1. Equity tools shall not be reclassified.
Because equity instrument investments are two types: one is included in the current profit and loss, and the other is included in the other comprehensive income. Originally, it is to keep a hole for choice. The criteria are based on anti-profit manipulation, which prevents some enterprises from classifying them as "financial assets measured at fair value and their changes are included in other comprehensive income" when the stock price drops, so as not to affect profits. When the stock price rises, it is reclassified as "financial assets measured at fair value and their changes are included in the current profit and loss", achieving the purpose of profit manipulation, so equity financial assets are simply not allowed to be reclassified.
2. Bond financial assets can be reclassified.
Basic financial instruments Investment in debt-type financial instruments is confirmed and classified according to the business model. Therefore, the business model of enterprises can be reclassified after it has changed.
The reclassification here is a change in the business model, not a change in accounting policies, and must not be followed and adjusted, and the application of future methods shall be handled. The specific accounting treatment is "marrying a chicken with the chicken, marrying a dog with the dog". For example, financial assets measured at amortized cost are reclassified as financial assets measured at fair value and their changes are included in the current profit and loss. The original project is measured at amortized cost, and the new project is measured at fair value, which is adjusted to fair value measurement on the reclassification date.
Here we should pay attention to the reclassification day, which is the first day of the first accounting reporting period after the business model changes. Suppose that the company changes its business model in December 2018, and January 1, 2019 is called the "Reclassification Day". This is the avoidance idea of anti-profit manipulation, because it is not ruled out that companies engage in "fake classification" to manipulate profits at the end of the period, and set the reclassification date as the first day of the next accounting period, which can effectively prevent companies from playing "tricks". The method of deliberately reclassifying profits at the end of the period will be invalid.
3. Financial assets formed by derivative instruments shall not be reclassified.
reclassification is caused by changes in business model. Why are derivatives not allowed to form a reclassification of transactional financial assets? Because there is no possibility of changing the business model from the "transaction motivation" business model to the "contract cash flow" business model, just like two people gambling money, only gambling agreements, no contract cash flow, everything will be known after opening the card.
Financial assets mainly include cash in stock, bank deposits, accounts receivable, notes receivable, loans, advances, other receivables, interest receivable, debt investment, equity investment, fund investment, derivative financial assets, etc.
Financial assets can be divided into the following four categories: 1. Financial assets measured at fair value and whose changes are included in the current profit and loss, including transactional financial assets and financial assets directly designated as measured at fair value and whose changes are included in the current profit and loss. 2. Hold to maturity investment. 3. Loans and receivables. 4. Available for sale financial assets.
