cutting through uk gaap

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xxxxx | 2

Cutting

through

UK GAAP

kpmg.co.uk

http://www.kpmg.co.uk/http://www.kpmg.co.uk/


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CuttingthroughUKGAAP|02

Cutting through UK GAAP

KPMG’sguidetoFinancialReportingStandards100,101and102

Inlate2012andearly2013theFinancialReportingCouncilissuedasuiteofstandardsthatreplace

existingUKaccountingstandards.Theirreleaserepresentstheculminationoftenyears’consultation

onhowbesttobringUKGAAPuptodate.Theprincipalchallengesinthatperiodhavebeentomaintain

consistencywiththerequirementsofUKlawandtoachieveproportionalitywiththeneedsoftheusers

offinancialstatements.

EntitiesthatarecurrentlyrequiredtoapplyEUIFRSbyapplicablelawandregulationwillcontinueto

doso.Otherentitieswillbeable,subjecttoeligibility,tochoosetopreparetheirfinancialstatements

inaccordancewithEUIFRS,FRS101,FRS102ortheFRSSE.ForsubsidiariesofentitiespreparingEUIFRSconsolidatedfinancialstatements,theapplicationofFRS101inparticularwillallowthe

useofaccountingpoliciesthataremoreconsistentwiththoseofthegroup,withouttheperceived

burdenofapplyingthefulldisclosurerequirementsofEUIFRS.Groupscanelectforsomeoftheir

subsidiariestoapplyFRS101andothersFRS102(or,ifeligible,theFRSSE),sincebothwillbe

`CompaniesActaccounts’.

Thosechargedwithgovernancewillneedtomakeimportantdecisionsaboutwhichaccounting

frameworktoapply.Thiswillrequirenotonlyconsiderationoftheavailableaccountingoptions,

butalsoassessmentofthepotentialeffectonaccountingsystems,stafftraining,taxationand

otherarrangementssuchasloancovenants.Theywillalsoneedtoconsiderthepotentialeffecton

distributableprofits.Somemaywishtoadoptthenewstandardsbeforethemandatoryeffective

dateofperiodscommencingonorafter1January2015.Earlyadoptionisindeedpermittedbut

mayrequirecarefulconsiderationoftherelativemeritsofeachoftheavailablestandards.

Inthispublication,wesummarisetherequirementsofeachofthenewstandardsFRSs100,101and

102.Inaddition,wehighlightthekeyaccountingdifferencesbetweenFRS102,previousUKGAAPand

EUIFRS,inordertoinformthosedecidingwhichstandardstoapplyandtoeasethetransitiontoFRS

102forthosethatchoosetoapplythatstandard.

AsFRS102isanewfinancialreportingframework,commonpracticeandinterpretationhasyetto

developinthoseareasinwhichthestandardisnotexplicitinitsrequirements.Wewillupdatefuture

editionsofthispublicationtoreflectthatbodyofexperienceasitdevelops,whichmaybeinfluenced

bothbypastUKGAAPpracticeandevolvingIFRSapplication.AnewGAAP,applicabletotensofthousandsofentitiesallatonce,isanexcitingandchallenging

prospect.ThisnewGAAPhasbeentenyearsingestationandallowsratherlesstimeforentities

tounderstandit.Welookforwardtohelpingyoutodojustthat,beginningwiththispublication.

Tony Cates

Head of Audit, KPMG in the UK

April2013

© 2013 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG

network of independent member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.


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03|CuttingthroughUKGAAP

Interpretativeguidanceisbasedonspecificfactsandcircumstances.Inmanyinstances,furtherinterpretationwillbeneededinorderforanentitytoapplyFRSs100,101and102toitsownfacts,circumstancesandindividualtransactions.

Further,someoftheinformationcontainedinthispublicationisbasedontheinterpretationsofKPMGintheUK’s

DepartmentofProfessionalPractice,thatmaychangeaspracticeandimplementationguidancedevelop.Usersare

cautionedtoreadthispublicationinconjunctionwiththeactualtextofthestandardsandimplementationguidance

issued,andtoconsulttheirprofessionaladvisersbeforeconcludingonaccountingtreatmentsfortheirowntransactions.


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Contents

About this publication 05

Abbreviations 06

Introduction 07

FRS 100: Application of financial reporting requirements 09

FRS 101: Reduced disclosure framework 17

FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland

03

04

05

06

07

08

09 10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34 34A

34B

34C

34D

34E

34F

34G

34H

34I

34J

34K

35

Scope,concepts,principlesandpresentation 21

Statementoffinancialposition(Balancesheet) 35

Statementofcomprehensiveincomeandincomestatement 39

Statementofchangesinequityandstatementofincomeandretainedearnings 47

Statementofcashflows 51

Notestothefinancialstatements 57

Consolidatedandseparatefinancialstatements 61 Accountingpolicies,estimatesanderrors 75

Basicfinancialinstruments 81

Otherfinancialinstruments 93

Inventories 103

Associates 109

Jointventures 117

Investmentproperty 123

Property,plantandequipment 127

Intangibleassetsotherthangoodwill 135

Businesscombinationsandgoodwill 145

Leases 157

Provisionsandcontingencies 167

Liabilitiesandequity 175

Revenue 183

Governmentgrants 191

Borrowingcosts 195

Sharebasedpayments 199

Impairmentofassets 207

Employeebenefits 217

Incometax 229

Foreigncurrencytranslation 235

Hyperinflation 241

Eventsaftertheendofthereportingperiod 245

Relatedpartydisclosures 249

Specialisedactivities 257 Agriculture 259

Extractiveactivities 261

Serviceconcessionarrangements 263

Financialinstitutions 267

Retirementbenefitplans:Financialstatements 269

Heritageassets 273

Fundingcommitments 275

Publicbenefitentities:Scope 277

Publicbenefitentities:Incomingresourcesfromnonexchangetransactions 279

Publicbenefitentities:Entitycombinations 281

Publicbenefitentities:Concessionaryloans 283

TransitiontoFRS102 285

Appendices

AppendixI:Listofstandardsandinterpretationsreferredtointhispublication 293

Appendix II: Common profit and loss account and balance sheet formats from Schedules 1 and 6 297 to the Regulations

Index 302




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ThispublicationsummarisestherequirementsofFRS100,FRS101andFRS102andnotesthemaindifferencesbetween

FRS102,previousUKGAAPandEUIFRS.ItdoesnotconsidertheFRSSEanddoesnotdiscussthedisclosurerequirements

ofFRS102inanydetail.

AlthoughitincludesanoverviewoftherequirementsofFRSs100102,thispublicationisaninterpretativeguidetothoseFRSs

thatbuildsonthestandardsandshouldbereadalongsidethem.

ThepublicationisorganisedintochaptersthatgenerallycorrespondtotherelevantsectionofFRS102(Chapters3to35).

Chapters1and2considerFRS100andFRS101respectively.

Thispublicationincludesthefollowingparagraph/sectionreferences:

• x.x(e.g.3.1)–paragraphofthemainbodyinthispublication

• pUKx.x(e.g.pUK3.1)–paragraphofcomparisontopreviousUKGAAPinthispublication

• IFRSx.x(e.g.IFRS3.1)–paragraphofcomparisontoEUIFRSinthispublication

• FRS10x.x.x(e.g.FRS102.3.1)–paragraphoftherelevantstandard

• FRS10x.ACA.xx(e.g.FRS102.ACA.92)–paragraphofAccountingCouncil’sAdviceontherelevantstandard

• FRS10x.GL–glossaryoftherelevantstandard

• Chapterx(e.g.Chapter3Scope, concepts, principles and presentation)–chapterinthispublication

• Sectionx(e.g.Section3Financial statement presentation)–sectionofthestandardFRS102

Acknowledgements

WegratefullyacknowledgeourtechnicalteamintheDepartmentofProfessionalPracticeofKPMGintheUK(UKDPP)as

primaryauthorsofthisbook.TheprojecthasbeenledbyLynnPearcy,KarenFaragher,GinaDesaiandRebeccaWilson.

