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Under Ind AS 109, when reclassifying a financial asset from AMORTISED COST to FVTPL (because of a BM change), the entity:
AContinues at amortised cost until disposal; FV changes recorded in OCI from reclassification date
BCannot reclassify — only the reverse direction (FVTPL to amortised cost) is permitted
CRe-measures the asset at fair value on the reclassification date; recognises the difference between previous amortised cost and FV in PROFIT OR LOSS
DRe-measures at fair value; the difference goes to OCI
Answer & Solution
Correct answer: C. Re-measures the asset at fair value on the reclassification date; recognises the difference between previous amortised cost and FV in PROFIT OR LOSS
Para 5.6.2 + B5.6.1 — amortised cost → FVTPL reclassification re-measures the asset at FV; the FV-vs-AC gap goes to P&L (not OCI). The reclassification is PROSPECTIVE; previous interest, gains, losses and impairment are NOT restated. Other directions: AC → FVOCI takes the FV-vs-AC gap to OCI; FVOCI → AC reverses OCI; FVTPL ↔ FVOCI use FV as the new basis on the reclassification date.
Related questions
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