Gains and losses on available-for-sale financial assets are recognised directly in equity until the financial asset is derecognised. At this time the cumulative gain or loss previously recognised is:

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Gains and losses on available-for-sale financial assets are recognized in other comprehensive income and accumulated in the equity section of the balance sheet under a separate component of equity (often called "other reserves") until the financial asset is derecognized or sold. At that point, the cumulative gain or loss previously recognized in equity is reclassified from equity to profit or loss as a reclassification adjustment. This process ensures that the gains or losses impact the income statement in the period in which the asset is derecognized, providing a more accurate reflection of the company's financial performance related to the disposal of the asset.

Gains and Losses on Available-For-Sale Financial Assets Are Recognised Directly