An unrealized loss for an equity securities investment classified as trading securities does not reduce net income.

Question

Quizplus · Accepted Answer

An unrealized loss for an equity securities investment classified as trading securities does reduce net income because it is taken into account in the calculation of net income. Trading securities are those securities that are bought and held with the intention of selling them in the near future for a profit. Any changes in the fair value of trading securities are recognized in the income statement, which can lead to an unrealized loss or gain.

An Unrealized Loss for an Equity Securities Investment Classified as Trading