Marketable Securities

Question 1

Define: Trading Securities (HFT)

Answer 1

Investments in securities held for a brief period of time to be sold in the short term (within one operating cycle) that are reported at fair value with unrealized gains and losses reported in income.

Question 2

Define: Available-For-Sale Securities

Answer 2

Investments in securities, which may be held and/or sold in either the short or long term, that are neither trading securities that are reported at fair value with unrealized gains and losses reported in other comprehensive income (OCI).

Question 3

Define: Held-to-Maturity Securities (HTM)

Answer 3

Investments in debt securities (usually bonds) that the entity has the ability and intent to hold for the long term until the security matures and the principal is fully repaid that are reported at amortized cost applying the interest method.