I am having confusion regarding AFS-equity investment impairment reversal. In the CFAI book, (IFRS) its given you cannot reverse losses in AFS, but in the Deutsche bank example, they are reversing AFS secs directly to equity. Could someone please clarify?作者: mp3bu 时间: 2013-4-22 06:27
What its basically saying is that if you an impair an equity security classified as AFS, you write it down and take the loss in income. An impairment is different that just an overall change in market value
HOWEVER, subsequent to that, you still need to mark the security to market (still an AFS security) on an ongoing basis. If the value subsequently starts to recover, any increases in value after that are just recognized in equity instead of in the income statement as typically would happen with an AFS
With debt, in IFRS, if the value starts to recover you can reverse the impairment to the I/S
With GAAP, impairment is possible but recoveries arent… any changes in value after the impairment are reflected in equity until sold.
