Response to EFRAG Consultation on Equity Instruments – Impairment and Recycling

This consultation response explains that problems may arise as under the new standard, unrealised gains/losses would be immediately reflected in the Profit and Loss Statement (P&L). We propose flexibility to allow recycling for investors, i.e. to recognize unrealized gains and losses in Other Comprehensive Income and then recycle to the P&L, or if it wished to recognize unrealized gains and losses in the P&L straight away, then this would avoid unrealised gains/losses being immediately reflected in the P&L while not enabling the investor to use recycling as an earnings management tool.