CHAPTER 4
Transfer of Categories
LEARNING OBJECTIVES
After studying this chapter, you should have a grasp of the following:
- Transfer of equity investments between trading and available-for-sale categories.
- Presentation in income statement.
- Impairment of securities.
- Deferred tax effects on unrealized gain/loss in trading and available-for-sale securities.
- How to record and report trade transactions of equity investments comprehensively.
Relevant Accounting Standards
| U.S. GAAP | IFRS |
| FAS 52—Foreign Currency TranslationFAS 94—Consolidation of All Majority-owned SubsidiariesFAS 109—Accounting for Income TaxesFAS 115—Accounting for Certain Investments in Debt and Equity SecuritiesFAS 130—Reporting Comprehensive IncomeFAS 157—Fair Value MeasurementsFAS 159—The Fair Value Option for Financial Assets and Financial Liabilities | IFRS 7—Financial Instruments: DisclosureIAS 21—The Effects of Changes in Foreign Exchange RatesIAS 32—Financial Instruments: PresentationIAS 36—Impairment of AssetsIAS 39—Financial Instruments: Recognition and Measurement |
TRANSFER BETWEEN CATEGORIES
The classification of securities should be reviewed at each balance sheet date. When the equity securities are transferred from trading securities to the available-for-sale category, then the gain/loss recognized as unrealized should not be reversed and no adjustment should be made to the other comprehensive income (OCI). When the equity securities are transferred from the available-for-sale category to the ...
