Financial assets whether, another, category, available

dandman

if we reclassyfy an asset from one category to another am confused as to whether at the reclassfication point we should treat it by the rules of the new category or the old.

see below

1. reclassfy from available for sale to held for trading

a. immediately recognise gains and losses in Income statement under IFRS
b. amortize gain or loss over the remaining life
c.recognise gains or losses under US Gaap

2. reclassfy from held for trading to Available for sale

a. un realised gains or lossed reported in income statement
b. un realised gains or lossed reported in OCI
c. classification not permitted.

bbtomato

2.b appears to be for the new category, but initially 2.a for the old category
1 a. appears to be for the old category



Edited 1 time(s). Last edit at Sunday, May 16, 2010 at 06:23PM by janakisri.

SeanWest

i don't follow, is this a question or steps to take?

stalkey

1 is a.
2 is dicey. Generally not permitted to change. But still allowed to only if there is an embedded derivative that is a level 3 asset. Answer should be c, but answer is probably a. Would be recorded in profit and loss and the new cost would be the new value if you could do it.

Changes should 90% of the time go to IS as it is the equivalent of realizing the new cost basis. There are specific examples on not but it is outside the curriculum. My guess is that is what you are confused about?



Edited 1 time(s). Last edit at Sunday, May 16, 2010 at 06:35PM by Paraguay.

xilinx_altera

Moving out of held for trading is a big no no.

held for trading designated transactions need to be extremely rare and meet IAS 39 paragraph 50B and 50D. You also need to report the income statement impact if you do move the securities in your balance sheet with a note that this transaction is rare.

Moving between in GAAP is something that can be done.

Basically the only way you can move from fairvalue or held for trading is if you lose pricing on the instrument.

busterbluth

My apologies the first one shd be AFS to HTM not HFT

but the answers are
a
a as mentioned by Jana

but my problem is the first problem in treating reclassification adjustment as the treatment of HTM i.e.) Amortize ( new category)

but the second question is applying Inc. statement which is the treatment of HFT (the old category)

zephyranalyst

1. C
2. B

Classification to/from HFT under IFRS is highly restricted.

NO EXCUSES

troymo

2 is A.

Whether something moves into or out of HFT -> all gains / losses are classified in Income under P&L.

CP

onelife1

cpk123 Wrote:
-------------------------------------------------------
> 2 is A.
>
> Whether something moves into or out of HFT -> all
> gains / losses are classified in Income under P&L.


100% correct.

That is what needs to be remembered on the test. But the idea that you can move out of HFT or DAFV on a whim is wrong. Highly, Highly restricted and there is no value to doing it (as disclosure is still required in the footnotes stating what the actual effect would have been).

Again,

AFS to HTM, un realized gain/loss becomes realized in equity amortized over remaining life.

HTM to AFS, gain/loss recorded in OCI immediately.

Anything having to do with HELD FOR TRADING, going in or out. Put immediately recognized in IS on the test. There are examples where this is not true (losing pricing), but I believe to be outside the curriculum.