04.01- Marketable Securities (Trading) Flashcards
What are the three classifications for publicly traded investments where the investor has no significant influence?
- Trading Securities
- Available-for-sale securities
- Held-to-maturity securities
What are TRADING SECURITIES?
Equity instruments or debt instruments that are are acquired with the purpose of selling quickly and making a profit.
What are three examples of equity instruments?
- Stock
- Options
- Rights Warrants
What are TRADING SECURITIES typical classified as?
Current Assets
What are AVAILABLE-FOR-SALE SECURITIES?
Investments that don’t meet the definition of trading securities.
What are AVAILABLE-FOR-SALE SECURITIES typically classified as?
Either current or non-current assets
If an AVAILABLE-FOR-SALE SECURITY is considered to be held for an indefinate amount of time, what should it be classified as?
Non-current assets
What are HELD TO MATURITY SECURITIES?
Investments in BONDS which is expected to be held until the due date for repayment.
What are HELD TO MATURITY SECURITIES classified as?
Non-current assets (until they will mature in less than one year)
What causes the different types of investments to be categorized?
Management’s intentions
What are TRADING SECURITIES recorded at when acquired? What are they carried at?
- Cost
- Carried at Fair value
What type of activity are TRADING SECURITIES considered on the statement of cash flows?
Operating activity
How are TRADING SECURITIES recorded on a balance sheet?
If Current= Operating
If Noncurrent= Investing
What types of securities are including in TRADING SECURITIES?
Stocks and Bonds (equity and debt securities)
Where to UNREALIZED GAINS OR LOSSES appear for TRADING SECURITIES?
Income Statement