Other ways KPMG professionals can help

ThispublicationhasbeenproducedbyUKDPP.ThereisarangeofpublicationsandguidancepublishedbyUKDPP

andtheKPMGInternationalStandardsGroupthatisavailablenow(orinduecourse)toassistyoufurther,including:

• Illustrative financial statements preparedunderFRS102;

• Insights into IFRS ,thatprovidespracticalguidanceontheapplicationofIFRS;

• IFRS Handbooks ,thatincludeextensiveinterpretativeguidanceandillustrativeexamplestoelaborateonorclarifythe

practicalapplicationofIFRS;

• disclosurechecklists;

• elearningmodulesonFRSs100102fromtheKPMGLearningAcademy.

Foraccesstoanextensiverangeofaccounting,auditingandfinancialreportingguidanceandliterature,visitKPMG’s

AccountingResearchOnline.Thiswebbasedsubscriptionservicecanbeavaluabletoolforanyonewhowantstostay

informedintoday’sdynamicenvironment.Forafree15daytrial,gotowww.aro.kpmg.comandregistertoday.

For further information see www.kpmg.co.uk or www.kpmg.com/ifrs



http://www.aro.kpmg.com/http://www.kpmg.co.uk/http://www.kpmg.com/ifrshttp://www.aro.kpmg.com/http://www.kpmg.co.uk/http://www.kpmg.com/ifrs


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• ‘CompaniesAct’–CompaniesAct2006

• ‘EUIFRS’–InternationalFinancialReportingStandardsasadoptedbytheEuropeanUnion

• ‘FRC’–FinancialReportingCouncil,theUKregulatorthatissuesUKaccountingstandards

• ‘FRS’–FinancialReportingStandard

• ‘FRSSE’–FinancialReportingStandardforSmallerEntities

• ‘GAAP’–GenerallyAcceptedAccountingPractice/Principles

• ‘IAS’–InternationalAccountingStandard

• ‘IFRIC’–IFRSInterpretationsCommittee(previouslytheInternationalFinancialReportingInterpretationsCommittee)

• ‘IFRS’–InternationalFinancialReportingStandard

• ‘Insights into IFRS ’–KPMG’sInsights into IFRS publication

• ‘LLP’–LimitedLiabilityPartnership

• ‘LLPRegulations’–LimitedLiabilityPartnerships(AccountsandAudit)(ApplicationofCompaniesAct2006)Regulations

2008,StatutoryInstrument2008/1911

• ‘Regulations’–TheLargeandMediumsizedCompaniesandGroups(AccountsandReports)Regulations,Statutory

Instrument2008/410

• ‘SIC’–StandingInterpretationsCommittee

• ‘SORP’–StatementofRecommendedPractice

• ‘SSAP’–StatementofStandardAccountingPractice

• ‘UITF’–UrgentIssuesTaskForce

• ‘UKGAAP’–UnitedKingdomGenerallyAcceptedAccountingPractice/Principles




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Introduction

© 2013 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe

LLP and a member firm of the KPMG network of independent member firms

affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.


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01Application

offinancialreportingrequirements





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01Applicationoffinancialreportingrequirements|10

• Dependingoneligibilityandlegalandregulatoryrequirements,UKandIreland

privatesectorentitiesapplyEUIFRS,FRS101orFRS102(withorwithout

reduceddisclosures),ortheFRSSEinpreparingtheirgroupandindividual

financialstatements.

• AnentityapplyingFRS102ortheFRSSEalsoappliesaSORPifrequired

orrelevant.

• Anentitystatestheframeworkitisapplyinginthenotestoits

financialstatements.

• FRSs100,101and102areapplicableforperiodsbeginningonorafter

1January2015.Earlyadoptionispermittedsubjecttocertainconditions.

• TransitionalrequirementsareasspecifiedinFRS100,FRS101andFRS102.

• Qualifyingentitieswithinagroupmayapplyareduceddisclosureframeworkin

theirindividualfinancialstatementsunderFRS101orFRS102.

• Guidanceon‘equivalence’isgivenintheApplicationGuidancetoFRS100.




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FRS 100

1.1 FRS100setsoutthefinancialreportingrequirementsforUKandIrelandentitiespreparingfinancialstatementsthat

areintendedtogiveatrueandfairview.[FRS100.2]Itdoesnot,however,applytothefinancialstatementsofentities

withinthepublicsector1,whosefinancialreportingframeworkisdeterminedbytheRelevantAuthorities2andis

generallybasedonEUIFRSasadaptedforuseinthepublicsector(seetheForewordtoAccountingStandards

paragraph21).

1.2 FinancialstatementswithinthescopeofFRS100areprepared,dependingoneligibility,inaccordancewitheither

EUIFRS,FRS101Reduced disclosure framework ,FRS102The Financial Reporting Standard applicable in the UK

and Republic of Ireland ,ortheFRSSE.[FRS100.4]

1.3 EUIFRSisappliedwhenrequiredbylaworregulation(forexample,intheconsolidatedfinancialstatementsoffully

listedorAIMcompanies).

1.4

FRS101setsoutareduceddisclosureframeworkthatmaybeappliedintheindividualfinancialstatementsof

qualifyinggroupentities(seeparagraph1.22ofthispublication)thatotherwiseapplytherequirementsofEUIFRS.

ThisframeworkisdiscussedfurtherinChapter2ofthispublication.

1.5 FRS102replacesthepreviousbodyofUKGAAPstandardsandisdiscussedinChapters3to35ofthispublication.

Italsoincludesreduceddisclosureexemptionsforqualifyinggroupentities.

Basis of preparation of financial statements

1.6 Theapplicablestandardsaresummarisedinthefollowingtable.Anyentitycan‘tradeup’andapplya‘higher’

standard(forexample,anentityeligibletoapplytheFRSSEmaychooseinsteadtoapplyFRS102).

Accountingregime Applicableto Example Furtherguidance

EUIFRS • Those required to apply by law

orregulation

• Optional for others

• Group accounts of EU listed and

AIMentities

• Large private group or company

KPMG’sInsights

into IFRS

FRS101 • Individual nancial statements of

qualifyingparentandsubsidiaryentities

•

Parent

company

in

a

listed

or

privategroup

• Subsidiaries in a listed or

privategroup

Chapter2ofthis

publication;seealso

paragraphs1.221.34

foreligibility

FRS102 • Individual and group nancial

statementsoflargeandmediumsized

entities

• Individual and group nancial

statementsofsmallentitieschoosing

nottoapplyFRSSE

• Large and medium private

companiesandgroups

• Parent company in a listed or

privategroup


privategroup

Chapters3to35of

thispublication

FRS102

withreduced

disclosures

• Individual nancial statements of

qualifyingparentandsubsidiaryentities

• Parent company in a listed or

privategroup


privategroup

Chapters3to35

ofthispublication;

seealsoparagraphs

1.221.34for

eligibility

FRSSE • Eligible small entities • Small private companies

• Small non-company entities

SeeINT.7for

eligibility

1 ThepublicsectorincludesthoseentitiesclassifiedassuchbytheOfficeforNationalStatistics.

2 TheRelevantAuthoritiesintheUKare:HMTreasury,theWelshAssemblyGovernment,theScottishGovernment,theNorthernIrelandAssembly,CIPFA/LASAAC,theDepartmentofHealthandMonitor(IndependentRegulatorforNHSFoundationTrusts).




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Interaction with Companies Act requirements

1.7 FinancialstatementsofacompanypreparedinaccordancewithFRS101,FRS102(withorwithoutreduced

disclosures)ortheFRSSEare‘CompaniesActaccounts’asdefinedbysection395oftheCompaniesAct.Only

thosepreparedunderEUIFRSare‘IASaccounts’.1.8 TheCompaniesActspecifiesthatcharitablecompaniesprepareCompaniesActaccountssotheyarenoteligibleto

applyEUIFRSintheirindividualorgroupaccounts.

