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Definition

Trading Securities

Companies hold trading securities with the intention of selling them in a short period (generally less than a month). Trading means frequent buying and selling. Companies report trading securities at fair value, and report changes from cost as part of net income. The changes are reported as unrealized gains or losses because the securities have not been sold. The unrealized gain or loss is the difference between the total cost of trading securities and their total fair value. Companies classify trading securities as current assets.

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