“A downgrade of an entity’s credit rating or decline in fair value of a security below its cost or amortized cost is also not by itself evidence of impairment.” Next paragraph on same page: "If the HTM security value recovers in later period and its recovery attributable to “CREDIT UPGRADE” the impairment loss can be reversed 
(wow!) So a change in credit rating is sufficient to reverse an impairment but not cause to downgrade ? Can anyone please shed some light here… Also, Losses due to occurance of future events are not recognized. Don’t we come up by provisioning for the same ?
A downgrade as such does not trigger an automatic impairment charge. Impairment occurs only when you question whether you will get the promised cash flows in full and on time. Accordingly, a downgrade from AAA to AA will not necessarily leave you doubting the issuer’s ability to perform under the terms of the bond. A downgrade to junk is more likely to have that effect. If you took an impairment charge following a downgrade (and the associated negative outlook on future cash flows), then a subsequent upgrade may cause you to revise those cash flow expectations, which would give rise to an impairment reversal. Under IFRS we do not recognise losses ‘due to occurance of future events’. Another way of saying this is thatwe only recognise losses due to events which have already occurred. This is referred to as the incurred loss model (as opposed to a model under whch you take into account expected losses as well). Consider a portfolio of loans originated by a bank. When the loans are made, the bank already has some expectations considering probable losses on the portfolio. But it does not take any impairment charges (or provisions) yet. Something has to happen, a trigger, e.g. the borrower suffering financial difficulties for the bank to claim that the loss has been incurred and for a charge to be recorded in P&L. Hope this helps somewhat!
Great! makes sense now.
much appreciated your help. thankyou!
You’re welcome, take care!