Changes in classification between trading, available-for-sale, and held-to-maturity categories can occur only when justified by the facts and circumstances within the concepts of ASC 320. Given the nature of a trading security, transfers into or from the trading category should be rare.

For loans, reclassification between the held for sale and held for investment categories should generally occur at the point the intent changes.

Once the initial classification has been determined, reclassification of investments in debt instruments is only permitted when an entity changes its business model for managing the financial assets. Changes to the business model are expected to be infrequent; the change is determined by the entity’s senior management as a result of external or internal changes. It must be significant to the entity’s operations and should be evident to external parties. Changes in intention related to particular financial assets (even in circumstances of significant changes in market conditions) and transfers of financial assets between parts of the entity with different business models, are examples for circumstances that are not considered changes in business model.

For equity investments, the initial election to present fair value changes in OCI is irrevocable.