Financial Instruments

Allow me to answer to your second paragraph

You are pulling things from different angles and they both mean the same.

To put it simply when u make an investment in another company equity (when u buy shares) an an asset is born in your sfp by the name of investment.

Now that investment would either go up or down based on the fair value at year end of that investment and u would reflect that movement in your investment ( financial asset) at the year end , So that takes care of the SFP,

now your confusion is where do u take that decrease or increase in investment, In p and L or FVOCI, Right

To understand the treatment u must be aware of the MOTIVE of the business why he bought the shares in the first place.

Motive 1)

Generally what businesses do or even a rich old dude with lot of spare cash is hold it for short term trading. Whenever he will notice a rise in the value of shares, he would dispose of. This is the default treatment. At the year end whatever the movement would be taken to P and L no questions asked.

Motive 2)

Long term investment . The business plan to hold it for a substantially longer duration and for an accounting policy to be applied on such an investment . The entity declares such which is called” irrevocable election ” meaning u cant change your mind. So this relates to what u typed above ”

FVTOCI applies to equity instruments only and must be designated upon initial recognition”

Now that entity has designated that these shares are not held for short term trading . whatever the change in there fair values would be taken to FVTOCI.