1.9 Section407oftheCompaniesActrequirestheindividualfinancialstatementsofUKsubsidiarycompanieswithina

group,wheretheparentpreparesconsolidatedfinancialstatements,tobepreparedonaconsistentbasis(i.e.all

CompaniesActaccountsorIASaccounts)unlesstherearegoodreasonsnotto3.Theindividualfinancialstatements

oftheparentcompanyarepreparedonthesamebasisasthoseofthesubsidiariesexceptwhentheparentcompany

preparesIASgroupaccountsandIASindividualaccounts.Asonlyindividualfinancialstatementspreparedunder

EUIFRSareconsideredtobeIASaccounts,itispossiblefordifferentsubsidiarieswithinagrouptoapplyFRS101

andFRS102(and,ifeligible,theFRSSE)intheirindividualfinancialstatementswithoutbreachingtheCompanies

Actconsistencyrequirement.

1.10 Previously,onceacompanyhadprepareditsconsolidatedorindividualaccountsunderEUIFRS,itcouldnotreverttoUKGAAPinalaterfinancialyearunlesstherewasaspecified‘relevantchangeincircumstances’(e.g.ifthe

company(oritsparent)ceasedtohaveitssecuritiesadmittedtotradingonaregulatedmarketinanEEA4state

[CompaniesActsections395and403]).RecentchangestotheCompaniesActthatapplyforperiodsendingonor

after1October2012havenowalsointroducedafreechoiceforacompanytoreverttoUKGAAP(whichwillinclude

FRS101andFRS102)fromEUIFRSaslongasithasnotinthelastfiveyearspreviouslyrevertedtoUKGAAP

(otherthanasaresultofarelevantchangeincircumstances).

1.11 CertainrequirementsoftheCompaniesActapplyevenwhenthefinancialstatementsarepreparedinaccordance

withEUIFRS.Thisincludesdisclosuresinrelationtorelatedundertakingsanddirectors’benefits,andthe

requirementtoprepareadirectors’reportand(ifapplicable)adirectors’remunerationreport.[FRS100.A2.1819]

Non-companies

1.12

ManyentitiesapplyingFRS100arenotcompaniesandwillneedtoconsiderwhetherthereareanyconflictswiththe

legislationorregulationapplicabletothem.[FRS100.A2.20]TheFRChasconsideredthelegislationfortheformand

contentofaccountsforthefollowingandhasconcludedthattherearenosignificantareasofconflictwithFRS102:

• BuildingSocietiesAct1986;

• CharitiesAct2011;

• CharitiesandTrusteeInvestmentsAct(Scotland)2005;

• CharitiesAct(NorthernIreland)2008;

• FriendlyandIndustrialandProvidentSocietiesAct1968;

• FriendlySocietiesAct1992;and

• TheOccupationalPensionSchemes(RequirementtoobtainAuditedAccountsandaStatementfromthe

Auditor)Regulations1996.

1.13 Certainentitiesmayberequiredtocomplywithadditionalregulationsontopofthelegalrequirementsand

accountingstandards,andsomefallwithinthescopeofSORPs,whichwillbeupdatedtoreflecttherequirements

ofFRS102.[FRS100.A2.21]

3 CharitablecompaniesarenotpermittedtoprepareIASaccountsandarenotrequiredtoapplythesamefinancialreportingframeworkas

noncharitysubsidiaries.

4 TheEuropeanEconomicArea(EEA)comprisesthecountriesoftheEuropeanUnion(EU),plusIceland,LiechtensteinandNorway.ItdoesnotincludetheChannelIslands,theIsleofMan,orGibraltar.




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Statements of recommended practice (SORPs)

1.14 SORPsareintendedtoimprovecomparabilitybetweenentitieswithinasector.Indevelopingitsaccountingpolicies,an

entityapplyingFRS102ortheFRSSEmayapplyaSORPifitisinscopeofthatSORP(ormayberequiredtodosoby

applicablelaworregulation)ormaychoosetoapplyaSORPthatisrelevanttoitprovidedtheSORPdoesnotconflictwiththerequirementsoftheaccountingstandardapplied.IfanentityappliesaSORPitstatesthisinitsfinancial

statements.AnydeparturesfromtheaccountingordisclosuresoftheSORParedisclosed.[FRS100.58,FRS102.10.5]

Statement of compliance

1.15 Anentityincludesastatementofcomplianceinthenotestoitsfinancialstatementsspecifyingwhetheritis

applyingFRS102,thereduceddisclosureframeworkofFRS102,FRS101ortheFRSSE.Entitiesapplyingfull

EUIFRSarerequiredbyIAS1.16togiveanequivalentstatementofcompliance.[FRS100.9]

Effective date and transition

1.16 FRSs100,101and102areapplicableforperiodsbeginningonorafter1January2015.Earlyadoptionispermitted.

[FRS100.10]However,earlyadoptionofFRS101mayberestrictedforcompaniesthatpreviouslyappliedEUIFRS

intheirindividualfinancialstatementstoperiodsendingonorafter1October2012(seeparagraph1.10ofthispublication).Inaddition,earlyadoptionofFRS102isrestrictedtoperiodsendingonorafter31December2012

and,forentitieswithinthescopeofaSORP,earlyadoptionofFRS102ispermittedonlyifthestandarddoesnot

conflictwiththerequirementsofacurrentSORPorlegalrequirementsforthepreparationoffinancialstatements.

1.17 Ontransitionanentityappliesthefollowing:[FRS100.11]

(a) fortransitiontoEUIFRS–IFRS1–see Insights into IFRS Chapter6;

(b) fortransitiontoFRS101unlesstheentitypreviouslyappliedEUIFRS–IFRS1paragraphs633asamendedby

FRS101.5(b)–seeparagraph2.11ofthispublication;

(c) fortransitiontoFRS101whentheentitypreviouslyappliedEUIFRS–theentitydoesnotreapplyIFRS1but

considerswhetheradjustmentsarenecessarytocomplywithFRS101.5(b)[FRS100.12]–seeparagraph2.12

ofthispublication;

(d)

fortransitiontoFRS102–therequirementsinSection35Transition to FRS 102 –seeChapter35of

thispublication;

(e) fortransitiontotheFRSSE–therearenospecifictransitionrequirementsintheFRSSE.Anentityapplying

theFRSSEforthefirsttimewouldthereforeneedtoapplyallFRSSErequirementsretrospectivelyforany

transactionsorbalancesinthefinancialstatementsatthedateoftransition,excepttotheextentthatanyparts

ofthestandardappliedprospectivelyfromaspecificdate.NotethatFRS100introducedchangestotheFRSSE,

resultinginanewversionoftheFRSSE(effectiveJanuary2015)thatisoutsidethescopeofthispublication.

Equivalence

1.18 FRS100includesapplicationguidanceonequivalencebothforthepurposeofconsideringexemptionfrom

consolidationundersection401oftheCompaniesActandforthepurposeofthedisclosureexemptionspotentially

availableunderFRS101andFRS102(seeparagraphs1.28to1.30ofthispublication).1.19 Undersection401oftheCompaniesAct,aparentcompanythatisthesubsidiaryofanonEEAparentmaybe

exemptfrompreparingconsolidatedfinancialstatementsif(amongotherconditions)itisincludedinahigher

consolidationthatispreparedinamanner‘equivalent’tofinancialstatementspreparedinaccordancewiththe

EUFourthandSeventhDirectives.UITF43previouslyprovidedguidanceonthemeaningofequivalenceforthis

purpose,whichhasnowbeenincludedintheApplicationGuidancetoFRS100.




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1.20 TheApplicationGuidanceindicatesthatonlyFRS102andEUIFRSwillautomaticallybeequivalentforthispurpose.

