TRADING AND AVAILABLE-FOR-SALE SECURITIES
Investments in readily marketable equity securities are classified into one of two categories: (1) trading securities or (2) available-for-sale securities. Trading securities are bought and held principally for the purpose of selling them in the near future with the objective of generating profit on short-term price changes. Investments not classified as trading securities are considered available-for-sale securities. Trading securities are always listed in the current section of the balance sheet, while available-for-sale securities are listed as current or long-term, depending on management's intention.2
Trading and available-for-sale are terms used under IFRS, and the accounting methods used for these securities are very similar to U.S. GAAP.
2. This chapter considers investments in equity securities, and this particular section is based on Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” Investments in debt securities are classified into one of three categories: (1) trading, (2) available-for-sale, or (3) held-to-maturity. The methods used to account for trading and available-for-sale debt securities are the same as those used for trading and available-for-sale equity securities. Accounting for debt securities held to maturity is covered in Appendix 11B of this ...