Good afternoon
Friends can someone tell me which is the difference to classify a security as trading security or as available for sale ?
Thank you
Trading securities are those that you plan to sell soon; available-for-sale securities are those that you don’t plan to sell soon, but might sell soon if the price is right.
The accounting difference is that all gains/losses (realized and unrealized) on trading securities go through the income statement, while only realized gains/losses on available-for-sale securities go through the income statement; unrealized gains/losses on available-for-sale securities go directly to equity as part of OCI.