FullIFRSmaybeequivalentsubjecttoconsiderationofthereasonforthedifferencefromEUIFRS.Higher

consolidatedfinancialstatementspreparedunderotherGAAPsrequirespecificconsideration.SomesuchGAAPs

arecloselyrelatedtofullIFRS;fortheseFRS100requiresconsiderationtobegiventodifferencesfromEUIFRS.

Forothersitrequirescomparison,basedontheparticularfacts,withtheSeventhDirective.Inthisrespect,only

thebasicrequirementsoftheFourthandSeventhDirectivesarerequiredtobemet,inparticulartherequirement

togiveatrueandfairview;strictconformitywitheveryprovisionoftheDirectivesisnotnecessary.FRS100does,

however,makespecificreferencetoUS,Canadian,Japanese,Chinese,andSouthKoreanGAAPs.Itobservesthat

theseareconsideredbytheEuropeanCommissiontobeequivalenttoEUIFRS.AlthoughFRS100makesthis

observation,itdoesnotgiveanydefinitivepositiononthoseGAAPs’equivalencetotheSeventhDirective,but

requiresassessmentoftheparticularfactsandadvisesagainstbeingoverlycautious.[FRS100.AG4AG7]

Reduced disclosure frameworks

1.21 FRS101andFRS102offerreduceddisclosureframeworksthatmaybeappliedintheindividualfinancialstatements

ofqualifyingentitiesprovidedcertaincriteriaaremet(seeparagraphs1.22to1.34ofthispublication).Theavailable

disclosureexemptionsarediscussedinChapters2and3ofthispublication.Thereduceddisclosureframeworks

maynotbeappliedinanyconsolidatedfinancialstatements.[FRS101.3,FRS102.1.10]

Definition of qualifying entity

1.22 Aqualifyingentityisamemberofagroupwheretheparentofthatgrouppreparespubliclyavailableconsolidated

financialstatementsthatareintendedtogiveatrueandfairviewandthatmemberisincludedintheconsolidation.

[FRS101.GL,FRS102.GL]

1.23 ThedefinitionofaqualifyingentityforFRS101(butnotforFRS102)purposeshasadditionalwordingthat

excludescharitiesfrombeingqualifyingentities.CharitablecompanieswithinagroupmaynotapplyFRS101

intheirindividualfinancialstatementsbutmay(subjecttomeetingthenecessaryconditions)applythereduced

disclosuresofferedforqualifyingentitiesunderFRS102.[FRS101.GL]

1.24 PartofthedefinitionofaqualifyingentityunderFRS101andFRS102isthattheconsolidatedfinancialstatements

inwhichthegroupentityisincludedare‘intendedtogiveatrueandfairview’.Thisisnotaquestionofwhetherthey

doinfactgiveatrueandfairviewbutwhethertheyareintendedtodoso,presumablyunderlegalorregulatory

requirements.WhentheGAAPappliedintheconsolidatedfinancialstatementsisEUIFRS,fullIFRSorFRS102,

orisconsideredtobeequivalentforthepurposeofsection401oftheCompaniesAct(seeparagraph1.20ofthis

publication),weconsiderthatthisconditionwillbemet.ForotherGAAPsitwillbenecessarytoconsultthewording

oftheapplicablelegalandregulatoryrequirementsinordertodeterminewhethertheconsolidatedfinancial

statementsareintendedtogiveatrueandfairview.

1.25 ‘Includedintheconsolidation’meansthattheentityisincludedintheconsolidatedfinancialstatementsonafull(not

proportional)consolidationbasis.[FRS101.GL,FRS102.GL]Thedefinitionofaqualifyingentityincludesboth

subsidiariesandtheparentofagroup(assumingthatthenecessarycriteriaaremet).

Criteria for applying a reduced disclosure framework

1.26 AqualifyingentitymayapplythereduceddisclosureframeworkofFRS101orFRS102onlyifbothofthefollowing

conditionsaremet:

(a) Itsshareholdershavebeennotifiedinwritingabout,anddonotobjectto,theapplicationofthedisclosure

exemptions.Onlyshareholder(s)holdingfivepercentormoreofthetotalallottedsharesoftheentity,ormore

thanhalfoftheallottedsharesnotheldbytheimmediateparent,areentitledtoserveanobjection.Theentity

specifiesareasonabletimeframeandformatforobjections.[FRS101.5(a),FRS102.1.11(a)]Whilstthiscondition

mayberelativelystraightforwardtomeetinthecaseofawhollyownedsubsidiarywithinagroup,listedultimate

parentcompaniesmayfindthisconditionmorechallenginglogistically.Suchcompanieswillneedtoplan

carefullythemethodbywhichtheywillobtainthispermission,forexampleaspartoftheAnnualGeneral

Meetingprocessorviaaseparatecommunicationwithshareholders.

(b) Thefinancialstatementssummarise(innarrativeform)theexemptionsappliedandidentifytheconsolidated

financialstatementsinwhichtheentityisconsolidated.[FRS101.5(c),FRS102.1.11(c)]




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FRS 101 – consequential amendments to EU-IFRS

1.27 SincefinancialstatementspreparedinaccordancewithFRS101areCompaniesActaccounts(seeparagraph1.7of

thispublication),qualifyingentitiesapplyingFRS101makecertainamendmentstotherequirementsofEUIFRSin

ordertocomplywiththerequirementsoftheCompaniesAct;thesearediscussedinChapter2ofthispublication.[FRS101.5(b)]

Equivalent disclosures

1.28 Certain(butnotall)ofthedisclosureexemptionsavailableinFRS101andFRS102areconditionaluponequivalent

disclosuresbeingincludedintheconsolidatedfinancialstatementsofthegroupinwhichtheentityisconsolidated.

TheApplicationGuidancetoFRS100providesguidanceonthemeaningofequivalenceforthispurpose.

1.29 ThereisnorequirementforthehigherconsolidatedfinancialstatementstobepreparedunderanyspecificGAAP

(subjecttothegeneralrequirementthattheyareintendedtogiveatrueandfairview–seeparagraph1.24ofthis

publication)andonlythebasicdisclosurerequirementsoftherelevantstandardneedtobemet;compliancewith

everydisclosurerequirementofthatstandardisnotrequired.Disclosureexemptionsforqualifyingentitiesare

permittedevenwhenthedisclosuresintheconsolidatedfinancialstatementsaremadeinaggregateorinan

abbreviatedform.However,nodisclosureexemptionisavailableintheindividualfinancialstatementsofaqualifyingentity(subjecttomaterialityconsiderationsattheentitylevel)ifnodisclosureismadeinthehigherconsolidated

financialstatementsonthegroundsofmaterialityfromthatconsolidatedpointofview.[FRS100.AG810]

1.30 Thestandardissilentastowhetherdisclosureisrequiredintheindividualfinancialstatementsofmaterialitemsthat

arepotentiallywithinthescopeofthedisclosureexemptionsbuteliminateonconsolidation(forexample,intragroup

derivatives)andhencearenotthemselvesdisclosedintheconsolidatedfinancialstatements.However,thewording

oftheApplicationGuidancesuggeststhatadisclosureexemptionwouldbeavailableforsuchitemsifdisclosureis

madeintheconsolidatedfinancialstatementsinrelationtoexternalitemsofthesamenature(inthisexample,

externalderivatives).




