This video shows the accounting for Trading Securities. When an investor owns less than 20% of the investee’s equity securities, the investor uses the fair value method to account for the securities (marking the securities to market and tracking unrealized gains and losses). When the investor’s intent is to sell the securities in the short-term, then the securities are deemed to be Trading Securities and the unrealized gains or losses flow through the Income Statement. When the securities are ultimately sold, the realized gain or loss also flows through the Income Statement.