income from normal operations in the period of the change and are not reported as extraordinary items.
Rather, these unrealized gains and losses affect the comprehensive income and are reflected under other comprehensive income (OCI), which eventually accumulated to shareholder's equity, not the income statement.
The T-account helps illustrate how assets and liabilities work within a corporation's balance sheet, with unchanged unrealized gains and losses from available-for-sale securities impacting the equity side of the balance. This concept is important in understanding the financial position presented in a bank's T-account, where assets must equal liabilities plus net worth.