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Financial institutions

1.31 Aqualifyingentitythatisafinancialinstitutionisnotexemptfromdisclosuresinrelationtofinancialinstruments.

[FRS101.7,FRS102.1.9]

1.32 Afinancialinstitutionincludesanyofthefollowing:[FRS101.GL,FRS102.GL]

(a)abankthatis:

(i) afirmwithaPartIVpermission6thatincludesacceptingdepositsand:

thatisacreditinstitution;or

whosePartIVpermissionincludesarequirementthatitcomplieswiththerulesintheGeneralPrudential

sourcebookandthePrudentialsourcebookforBanks,BuildingSocietiesandInvestmentFirmsrelatingto

banks,butwhichisnotabuildingsociety,afriendlysocietyoracreditunion;

(ii)anEEAbankthatisafullcreditinstitution;

(b) abuildingsocietythatisdefinedinsection119(1)oftheBuildingSocietiesAct1986asabuildingsociety

incorporated(ordeemedtobeincorporated)underthatact;

(c)acreditunion,beingabodycorporateregisteredundertheIndustrialandProvidentSocietiesAct1965asacreditunioninaccordancewiththeCreditUnionsAct1979,thatisanauthorisedperson;

(d)acustodianbank,brokerdealerorstockbroker;

(e) anentitythatundertakesthebusinessofeffectingorcarryingoutinsurancecontracts,includinggeneralandlife

assuranceentities;

(f) anincorporatedfriendlysocietyincorporatedundertheFriendlySocietiesAct1992oraregisteredfriendlysociety

registeredundersection7(1)(a)oftheFriendlySocietiesAct1974oranyenactmentthatitreplaced,includingany

registeredbranches;

(g) aninvestmenttrust,IrishInvestmentCompany,venturecapitaltrust,mutualfund,exchangetradedfund,unit

trust,openendedinvestmentcompany(OEIC);

(h)aretirementbenefitplan;or

(i)

anyotherentitywhoseprincipalactivityistogeneratewealthormanageriskthroughfinancialinstruments.

Thisisintendedtocoverentitiesthathavebusinessactivitiessimilartothoselistedabovebutarenot

specificallyincludedinthelistabove.

1.33 Aparententitywhosesoleactivityistoholdinvestmentsinothergroupentitiesisnotafinancialinstitution.

1.34 Asubsidiaryentityengagedsolelyintreasuryactivitiesforthegroupasawholeislikelytomeetthedefinitionofa

financialinstitution.[FRS102.ACA.37]

6 Asdefinedinsection40(4)oftheFinancialServicesandMarketsAct2000.




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02Reduced

disclosureframework


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02Reduceddisclosureframework|18

• FRS101setsoutthedisclosureexemptionsavailableintheindividualfinancial

statementsofqualifyingentitieswithinagroupthatotherwiseapplythe

requirementsofEUIFRS(asmodifiedbyFRS101inordertocomplywiththe

CompaniesAct).

• Aqualifyingentityisamemberofagroupwheretheparentofthatgroup

preparespubliclyavailableconsolidatedfinancialstatementsthatareintended

togiveatrueandfairviewandthatmemberisincludedintheconsolidation.

• FRS101cannotbeappliedinanyconsolidatedfinancialstatements.

• FinancialstatementspreparedunderFRS101areCompaniesActaccounts;

certainamendmentstotherequirementsofEUIFRS(includingtheuseof

CompaniesActformats)arethereforerequiredtoensurecompliancewith

theCompaniesAct.

• Qualifyingentitiesthatarefinancialinstitutionsarenotexemptfromthe

financialinstrumentdisclosurerequirementsofIFRS7andIFRS13.




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FRS 101

2.1 FRS101setsoutthedisclosureexemptionsavailableintheindividualfinancialstatementsofqualifyingentities

withinagroupthatotherwiseapplytherequirementsofEUIFRS(asmodifiedbyFRS101).Aqualifyingentityisa

memberofagroupwheretheparentofthatgrouppreparespubliclyavailableconsolidatedfinancialstatementsthat

areintendedtogiveatrueandfairviewandthatmemberisincludedintheconsolidation.Thedefinitionofa

qualifyingentity,andthegeneralcriteriaforapplyingareduceddisclosureframeworkassetoutinFRS101,is

discussedinparagraphs1.21to1.30ofthispublication.

2.2 QualifyingentitiesthatarerequiredorchoosetoprepareconsolidatedfinancialstatementsmaynotapplyFRS101in

thosefinancialstatements.[FRS101.3]

2.3 EntitiesapplyingFRS101makeastatementofcompliancewiththatstandardinthenotestothefinancial

statements.ItisnotappropriatetoincludeastatementofcomplianceassetoutinIAS1.16sincethefinancial

statementswillnotcomplywithalloftherequirementsofEUIFRS.

Amendments to EU-IFRS requirements

2.4 AsfinancialstatementspreparedunderFRS101areCompaniesActaccounts(seeparagraph1.7ofthispublication),

certainamendmentstotherequirementsofEUIFRSarerequiredinordertocomplywiththeAct.[FRS101.5(b)]

ThesearediscussedintheApplicationGuidancetothestandardandinclude:

• ThepresentationformatsoftheCompaniesActapplyratherthanthoseofIAS1.TherequirementsofIAS1may

beappliedtotheextentthattheydonotconflictwiththeCompaniesActrequirements.

• Thetrueandfairoverrideisappliedinrelationtothenonamortisationofgoodwill.

• Negativegoodwillisnotrecognisedimmediatelyinprofitorloss.Itisinsteadcarriedonthebalancesheetand

recognisedinprofitorlossgenerallyinthesameperiod(s)asthenonmonetaryassetsacquiredarerecovered.

• Contingentconsiderationinabusinesscombinationisaccountedforatitsestimatedamountwhenpaymentis

consideredprobableandtheamountcanbemeasuredreliably,ratherthanbeingincludedatitsfairvalueatthe

acquisitiondate.Changesincontingentconsiderationarerecognisedasanadjustmenttotheacquisitioncost

ratherthanbeingrecognisedinprofitorloss.

• Theanalysisoftheresultsofdiscontinuedoperationsispresentedinacolumnarformatonthefaceofthe

statementofcomprehensiveincome,togetherwithatotalcolumn.

• Onlyrealisedprofitsmayberecognisedinprofitorloss.However,movementsinthevalueoffinancial

instruments,investmentpropertiesandlivinganimalsorplantsmayneverthelessberecognisedinprofitorloss.

• Governmentgrantsrelatedtoassetsarepresentedasdeferredincomeandmaynotbecreditedtothecostofthe

relatedasset.Incomefromgovernmentgrantsispresentedasincomeinprofitorlossandmaynotbenetted

againsttherelatedexpense.

• Animpairmentofgoodwillisreversedif(andonlyif)thereasonsfortheimpairmenthaveceasedtoapply.

2.5 EntitiesthatarenotcompaniesmakethesameamendmentstotherequirementsofEUIFRSifapplying

FRS101.

Disclosure exemptions

2.6 UnderFRS101thereisnorequirementto:[FRS101.8]

• Presentcomparativemovementtablesinrelationtosharenumbers,property,plantandequipment,intangible

assets,investmentpropertiesandbiologicalassets(IASs1,16,38,40,41).

• Presentastatementofcashflows(IAS7).

• Disclosekeymanagementpersonnelcompensation(IAS24).However,forcompanies,disclosureofdirectors’

remunerationisrequiredundertheCompaniesAct(seeparagraph1.11ofthispublication).

• Discloserelatedpartytransactionsbetweenwhollyownedsubsidiariesandparentswithinagroup(thesame

exemptionappliesunderFRS102–seeparagraph33.7ofthispublication)(IAS24).Thisexemptiondoesnot

extendtobalanceswithgrouprelatedpartiesthatarerequiredtobedisclosedundertheCompaniesAct.




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02Reduceddisclosureframework|20

• Presentathirdbalancesheetwhenrestatingcomparativeinformation(IAS1).

• Discloseinformationinrelationtonewstandardsnotyetapplied(IAS8).

• Givecapitalmanagementdisclosures(IAS1)(althoughseeparagraph2.8(b)ofthispublication).

2.7

Inaddition,exemptionfromthefollowingdisclosurerequirementsisavailable,providedthatequivalentdisclosuresareincludedintheconsolidatedfinancialstatements.[FRS101.8]Equivalenceforthispurposeisdiscussedinthe

ApplicationGuidancetoFRS100(seeparagraphs1.28to1.30ofthispublication).

