Investment in Financial Assets: Held for trading vs Designated at Fair Value

CFA Level II FRA
#1

Guys,

Could someone explain what are the main differences between Held for trading and Designated at Fair Value?

Mainly in terms of Income Statement and Balance Sheet classifications

Thanks!!

#2

I wrote an article on invstments in financial assets that may be of some help here: http://financialexamhelp123.com/investments-in-financial-assets/

#3

If you are looking for a shortcut to learn most of the basics.

AFS is defined as not “Trading” and not “Held to Maturity” (US GAAP actually defines it this way). And it is the one where unrealized G/L flows though Equity. And since there are Unrealized G/L they must be held at Fair Value.

With just that, you are almost home free.

Held to Maturity is just like it sounds. As is Trading. Easy points.

#4

Thanks S2000magician and 40yoCFAcandidate !

The article helped a lot… I just didnt get the last paragraph: The US GAAP classification designated-at-fair-value (the equivalent IFRS term is fair-value-through-profit-and-loss) is an alternative classification for securities that an investing company might otherwise designate as held-to-maturity (bonds) or available-for-sale (stocks or bonds)

If “designated at fair value” has identical financial classification as held-for-tranding, than why is it an alternative classification to HTM and AFS?

Thanks again!