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Under Ind AS 109, financial LIABILITIES (unlike financial assets) cannot be reclassified. This means:
ALiabilities reclassify automatically when their fair value falls below carrying value
BEven if the entity's business model changes or new strategic intent emerges, an amortised-cost liability remains amortised-cost (and an FVTPL liability remains FVTPL) for its entire life
CLiabilities can only be reclassified once, at a major reporting milestone
DLiabilities can be reclassified if their credit risk changes by more than two notches
Answer & Solution
Correct answer: B. Even if the entity's business model changes or new strategic intent emerges, an amortised-cost liability remains amortised-cost (and an FVTPL liability remains FVTPL) for its entire life
Para 4.4.2 — reclassification rules apply ONLY to financial assets. Financial liabilities are NEVER reclassified post-initial recognition. The initial classification stands for the liability's life. (However, modifications/extinguishments can derecognise the old and recognise a new — a different mechanism, not reclassification.)
Related questions
Under Ind AS 109, when a financial asset is reclassified from FVTPL to AMORTISED COST (becUnder Ind AS 109, a SHARE BROKING company holds shares for short-term trading. These sharePQR Ltd. prepays an old loan to Bank A (incurring a prepayment premium and writing off unaUnder Ind AS 109, financial liabilities designated at FVTPL under the FAIR-VALUE OPTION prUnder Ind AS 109, when reclassifying a financial asset from AMORTISED COST to FVTPL (becauA Ltd. takes a 5-year ₹10,000 loan at 10% fixed (interest paid yearly, bullet principal atUnder Ind AS 109, a TRADE PAYABLE for purchase of goods on 45-day credit, with 18% p.a. inUnder Ind AS 109, financial assets can be RECLASSIFIED: