Reclassification of Investments in Financial Assets

Reclassification of Investments in Financial Assets (U.S. GAAP)

From ↓ \ To →	HTM	AFS	HFT	DFV
Held-to-maturity (HTM)	-	?	OK	OK
Available-for-sale (AFS)	?	-	OK	OK
Held-for-trading (HFT)	OK	OK	-	OK
Designated at fair value (DFV)	OK	OK	OK	-

• U.S. GAAP does permit securities to be reclassified into or out of held-for-trading or designated at fair value.
• Unrealized gains are recognized on the income statement at the time the security is reclassified.

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Reclassification of Investments in Financial Assets (IFRS)

From ↓ \ To →	HTM	AFS	HFT	DFV
Held-to-maturity (HTM)	-	OK(*2)	NG	NG
Available-for-sale (AFS)	OK(*1)	-	NG	NG
Held-for-trading (HFT)	NG	NG	-	NG
Designated at fair value (DFV)	NG	NG	NG	-

IFRS typically does not allow reclassification of investments into and out of fair value through profit or loss category and reclassification of investments out of held-for-trading category.

(*1) Debt securities classified as available-for-sale can be reclassified as held-to-maturity if the holder intends to (and is able to) hold the debt to its maturity date. The security's balance sheet value is remeasured to reflect its fair value at the time it is reclassified. Any difference between this amount and the maturity value, and any gain or loss that had been recorded in other comprehensive income, is amortized over the security's remaining life.
(*2) Held-to-maturity securities can be reclassified as available-for-sale if the holder no longer intends (or is no longer able) to hold the debt to maturity. The carrying value is remeasured to the security's fair value, with any difference recognized in other comprehensive income. Note that reclassifying a held-to-maturity security may prevent the holder from classifying other debt securities as held-to-maturity, or even require other held-to-maturity debt to be reclassified as available-for-sale.