• Detaileddisclosuresinrelationtocertaingroupsharebasedpaymentarrangements(IFRS2).Thisexemptiondoes

notinclude:forasubsidiary,arrangementsoveritsownequityinstruments;orforanultimateparent,

arrangementsthatarenotoveritsownequityinstruments.

• Detaileddisclosuresinrelationtobusinesscombinations,includingcurrentandcomparativeperiodmovement

tablesinrelationtogoodwill(IFRS3).However,movementsingoodwillbalancesareneverthelessrequiredtobe

disclosedundertheCompaniesAct.

• Cashflowdisclosuresinrelationtodiscontinuedoperations(IFRS5).

• Disclosuresinrelationtothekeyassumptionsusedinthedeterminationofrecoverableamountforimpairment

purposes(IAS36).• Financialinstrumentdisclosures(IFRS7)(althoughseeparagraph2.8ofthispublication).

• Disclosuresinrelationtofairvaluemeasurement(IFRS13)(althoughseeparagraph2.8ofthispublication).

2.8 However,anexemptionfromfinancialinstrumentdisclosuresisnotavailableinthefollowingcases:

(a) Ifthequalifyingentityisnotafinancialinstitutionbuthasfinancialinstrumentsheldatfairvalue(otherthan

financialliabilitiesthatareheldatfairvalueaspartofatradingportfolioorarederivatives),certaindisclosure

requirementsofIFRS7andIFRS13aregiveninrelationtothoseinstrumentsinordertocomplywiththe

requirementsoftheCompaniesAct(thisapplieseveniftheentityisnotacompany).[FRS101.6]

(b) Qualifyingentitiesthatarefinancialinstitutions(seeparagraph1.31ofthispublication)cannotapplythe

disclosureexemptionsfromeitherIFRS7,IFRS13(totheextentthattheyapplytofinancialinstruments),orthe

capitalmanagementdisclosuresofIAS1.[FRS101.7]

Effective date and transitional arrangements



2.9 FRS101isapplicableforperiodsbeginningonorafter1January2015.Earlyadoptionispermitted.However,early

adoptionmayberestrictedtoperiodsendingorafter1October2012forcompaniesthatpreviouslyappliedEUIFRS

intheirindividualfinancialstatements(seeparagraph1.10ofthispublication).

2.10 ThetransitionalrequirementsonadoptionofFRS101aresetoutinFRS100.Thedateoftransitionisthestartofthe

earliestcomparativeperiodpresentedinthefirstfinancialstatementspreparedunderFRS101.[FRS101.GL]

2.11 AqualifyingentitythatdidnotpreviouslyapplyEUIFRSpriortothedateoftransitionappliestherequirementsof

IFRS1.633asadoptedbytheEU,includingtherelevantappendices(asamendedbyFRS101.AG1,thatrequiresa

qualifyingentitytomeasureitsassetsandliabilitiesinaccordancewithFRS101).[FRS100.11(b)]

2.12 AqualifyingentitytransitioningtoFRS101thatappliedEUIFRSpriortothedateoftransitionconsiderswhether

amendmentsarerequiredtocomplywiththeamendmentstoEUIFRSsetoutinFRS101.AG1,butdoesnotreapplytheprovisionsofIFRS1.Whenamendmentstotherecognition,measurementordisclosurerequirementsof

EUIFRSinaccordancewithparagraph5(b)ofFRS101arerequired,theentityconsiderswhethertheamendments

haveamaterialeffectonthefirstfinancialstatementspreparedunderFRS101.Ifthereisnomaterialeffect,the

entitydisclosesthatFRS101hasbeenadoptedandprovidesanarrativesummaryofthedisclosureexemptions

applied.Ifthereisamaterialeffect,theentity’sfirstfinancialstatementspreparedunderFRS101include(foreach

periodpracticable):

(a) adescriptionofthenatureofeachmaterialchangeinaccountingpolicy;

(b) reconciliationsofequityunderEUIFRStothatunderFRS101asatthedateoftransitiontoFRS101andasatthe

endofthelatestperiodpresentedintheentity’smostrecentannualfinancialstatementspreparedunderEU-

IFRS;and

(c)areconciliationofprofitorlossunderEUIFRStothatunderFRS101forthelatestperiodpresentedinthe

entity’smostrecentannualfinancialstatementspreparedunderEUIFRS.[FRS100.12]


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03Scope,concepts,

principlesandpresentation





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03Scope,concepts,principlesandpresentation|22

• Entities,includingpublicbenefitentities,preparingfinancialstatements

intendedtogiveatrueandfairviewapplyFRS102whentheyarenoteligible

orrequiredtoapplyanotherreportingframework(e.g.EUIFRS,FRS101or

FRSSE)orareeligiblebutchoosenottodoso.

• AstatementofcompliancewithFRS102and,ifapplicable,thattheentityisapublicbenefitentity,isgiveninthenotes.

• DeparturesfromFRS102orapplicablelegislation,andthereasonsforit,

aredisclosed.

• IfrelevantanentityappliesIAS33,IFRS8andFRS103(onceissued)in

additiontoFRS102.

• Certaindisclosureexemptionsareavailableforqualifyingentities.

• Theobjectiveoffinancialstatementsistoproviderelevantfinancialinformation

touserstoinformtheireconomicdecisions.

• Financialstatementscomprisestatements(andrelatednotes)showingthefinancialposition,financialperformanceandcashflowsofanentity.

• Financialstatementsareunderstandable,relevant,reliable,prudent,complete,

comparableandtimely.Theyreflectsubstancenotmerelylegalformandare

freefrombias.

• Itemsarerecognisedinanentity’sfinancialstatementswhentheymeetthe

definitionofanasset,liability,incomeorexpense,canbemeasuredreliably

andhaveaprobablefutureeconomicbenefitinfloworoutflow.

• Performanceispresentedinasinglestatementofcomprehensiveincomeora

separateincomestatementandstatementofcomprehensiveincome.

• Incomeandexpensesarerecognisedasaresultofchangesinrecognised

assetsandliabilities.

• FRS102specifiesthebasesofmeasurementforassets,liabilities,incomeand

expensese.g.historicalcostorfairvalue.

• Financialstatements,exceptcashflowinformation,arepreparedonan

accrualsbasis.

• Offsettingofassetsandliabilitiesorofincomeandexpensesisnotallowed

unlessrequiredorpermittedbyFRS102.

• Goingconcernisassessedbymanagementforatleast12months.Inpractice

thislookforwardperiodwillbe12monthsfromthedateofapprovalofthefinancialstatementsduetoauditingstandardrequirements.

• Anymaterialuncertaintiesoranongoingconcernbasisofpreparation

aredisclosed.

• Financialstatementsareusuallypreparedannuallyandonaconsistent

basis.ComparativesaredisclosedexceptwhenFRS102permitsor

requiresotherwise.

• Materialitemsaredisclosedseparatelyandmaterialityisconsideredinthe

financialstatementsaggregationprocess.

• Financialstatementsstatetheentity’sname,periodenddate,presentational

currency,roundinglevelandwhethertheyaregrouporcompanyfinancialstatements.Theyalsodisclosetheregisteredoffice,countryofincorporation

andprincipalactivitiesandoperations.




