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Section 4230: Reclassification of Investments in Securities
1. All securities reclassified
--> from one category to another
--> are transferred at fair value
2. From Trading to Other
--> Unrealized Holding Gain and Loss (HGL) at transfer date
--> already recognized in earnings
--> not reversed
3. From Other to Trading
--> Unrealized Holding Gain and Loss (HGL) at transfer date
--> recognized in earnings immediately
4. From HTM to AFS
--> Unrealized Holding Gain and Loss (HGL) at transfer date
--> recognized in OCI
5. From AFS to HTM
--> Unrealized Holding Gain and Loss (HGL) at transfer date
--> stays in OCI
--> amortized over remaining life of security
6. Following transfers should be rare
--> from HTM to Other
--> from Trading to Other
--> from Other to Trading
7. Classification
--> reassessed at the end of each reporting period
8. Terms
OCI: Other Comprehensive Income
Trading: Trading Securities
AFS: Available-for-Sale Securities
HTM: Held-to-Maturity Securities
HGL: Holding Gain and Loss
FVPL: Financial Assets and Financial Liabilities at Fair Value through Profit or Loss
9. IAS 39 Before October 2008 Amendment
Financial instruments are
--> not allowed to be transferred into FVPL
--> not allowed to be transferred out of FVPL
10. October 2008 Amendment to IAS 39
Financial instruments are
--> not allowed to be transferred into FVPL
--> after initial recognition
Financial instruments are
--> not allowed to be transferred out of FVPL
--> if it was designated as FVPL before
Derivatives are
--> not allowed to be transferred out of FVPL
Financial instruments
--> currently classified as "held-for-trading" are
--> allowed to be transferred out of FVPL,
--> if certain conditions are met
Financial instruments
--> currently classified as "Available-for-Sale" are
--> allowed to be transferred to Loans and Receivables,
--> if certain conditions are met
11. Reasons for Amendments in October 2008
--> to be consistent with U.S. GAAP
[U.S. GAAP, SFAS 115]
Reclassification out of Trading is
--> allowed, in rare situations
[U.S. GAAP, SFAS 65]
Reclassification
--> out of Mortgage Loans Held for Sale
--> into Mortgage Loans Held for Long Term Investments is
--> allowed, if certain conditions are met
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