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17- PAGE 30 Copyright ? 2011 John Wiley Sons, Inc.???Kieso, Intermediate Accounting, 14/e, Solutions Manual ???(For Instructor Use Only) Copyright ? 2011 John Wiley Sons, Inc.???Kieso, Intermediate Accounting, 14/e, Solutions Manual ???(For Instructor Use Only) 17- PAGE 31 CHAPTER 17 Investments SOLUTIONS TO CODIFICATION EXERCISES CE17-1 Master Glossary (a) Trading securities are securities that are bought and held principally for the purpose of selling them in the near term and therefore held for only a short period of time. Trading generally reflects active and frequent buying and selling, and trading securities are generally used with the objective of generating profits on short-term differences in price. (b) A holding gain or loss is the net change in fair value of a security. The holding gain or loss does not include dividend or interest income recognized but not yet received or write-downs for other-than-temporary impairment. (c) A cash flow hedge is a hedge of the exposure to variability in the cash flows of a recognized asset or liability, or of a forecasted transaction, that is attributable to a particular risk. (d) A fair value hedge is a hedge of the exposure to changes in the fair value of a recognized asset or liability, or of an unrecognized firm commitment, that are attributable to a particular risk. CE17-2 According to FASB ASC 235-10-S99-1 (Notes to Financial Statements—SEC Materials): (n) Accounting policies for certain derivative instruments. Disclosures regarding accounting policies shall include descriptions of the accounting policies used for derivative financial instruments and derivative commodity instruments and the methods of applying those policies that materially affect the determination of financial position, cash flows, or results of operation. This description shall include, to the extent material, each of the following items: (1) A discussion of each method used to account for derivative financial instruments and derivati