Video: Trading Equity Securities

In this lesson, Nick Palazzolo, CPA, takes a deep dive into the nuances of accounting for trading equity securities, comparing them to available for sale securities and discussing the unique treatment of unrealized holding gains and losses in net income. He elaborates on the initial recording of these securities at cost and subsequent reporting at fair value, as well as the impact of cash dividends on income. Furthermore, Nick revisits the equity method, emphasizing its importance and complexity, and reviews increasing investments by the share of earnings and the implications of net losses on carrying value, ensuring these critical concepts are crystal clear.