Cindy G. Balanon 5.

1. Suppose that an investment in equity instrument was originally acquired

for sale, can the entity transfer its classification to FVTOCI in year 2 if it no
longer wants to sell the shares?

No, because the only way to become an FVTOCI is only upon initial
recognition and the decision during its election is irrevocable. This means
that it should be originally acquired as an FVTOCI in the first place and not
through transferring. An equity instrument that is originally acquired for sale
which was measured at FVPL, cannot be transferred to FVTOCI. Since
these two is necessarily separated because the Profit or Loss is close to the
Retained Earnings and it can declare dividends while the FVTOCI don’t.
Therefore the transfer of classification of an equity held for sale to FVTOCI is
not allowed even if it no longer wants to sell the shares.

2. Suppose that an investment is an FVTOCI instrument on initial

recognition, can the entity transfer it to FVTPL category in year 2 if it now
wants to sell the shares?

No, simply because once designated as FVTOCI then it will be forever

designated as FVTOCI as the decision of it in the beginning is irrevocable.
Even if you are going to sell it and it will become a current asset it is still an
FVTOCI instrument. The FVTOCI instrument cannot be transfer and cannot
be sold because transferring of measurement is not allowed according to
PFRS 9. The reason behind why this is established is to prevent manipulation
because investors can/might transfer their equity instrument casually
depending on which categoty they can benefit surely and it will not be fair for
the company.