The book says “IFRS generally prohibits the reclassification of securities into or out of the desig- nated at fair value category” (It doesn’t mention if its FV P&L or FV OCI)
How ever reclassification out of AFS (which is equivalent to FV OCI) is allowed if I am not mistaken. (does this also mean that above sentense only meaningful for FV P&L and reclassification out of FV OCI is allowed?)
Thanks in advance.
Also one more question:
Under GAAP if the AFS debt or equity security is impaired and is written down, when their fair value increase in future, Material says the increase is treated as unrealized gain and is included in OCI.
So in a way, reversal of impairment is allowed in this scenario… is that correct?
For impairments, you’re not really ‘recovering’ the loss until it flows through the IS. But yes, your BS will show the increased FV of the secruity. Although impairment charges are usually material and not temporary, meaning you’re unlikely to see impariments immediately followed by increases to FV on the BS.