Suppose a buy-side client buys a TRS from a dealer. Even if the contract doesn't say that the client can unwind anytime, in practice, the client can, and it would be misleading and bad accounting to recognize more P&L under the assumption that the client won't unwind until maturity.
The dealer is usually long the underlying cash instrument. You PV that using the bid price plus accrued. The PV of the instrument leg of the TRS should be exactly the same. You should use the bid price for it, not ask price that you would if you were short the cash instrument.
In addition to the instrument leg, the client probably pays to the dealer a financing leg. The dealer should only recognize the accrued interest on that until the earliest date when the client can stop paying, which, practically, is any time.
Edit: I'm going to make up a numeric example to better illustrate each of the points you asked. Suppose the dealer buys USD 10 million of some underlying foreign currency bond maturing in 1 year (cash hedge), and sells a TRS on the same notional to the client. Typically, the maturity of the derivative is 2 business days after the maturity if the bond, but practically the vast majority of these contracts are unwound early. If the bond pays coupons or principal (in foreign currency), or of an underlying equity pays dividends, then the dealer pays the corresponding USD amount to the client in 2 (sometimes more) business days.
Let us first figure the fair value of the cash hedge. Suppose the bond is quoted on screens 98-99. 98 is the observable clean bid price. If the dealer sells the bond now, he will receive 98% of the notional plus the accrued. Clearly, this is its fair value.
The fair value of the bond leg of the TRS is what the client would receive if he decided to unwind now, which is the proceeds from selling the cash hedge. It does not matter whether the term sheet explicitly mentions that this is allowed. It would not make sense to me to try to project some adjustment to the observable bond price to account for the possibility of the client being locked in and unable to unwind early.
The dealer also earns carry on the funding leg of the TRS. It is easier to see where the P&L comes deom I'd you view the funding leg as separate from the instrument leg. The fair value of that is again whatever the dealer would receive if the TRS were unwound now. It would not be right to assume that the dealer would continue to earn this carry until the TRS maturity.
3 if the client wanted to unwind early and the dealer gave him any kind of hard time, using language like "non-breakable" or an exhorbitant fee, then the client would just reassign the unwanted exposure to someone else at a discount, not do any more business with this dealer, and tell all their friends about it.:)