I have asked this question earlier aswell but still dont have a concrete answer yet.One last time-Does US GAAP allow reversal of impairment losses under AFS and HTM securities?if yes how to treat it?
US GAAP does not allow any reversal of impairment as far as I know
AFS shouldn’t be impaired since its unrealized loss/gains are recorded in OCI until it is sold.
cbok says under IFRS the cumulative loss that had been recognised in OCI is transfered to P&L.it also says impairment losses on AFS equity cannot be reversed through P&L.
For US GAAP it is vague.
Check C.4 in my summary it may provide some insights.
http://www.analystforum.com/forums/cfa-forums/cfa-level-ii-forum/91350327
You are right regarding IAS 39 binding till 2018. Afterwards, there is no AFS category nor its impairment issues.
Also, be sure that in such case likely is not permitted under USGAAP since there nothing is permitted to be impaired.
“IFRS 9 does not address impairment. However as IFRS 9 eliminates the available for sale (AFS) category, it also eliminates the AFS impairment rules. Under IAS 39 measuring impairment losses on debt securities in illiquid markets based on fair value often led to reporting an impairment loss that exceeded the credit loss management expected. Additionally, impairment losses on AFS equity investments cannot be reversed under IAS 39 if the fair value of the investment increases. Under IFRS 9, debt securities that qualify for the amortised cost model are measured under that model and declines in equity investments measured at FVTPL are recognised in profit or loss and reversed through profit or loss if the fair value increases.” http://www.accaglobal.com
Makes sense.
The summary provided says for US GAAP reversal allowed in OCI.That is what i also think beacuse the cbok says-the new cost basis cannot be increased for subsequent increases in fair value instead,they are treated as unrealized gains/losses and included in OCI.