What are trading debt securities?
Trading securities are purchased for the sole purpose of selling in the short-term (less than 12 months). Trading securities are reported as current assets and must be reported at fair value.

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Where are unrealized gains or losses for debt trading securities recorded?
Unrealized gains or losses are recorded directly to the income statement for the change in fair value that occurred during the period. The visual below compares the treatment for debt trading securities to the other two types of debt securities, which are available-for-sale and held-to-maturity.
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How are unrealized gains or losses reported if a company converts a debt security from trading to available-for-sale or held-to-maturity?
As the visual below shows, any unrealized gains or losses would be recognized on the income statement when a debt security is converted from trading to AFS or held-to-maturity. The unrealized gain or loss would be based on the change in fair value from the beginning of the period to the end of the period.
Where are unrealized gains or losses for debt trading securities recorded?
Unrealized gains or losses are recorded directly to the income statement for the change in fair value that occurred during the period. The visual below compares the treatment for debt trading securities to the other two types of debt securities, which are available-for-sale and held-to-maturity.
How are unrealized gains or losses reported if a company converts a debt security from trading to available-for-sale or held-to-maturity?
As the visual below shows, any unrealized gains or losses would be recognized on the income statement when a debt security is converted from trading to AFS or held-to-maturity. The unrealized gain or loss would be based on the change in fair value from the beginning of the period to the end of the period.