If Ziggy Company concluded that an investment originally classified as held to maturity would now more appropriately be classified as available for sale, Ziggy would:

a) Reclassify the investment as available for sale and immediately recognize in net income any unrealized holding gain or loss on the reclassification date.
b) Not reclassify the investment, as original classifications are irrevocable.
c) Need to restate earnings, as the original classification was in error.
d) Reclassify the investment as available for sale and immediately recognize in accumulated other comprehensive income any unrealized holding gain or loss on the reclassification date.

Reclassify the investment as available for sale and immediately recognize in accumulated other comprehensive income any unrealized gain or loss on the reclassification date.

Explanation:

In this scenario the investment held by Ziggy was initially classified as held to maturity, meaning there was no option for sale of the investment rather it was to be held to maturity when the value of the bond will be given to the Investment holder.

However if the Investment is now to be classified as available for sale, the gains and losses in the investment is calculated as ate the reclassification date.

This will enable a pricing that reflects the true value of the investment.