Need some clarification re Fair Value option. On the 2010 mock, one of the answers stated that only AVS securities could be reclassified as Fair Value, whereas in the CFAI text, it mentions that both AVS and HTM securities can be reclassified. Thoughts?
You can initially opt to value HTM and AVS as Fair Value. I know that once you set the debt security as HTM you can not change it so maybe that is the point? You can initially classify it at FV but you can not reclassify it while AVS you can. Just a guess
there is GAAP and IFRS difference IFRS does not allow HTM to be reclassified.
Reclassifying HTM to AFS is extremely rare and is a red flag for auditors. It’s done, but it is kind of taboo.