IAS 32 provides guidance on the accounting treatment for financial instruments that are classified as available for sale. Available-for-sale financial instruments are those that are not held for trading or held-to-maturity, and they are generally intended to be held for an indefinite period of time. Here's how IAS 32 addresses the accounting treatment for available-for-sale financial instruments:

1. Initial recognition: Available-for-sale financial instruments are initially recognized at fair value, which includes transaction costs directly attributable to the acquisition of the instrument.
2. Subsequent measurement: Available-for-sale financial instruments are measured at fair value on each reporting date, with changes in fair value recognized in other comprehensive income, unless the change in fair value represents impairment or an exchange of assets that is not part of the entity's normal operations.
3. Impairment: If the fair value of an available-for-sale financial instrument has declined below its cost or amortized cost, and the decline is considered to be other than temporary, the cumulative loss recognized in other comprehensive income is reclassified to profit or loss.
4. Disposal: When an available-for-sale financial instrument is sold, redeemed, or otherwise disposed of, the cumulative gain or loss recognized in other comprehensive income is reclassified to profit or loss.

Here's an example to illustrate the accounting treatment for available-for-sale financial instruments:

Suppose a company holds a portfolio of debt securities that are classified as available for sale. The company initially recognized the securities at their fair value of $100,000, which includes transaction costs of $1,000. At the end of the reporting period, the fair value of the securities has increased to $105,000, resulting in a gain of $4,000. The gain is recognized in other comprehensive income, as it represents a change in fair value that is not considered impairment or an exchange of assets that is not part of the company's normal operations.

In the next reporting period, the fair value of the securities declines to $103,000, resulting in a loss of $2,000. The loss is recognized in other comprehensive income, as it represents a change in fair value that is not considered impairment or an exchange of assets that is not part of the company's normal operations.

If the decline in fair value is considered to be other than temporary, the cumulative loss recognized in other comprehensive income is reclassified to profit or loss. For example, if the fair value of the securities declines to $98,000 and the decline is considered to be other than temporary, the cumulative loss of $2,000 previously recognized in other comprehensive income would be reclassified to profit or loss.

When the securities are sold or otherwise disposed of, the cumulative gain or loss recognized in other comprehensive income is reclassified to profit or loss. For example, if the securities are sold for $104,000, the cumulative gain of $2,000 previously recognized in other comprehensive income would be reclassified to profit or loss.