The first day in the reporting period in which a new or changed business model (BM) is applied by an entity, necessitating a reclassification of its financial assets to reflect the new reality. For example, if an entity has reclassified from the “amortized cost” category to the “FVTPL” category, fair value will be measured at reclassification date, with the difference from carrying amount being recognized in profit and loss.

The accounting impact of a reclassification may, or may not, prompt for restatement of recognized gains, losses or interest, depending on the categories involved in the process. For example, reclassification from amortized cost to FVOCI does not result in an adjustment to the effective interest rate associated with a financial asset. While in the opposite scenario (reclassification from FVOCI to amortized cost), cumulative gains/ losses in the other comprehensive income will be adjusted against the fair value of the asset at reclassification date.