Investment Reclassification | Available for sale | Hold to Maturity | Intermediate Accounting
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In this video, I discuss
In this video, I discuss investment reclassification between categories from trading securities from available for sales to held to maturity. IFRS 9 does not allow investment reclassification of financial liabilities but allows reclassification of financial assets only it is evident from change in the investor's business model.
Are you a CPA candidate or accounting student? Check my website for additional resources such exam questions and notes:https://farhatlectures.com/
Connect with me on LinkedIn:
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What Is Reclassification?
Reclassification is most commonly known as the process of changing a share class issued by mutual funds. This can occur when certain requirements have been met, or else it may be caused by changes made by the mutual fund company. In most cases reclassification is not considered to be a taxable event.
KEY TAKEAWAYS
Reclassification occurs when a mutual fund company changes the share class of certain issues.
This may be done to add or remove a sales load from fund shares, or to require larger minimum investments for purchase.
Reclassifications are typically a non-taxable event, but may impact fund holders in different ways.
Understanding Reclassification
Reclassification can be used in open-end mutual fund structuring. It provides the mutual fund with some flexibility for managing share class features. It may also provide benefits to investors.
In open-end mutual funds, the fund typically issues multiple classes of shares. Each share class is structured with its own fees and sales loads. Some mutual fund companies may structure certain shares with reclassification provisions based on their duration. Class B shares are commonly converted to Class A shares after a specified period of time. (See also: The ABCs of Mutual Fund Classes.)
In the case of Class B shares, an investor could potentially avoid sales charges and pay a lower expense ratio after conversion. Class B shares commonly only incur back-end deferred sales charges which decrease over time. After a specified time period, these shares are often converted to Class A shares. The conversion is a non-taxable event, and the share class expense ratio is often lower for Class A shares, which is an added benefit for the shareholder.
Some fund companies may have certain requirements that trigger a share class reclassification. Vanguard provides one example with their Admiral Shares, which are intended for high-net-worth individuals. If an investor falls below the minimum investment, their shares are automatically reclassified to the fund’s Investor Share class.
Are you a CPA candidate or accounting student? Check my website for additional resources such exam questions and notes:https://farhatlectures.com/
Connect with me on LinkedIn:
LinkedIn: professorfarhat
Instagram Account: @farhatlectures
Facebook: @accountinglectures
Twitter: @farhatlectures
Email: [email protected]
#CPAEXAM #intermediateaccounting#accountingstudent
What Is Reclassification?
Reclassification is most commonly known as the process of changing a share class issued by mutual funds. This can occur when certain requirements have been met, or else it may be caused by changes made by the mutual fund company. In most cases reclassification is not considered to be a taxable event.
KEY TAKEAWAYS
Reclassification occurs when a mutual fund company changes the share class of certain issues.
This may be done to add or remove a sales load from fund shares, or to require larger minimum investments for purchase.
Reclassifications are typically a non-taxable event, but may impact fund holders in different ways.
Understanding Reclassification
Reclassification can be used in open-end mutual fund structuring. It provides the mutual fund with some flexibility for managing share class features. It may also provide benefits to investors.
In open-end mutual funds, the fund typically issues multiple classes of shares. Each share class is structured with its own fees and sales loads. Some mutual fund companies may structure certain shares with reclassification provisions based on their duration. Class B shares are commonly converted to Class A shares after a specified period of time. (See also: The ABCs of Mutual Fund Classes.)
In the case of Class B shares, an investor could potentially avoid sales charges and pay a lower expense ratio after conversion. Class B shares commonly only incur back-end deferred sales charges which decrease over time. After a specified time period, these shares are often converted to Class A shares. The conversion is a non-taxable event, and the share class expense ratio is often lower for Class A shares, which is an added benefit for the shareholder.
Some fund companies may have certain requirements that trigger a share class reclassification. Vanguard provides one example with their Admiral Shares, which are intended for high-net-worth individuals. If an investor falls below the minimum investment, their shares are automatically reclassified to the fund’s Investor Share class.
5 سال پیش
در تاریخ 1398/12/21 منتشر شده
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