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Under Ind AS 109, financial assets can be RECLASSIFIED:
AOnly when the entity CHANGES its business model for managing the assets — expected to be very infrequent
BAt each reporting date based on management's revised intentions
CWhenever a financial asset's credit risk increases significantly
DAt the entity's discretion to optimise its presentation
Answer & Solution
Correct answer: A. Only when the entity CHANGES its business model for managing the assets — expected to be very infrequent
Para 4.4.1 — financial-asset reclassification is permitted ONLY when the entity changes its business model for managing those assets. Such changes are expected to be VERY INFREQUENT (e.g., shutting down a major business line, acquiring/disposing a portfolio). NOT triggered by: change of intention on individual assets, temporary market disappearance, transfers between parts of the entity with different BMs, or changes in credit risk. Financial LIABILITIES cannot be reclassified at all.
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