Trading financial assets refer to debt securities and equity securities that companies intend to actively manage and trade to obtain profits. Companies often buy and sell such securities frequently in an attempt to profit from short-term price changes.

Characteristics of trading financial assets:

1. The purpose of holding by the enterprise is short-term, that is, it is determined at the time of initial recognition that the purpose of holding is for short-term profits. Generally, the short term here should be no more than one year (including one year);

2. The asset has an active market, and the fair value can be obtained through the active market.

3. No asset impairment losses will be accrued during the holding period of trading financial assets.

Definition of trading financial assets:

According to the accounting standards for the recognition and measurement of financial instruments, financial assets or financial liabilities that meet one of the following conditions shall be classified as trading financial assets. Assets or financial liabilities:

(1) The purpose of acquiring the financial assets is mainly for sale or repurchase in the near future. For example, stocks purchased for short-term holding can be used as trading financial assets.

(2) It is part of a portfolio of identifiable financial instruments that are managed centrally, and there is objective evidence that the company has recently used short-term profit-making methods to manage the portfolio. If a fund company purchases a group of stocks with the purpose of making short-term profits, the group of stocks should be treated as trading financial assets.

(3) It is a derivative instrument. That is to say, under normal circumstances, purchased futures and other derivatives should be regarded as trading financial assets, because the purpose of derivatives is to trade. However, derivatives that are designated as effective hedging instruments, derivatives that are financial guarantee contracts, and are linked to equity instrument investments that are not quoted in an active market and whose fair value cannot be measured reliably and must be settled by delivering the equity instrument. The exception is derivatives, as they cannot be traded at any time.

Accounting treatment of trading financial assets

1. This account accounts for financial assets held by an enterprise that are measured at fair value and whose changes are included in current profits and losses, including those held for trading purposes. Bond investments, stock investments, fund investments, warrant investments, etc. held and financial assets directly designated as measured at fair value and whose changes are included in current profits and losses.

Derivative financial assets are not accounted for in this account.

The agency underwriting of securities by an enterprise (securities) is accounted for in this account, or the "1331 Agency underwriting of securities" account can be set separately for accounting.

2. This account should be separately accounted for "cost" and "change in fair value" according to the category and type of trading financial assets.

3. Main accounting treatment of trading financial assets

(1) When an enterprise obtains trading financial assets, this account shall be debited according to the fair value of the trading financial assets ( cost), debit the "investment income" account according to the transaction costs incurred, and debit "dividends receivable or interest receivable" for the price that includes cash dividends or interests that have been declared but not yet distributed, and credit the actual amount paid. Record "bank deposits" and other subjects.

(2) For cash dividends or bond interest declared by the invested unit during the period of holding trading financial assets, the account "Dividends Receivable (or Interest Receivable)" will be debited and "Investment Income" will be credited "suject. (When cash dividends or interest are received, "bank deposit" is debited and "dividends receivable or interest receivable" is credited)

(3) Fair value of trading financial assets on the balance sheet date If the difference is higher than its book balance, this account (change in fair value) will be debited and the "Profits and losses from changes in fair value" account will be credited; if the fair value is lower than its book balance, the opposite accounting entry will be made.

(4) When selling a trading financial asset, accounts such as "Bank Deposits" should be debited according to the actual amount received, and this account (cost) should be credited according to the cost of the trading financial asset. ), this account (change in fair value) will be credited or debited according to the change in the fair value of the trading financial asset, and the "investment income" account will be credited or debited according to the difference. At the same time, according to the change in the fair value of the trading financial asset, the "profit and loss from changes in fair value" account will be debited or credited, and the "investment income" account will be credited or debited.

4. The ending debit balance of this account reflects the fair value of the company’s trading financial assets.