FRS 102 The New UK GAAP Tuesday 8 th September 2015 Steve Neal - - PowerPoint PPT Presentation

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FRS 102 The New UK GAAP Tuesday 8 th September 2015 Steve Neal - - PowerPoint PPT Presentation

Feb 07, 2023 29 likes •295 views

FRS 102 The New UK GAAP Tuesday 8 th September 2015 Steve Neal & Ed Porter Todays briefing: what will we cover WHO WHEN HOW WHAT does it is it to be will we will change affect implemented implement WHO does it affect All UK

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FRS 102 The New UK GAAP

Tuesday 8th September 2015 Steve Neal & Ed Porter

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Today’s briefing: what will we cover

HOW will we implement WHAT will change WHEN is it to be implemented WHO does it affect

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WHO does it affect

  • All UK companies – except:

IFRS

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Communicate Communicate Decide Decide Understand Understand

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When is it implemented

  • From 1 January 2015 for ‘non-small’, 1

January 2016 for ‘small’

  • Early adoption is permissible
  • Comparatives will be needed for 2014 &

2015 and therefore dates of transition are 1 January 2014 & 1 January 2015 These are already in the past!

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Dates for implementation ‘non- small’

Date of Transition to FRS 102 Date current GAAP reporting ends First FRS 102 financial statements 01.01.2014 31.12.2014 31.12.2015 Time

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Dates for implementation ‘small’

Date of Transition to FRS 102 Date current GAAP reporting ends First FRS 102 financial statements 01.01.2015 31.12.2015 31.12.2016 Time

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Early adoption???

  • From 1 January 2015 small co thresholds

increased: Turnover £6.5m - £10.2m Gross assets £3.26m - £5.1m Employees 50 (no change)

  • Some medium co’s now small so can

apply reduced framework in advance

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WHAT will change

Accounting policies Format of financial statements New terminology

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Accounting policies - Some key areas of change

  • Focus on those most

likely to affect owner managed companies

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Bank Debt

  • Does it qualify as 'basic‘
  • Yes? Measured initially

at ‘cost’, and then in the balance sheet at amortised cost

  • No? Measured at fair value and then

re-valued at each reporting date.

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Forward Contracts

  • Used to just disclose in the notes…
  • Under FRS 102 recognise at fair value

at inception

  • Recognise gain or loss at end of each

financial reporting period

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Intercompany loans

  • Loans to/from subsidiaries have been

recognised at face value

  • Under FRS 102, apply market rate of

interest and record at net present value (discounted amount)

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Deferred tax

  • Currently no requirement to provide for

deferred tax on non-monetary assets when they are revalued

  • Under FRS 102 likely to be additional

provisions on revalued assets

  • May result in a reduction in distributable

profits & net assets

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  • Intangibles other than goodwill

to be recognised-at fair value

  • Considered to have a finite life
  • Presumption of no more than

ten years - unless reliable estimate provided

  • Tax

Intangibles and Goodwill

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  • Accruals for

holiday pay where holiday year does not match financial year

Employee Benefits

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  • To be valued at Fair value - at each reporting date
  • Definition will include properties rented within

groups

  • Changes in value will go to Profit and Loss (not

revaluation reserve)

Investment Properties

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  • An intangible can be recognised if cost or

value can be measured reliably

  • More intangibles will be recognised e.g.

customer lists

  • Different amortisation periods may apply

Business Combinations

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Some other issues

Lease incentives

Derivatives and hedging

Impairment

  • f stock

Related party transaction disclosures

Treatment

  • f errors

Borrowing costs

Defined benefit pension

  • bligations

Listed investments at Fair value

Government grants

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Ask us a question

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Thank you for listening

FRS 102 The New UK GAAP Tuesday 8th September 2015

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HOW will we implement

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Communicate Communicate Decide Decide Understand Understand

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Format of Financial Statements

Profit & Loss account Income Statement STRGL Statement of comprehensive income Cash flow Statement of cash flows Balance sheet Statement of financial position Reconciliation of movement in shareholders funds Statement of changes in equity

Old terminology New terminology

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FRS 102 – opening balance sheet

  • Recognise all assets & liabilities (per FRS 102)
  • Not recognise assets & liabilities (per FRS 102)
  • Reclassification under new rules
  • Apply new measurement rules
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Example Reconciliation Reconciliation of equity 31/12/14 01/01/14 £ £ Equity under previous GAAP xxx xxx Adjustments: Accrued holiday pay (x) (x) Goodwill amortisation (x) (x) Equity under FRS 102 (as adjusted) xxx xxx Reconciliation of profit or loss Profit for year under previous GAAP xx Holiday pay accrual (x) Goodwill amortisation (x) Profit for the year under FRS 102 (as adjusted) xx