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vs previous UK GAAPApplicablestandards:ASBStatementofPrinciples,SSAP25,FRS3,FRS5,FRS28

pUK3.1 TheconceptsandprinciplesoftheASB’sStatement of Principles areinlinewiththosestatedinFRS102.

pUK3.2 FRS5andtheStatement of Principles containspecificguidanceonhowtoapplytheprinciplethattransactionsare

accountedforinaccordancewiththeircommercialsubstance.ApplicationNotestoFRS5applythatprincipletoa

varietyofcomplextransactiontypes.

pUK3.3 Thefollowingaregenerallypresentedasprimarystatements:profitandlossaccount;statementoftotalrecognised

gainsandlosses;balancesheet;and(forcertainentities)acashflowstatement.SeeChapters4to7ofthis

publicationforfurtherguidance.

pUK3.4 MoreentitiesarerequiredtoprovidesegmentalreportingdisclosuresunderSSAP25thanunderFRS102,including

certainlargeprivateentitiesandunlistedpubliclimitedcompanies.ThedetailedrequirementsofSSAP25alsodiffer

fromthoseofIFRS8(whichareappliedbythoserequiredtoprovidesegmentinformationunderFRS102).This

includesthepossibilityofa‘seriouslyprejudicial’exemptionfromdisclosurethatisnotavailableunderIFRS8.




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FRS 102

Section3

Scope

3.1 FRS102appliestofinancialstatementsintendedtogiveatrueandfairviewofareportingentity’sfinancialposition

andprofitorloss.SeeChaptersINT,1and2ofthispublicationforthescopeandbackgroundtoFRSs100102.This

appliestobothcompaniesandpublicbenefitandotherentities.CertainparagraphswithinFRS102areprefixedwith

‘PBE’andthoseapplyonlytopublicbenefitentitiesandarenotappliedtoothertypesofentity.

3.2 FRS102appliesforaccountingperiodsbeginningonorafter1January2015.Earlyadoptionispermittedforaccounting

periodsendingonorafter31December2012,exceptforpublicbenefitentities,forwhichearlyadoptionispermitted

onlyifitdoesnotconflictwitheitherthelegalrequirementsforthepreparationofthefinancialstatementsorthe

requirementsofacurrentSORP.[FRS102.1.14]DisclosureisrequiredwhenFRS102isearlyadopted.

3.3 WhenanentitythatappliesFRS102isrequired,orchooses,topreparethefollowingitappliesthefollowingEUIFRSs:

• earningspershare:IAS33[FRS102.1.4]

• segmentalinformation:IFRS8[FRS102.1.5]

3.4 AnentityisrequiredtoapplyIAS33andIFRS8ifitssharesarepubliclytradedorifitfiles,orisintheprocessof

filing,financialstatementswitharegulatorybodyforapublicshareissue.AnentityappliesFRS103Insurance

contracts (onceissued)ifitissuesinsurancecontractsorfinancialinstrumentswithadiscretionaryparticipation

feature;seetheIntroductiontothispublication.[FRS102.1.6]ThereisnorequirementtoapplyIFRS4.

3.5 FRS102doesnotcoverthepresentationofinterimfinancialreportsandifsuchinformationispresented,then

disclosureismadeofthebasisforpreparingandpresentingtheinformation.[FRS102.3.25]TheAccountingStandards

Board’sStatementHalf-yearly financial reports hasbeenwithdrawnandthereisnorequirementforthosereporting

underFRS102toapplyIAS34(andIFRIC10),althoughentitiesmaychoosetodoso.

Reduced disclosures for qualifying group entities

3.6 Thedefinitionofaqualifyingentityisdiscussedinparagraphs1.22to1.25ofthispublication.

3.7 QualifyingentitiesapplyingFRS102mayapplythefollowingdisclosureexemptionsintheirindividualaccounts,

providedtheymeetthecriteriadiscussedinparagraph1.26ofthispublication.Theexemptionsmaynotbeappliedin

anyconsolidatedaccounts.[FRS102.1.12]

( a)Statementoffinancialposition–reconciliationofnumberofsharesoutstanding–FRS102.4.12(a)(iv).

(b)Presentationofacashflowstatement–Section7Statement of cash flows andFRS102.3.17(d).

( c) Sharebasedpayments–FRS102.26.18(b),FRS102.26.1921andFRS102.26.23exceptforagrouparrangement

involvingequityinstrumentsofasubsidiary.

(

d)Disclosureofkeymanagementpersonnelcompensation–FRS102.33.7.

( e)Financialinstruments–FRS102.11.3948AandFRS102.12.2629exceptthat:

qualifyingentitiesthatarefinancialinstitutions(seeparagraph1.32ofthispublication)maynotapplythis

exemption.Notethat,inadditiontothedisclosurerequirementsofSection11Basic financial instruments and

Section12Other financial instruments issues ,suchentitiesgivefurtherfinancialinstrumentdisclosuresasset

outinSection34Specialised activities andChapter34Dofthispublication;

qualifyingentitieswithfinancialliabilitiesheldatfairvalueapplythedisclosurerequirementsofparagraph

FRS102.11.48A.However,financialliabilitiesheldatfairvaluethatarepartofatradingportfolioorarederivatives

cantakeadvantageoftheexemptioninFRS102.1.12(c).

3.8 Theexemptionslistedinparagraphs3.7(c)and(e)ofthispublicationaredependentontheinclusionofequivalent

disclosuresintheconsolidatedfinancialstatementsofthegroupinwhichtheentityisconsolidated.Theapplication

guidancetoFRS100includesfurtherdetailonequivalence.Seeparagraphs1.28to1.30ofthispublication.




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vs EU-IFRSApplicablestandards:IASBFramework,IAS1,IAS34,IFRS8,IFRS13

IFRS3.1 FRS102andEUIFRSarebothbasedontheIASBFramework.However,theFrameworkcontainsconceptsof

capitalandcapitalmaintenancethatarenotdefinedinFRS102.

IFRS3.2 UnderEUIFRS,therearefewerexceptionsfromthepresentationofcomparativeinformation.Forexample,

movementsinproperty,plantandequipmentarealsopresentedforthecomparativeperiod.

IFRS3.3 IAS1requiresanentitytopresentastatementoffinancialposition(balancesheet)asatthebeginningoftheearliest

comparativeperiodwhentheentityappliesanaccountingpolicyretrospectivelyorcorrectsapriorperioderror,or

whenitreclassifiesitemsinitsfinancialstatements.




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Concepts and pervasive principles

3.9 FRS102setsouttheconceptsandpervasiveprinciplesthatentitiesconsiderwhenpreparingtheirfinancial

statements,althoughitgoesontonotethatwhentherearespecificrequirementswithinFRS102thatconflictwith

theseprinciples,thenthespecificrequirementsapply.3.10 Theobjectiveoffinancialstatementsistoprovideinformationonthefinancialposition,performanceandcashflows

oftheentitythatisusefultoabroadrangeofusersinmakingeconomicdecisions.[FRS102.2.2]Theyalsoenable

management’sstewardshipofthecompanytobeassessed.[FRS102.2.3]

3.11 Financialstatementsneedtobeunderstandabletouserswithareasonableknowledgeofbusiness,economic

activitiesandaccountingandawillingnesstostudytheinformation.However,relevantinformationmaynotbe

omittedonthegroundsthatitmaynotbeunderstoodbysomeusers.[FRS102.2.4]

3.12 Theinformationincludedinthefinancialstatementsneedstoberelevanttousers’needs.Informationisrelevant

whenitmightinfluencetheeconomicdecisionsofusersbyhelpingthemtoevaluatepast,presentorfuture

events.[FRS102.2.5]

3.13 Iftheomissionormisstatementofapieceofinformation,eitheronitsownorwithothers,couldinfluencethe

economicdecisionsoftheusers,thatinformationismaterial,andthereforerelevant.Materialitydependsonthesize

andnatureoftheomissionormisstatementjudgedinthesurroundingcircumstances.However,itisinappropriateto

make,orleaveuncorrected,immaterialdeparturesfromFRS102inordertoachieveacertainpresentationinthe

financialstatements.[FRS102.2.6]

3.14 Financialstatementsprovidereliableinformationthatisfreefrommaterialerrororbiasandfaithfullyrepresentsall

informationthatuserscouldreasonablyexpectorwhichthefinancialstatementsclaimtoinclude.If,intheselection

andpresentationofinformation,thereisanintentiontoinfluenceusers’judgementordecisionmakinginaparticular

way,thefinancialstatementsarenotfreefrombias.[FRS102.2.7]

