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Basic Question 3 of 10
Unrealized holding gains and losses for trading securities are:
B. Included in the determination of income from operations in the period of the change.
C. Neither reported in the income statement nor on the balance sheet.
A. Reported as a separate component of the shareholders' equity section of the balance sheet.
B. Included in the determination of income from operations in the period of the change.
C. Neither reported in the income statement nor on the balance sheet.
User Contributed Comments 7
| User | Comment |
|---|---|
| rfvo | Why would it no be income from investing? |
| warrentend1 | Because it is not an investing activity, investing activities examples are purchasing a building etc |
| suzette | Why not other income or income from financing activities? |
| bodduna | Head for trading is very liquid. May be not more more than 3 months. dividends received, Interest received& paid are treated as operating income under US GAAP. |
| mtsimone | Trading securities are current assets, a component of operations. |
| davidt876 | i see it as there are 2 types of investment activities: 1. long-term investing - which protects against inflation and employs a company's idle cash - which is on hand for unexpected liquidity needs - through a low risk strategy. this includes available-for-sale and held-to-maturity. 2. speculative investing - where you're speculating that you can profit from short-term mis-pricing in the market. this is held-for-trading. long-term investments compliments your current operations, while trading is onto itself a different operation altogether. that's why held-for trading is included in net income (from operations) |
| pigletin | there is no why? its all about the rules? just remember it as told |
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Colin Sampaleanu
Learning Outcome Statements
describe the classification, measurement, and disclosure under International Financial Reporting Standards (IFRS) for 1) investments in financial assets, 2) investments in associates, 3) joint ventures, 4) business combinations, and 5) special purpose and variable interest entities;
distinguish between IFRS and US GAAP in their classification, measurement, and disclosure of investments in financial assets, investments in associates, joint ventures, business combinations, and special purpose and variable interest entities;
analyze how different methods used to account for intercorporate investments affect financial statements and ratios.
CFA® 2025 Level II Curriculum, Volume 2, Module 10.