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Trading securities should be reported on the financial statements at fair market value.
Trading Securities
Financial assets such as stocks or bonds, bought and held primarily for the purpose of selling them in the near term to profit from price changes.
Financial Statements
Documents that provide an overview of a company's financial condition, including balance sheet, income statement, and cash flow statement.
Fair Market Value
The price at which an asset or service would exchange between a willing buyer and seller, not under duress, in an open and competitive market.
- Apprehend the basic doctrines of investment accounting and the motivation for employing either fair value or cost methodologies.
- Identify the accounting treatment disparities between trading securities, available-for-sale securities, held-to-maturity investments, and investments accounted for by the equity method.
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Learning Objectives
- Apprehend the basic doctrines of investment accounting and the motivation for employing either fair value or cost methodologies.
- Identify the accounting treatment disparities between trading securities, available-for-sale securities, held-to-maturity investments, and investments accounted for by the equity method.
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