3.15 Toenhancethereliabilityoffinancialstatements,transactionsarepresentedaccordingtotheirsubstanceandnotjust

theirlegalform.[FRS102.2.8]

3.16 Whenuncertaintiesexistaroundeventsandconditions,appropriatedisclosureismadeandprudenceisexercisedin

relationtothoseuncertaintiesinpreparingthefinancialstatements.Whenexercisingjudgementaroundestimates

resultingfromconditionsofuncertainty,prudenceistheinclusionofadegreeofcautionsuchthatexpensesandliabilities

arenotunderstatedandassetsandincomearenotoverstated.However,thedeliberateoverstatementofliabilitiesand

expensesorunderstatementofassetsandincomeisnotpermitted;prudencedoesnotpermitbias.[FRS102.2.9]

3.17 Financialstatementsmustbecomplete,whileconsideringmaterialityandcost.Informationmaybecomeunreliableor

nolongerrelevantifanomissioncausesthatinformationtobefalseormisleading.[FRS102.2.10]

3.18 Usersofthefinancialstatementsmustbeabletocompareanentity’sfinancialinformationbothovertimeandtothat

ofotherentitiessothattheyareabletoevaluatetheentity’srelativefinancialperformanceandposition.Therefore,

measurementandpresentationoffinancialinformationmustbeonaconsistentbasisbothfortheentityovertime

andcomparedtootherentities.Theaccountingpoliciesusedinpreparationofthefinancialstatementsandany

changesthereinaredisclosedtoallowuserstounderstandandcomparefinancialstatements.[FRS102.2.11]

3.19 Unduedelayinthereportingoffinancialinformationmaymeanitlosesrelevancetoinfluencetheeconomicdecisions

ofusersandsuchinformationisthereforeprovidedtouserswithadegreeoftimeliness.Theremaybeaneedfor

managementtobalancetheneedfortimeliness,relevanceandreliabilityoffinancialinformationwhenconsidering

howbesttosatisfytheneedsofusers.[FRS102.2.12]

3.20 Thecostofprovidinginformationshouldnotexceedthebenefitsofthatinformation.Judgementisrequiredin

evaluatingthebenefitsandcostsinvolved:thebenefitsmayaccruetoabroadrangeofusers,andthecostsmaynot

bebornebythosesameusers.[FRS102.2.13]Alowercostofcapitalmaybeenjoyedbytheeconomyasawholeif

financialreportinginformationenablescapitalproviderstomakebetterdecisions.Individualentitiesmayalsoenjoy

betteraccesstocapitalmarkets,alowercostofcapital,improvedpublicrelations,orbettermanagementdecisionsas

aresultoffinancialreporting.[FRS102.2.14]




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Financial position

3.21 Therelationshiponaspecificdatebetweenanentity’sassets,liabilitiesandequityaspresentedinthestatementof

financialposition(balancesheet)isitsfinancialposition.Anassetisdefinedasaresourcefromwhichfuture

economicbenefitsareexpectedtoflowasaresultofcontrolobtainedfromapastevent.Aliabilityisapresentobligationarisingfrompasteventsthatisexpectedtobesettledviaanoutflowofeconomicbenefits.Theresidual

interestintheentity’sassetsafterdeductingallliabilitiesisequity.[FRS102.2.15]

3.22 Someitemsmaymeetthedefinitionofanassetorliabilitybutarenotrecognisedinthefinancialstatementsasthey

donotmeettherecognitioncriteriadiscussedinparagraphs3.30to3.32ofthispublication.[FRS102.2.16]

3.23 Anasset’spotential,directlyorindirectly,tocontributetotheflowofcashandcashequivalentstotheentityisits

futureeconomicbenefit.Thecashflowsmaybethroughuseordisposal.[FRS102.2.17]Anassetmayormaynot

havephysicalform;someassetsareintangible.[FRS102.2.18]Theexistenceofanassetdoesnotrelyonarightof

ownership,butmoreontheabilitytocontroltheexpectedfutureeconomicbenefits.[FRS102.2.19]

3.24 Liabilitiesobligeanentitytoactorperforminaparticularmannerbywayofapresentobligationthatmaybeeither

legalorconstructive.Alegalobligationisenforceablebylawandresultsfromcontractualorstatutoryrequirements.

Aconstructiveobligationarisesfromtheentity’sactions,eitherfromanestablishedpatternofpastpractices,publishedpoliciesoracurrentspecificstatementthatindicatestoothersthattheentitywillacceptcertain

responsibilities,suchthatavalidexpectationhasbeenraisedinthoseotherpartiesthattheentitywillfulfil

thoseresponsibilities.[FRS102.2.20]

3.25 Apresentobligationisnormallysettledthroughpaymentofcash,transferofotherassets,provisionofservices,the

replacementwithanotherobligationorconversiontoequity.Itisalsopossibletoextinguishanobligationthroughthe

counterpartywaivingorforfeitingitsrights.[FRS102.2.21]

3.26 Theresidualinterestintheentity’sassetsafterdeductingallitsliabilitiesisequity.Withinthebalancesheet,equity

maybesubclassifiedtoinclude,forexample,shareholdercontributionsandretainedearnings.[FRS102.2.22]

Performance

3.27

Therelationshipbetweenincomeandexpenseinareportingperiodisanentity’sperformance.Itispresentedeitherinasinglestatementofcomprehensiveincomeorintwostatements:anincomestatementandastatementof

comprehensiveincome.[FRS102.2.23]

3.28 Incomeisdefinedasincreasesineconomicbenefitsinthereportingperiodasaresultofinflowsorenhancementsof

assetsordecreasesinliabilitiesthatresultinincreasesinequity.Whentheinflowrelatestoacontributionfromequity

investorsthisisnotincome.[FRS102.2.23(a)]Incomeincludesbothrevenue,thatarisesaspartoftheordinaryactivities

oftheentity(e.g.sales,fees,interest,royalties,dividendsandrent),andgains,thatareitemsotherthanrevenuethat

meetthedefinitionofincome(e.g.thegainonsaleofanitemofproperty,plantandequipment(PP&E)).Gainsare

oftenpresentedseparatelyinthestatementofcomprehensiveincometoaidusers’understanding.[FRS102.2.25]

3.29 Expensesaredecreasesineconomicbenefitsinthereportingperiodasaresultofassetoutflowsoradditional

liabilitiesincurredthatdecreaseequity.Distributionstoequityinvestorsarenotexpenses.[FRS102.2.23(b)]Expenses

includebothamountsthatariseinthecourseoftheentity’sordinaryactivities(e.g.costofsales,wagesand

depreciation)thatresultinanoutflowordepletionofassets,andlosses,thatareotheritemsthatmeetthedefinition

ofexpensesandthatmayariseintheordinarycourseofbusiness(e.g.thelossonsaleofanitemofPP&E).Losses

areoftenpresentedseparatelyinthestatementofcomprehensiveincometoaidusers’understanding.[FRS102.2.26]

Recognition of assets, liabilities, income and expenses

3.30 Anassetisrecognisedinthebalancesheetwhenitiscontrolledbytheentity,theflowoffutureeconomicbenefitsis

probableanditscostorvaluecanbemeasuredreliably.Anassetisnotrecognisedinrespectofexpenditurewhenthe

associatedfutureeconomicbenefitsareallexpectedtobereceivedinthecurrentreportingperiod.Inthiscasethe

amountisreportedasanexpenseinthestatementofcomprehensiveincomeorincomestatement.[FRS102.2.37]

3.31 Aliabilityisrecognisedinthebalancesheetwhenitisanobligationasaresultofapastevent,thesettlementamount

canbemeasuredreliablyandthetransferofeconomicbenefitsinsettlementisprobable.[FRS102.2.39]




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3.32 Toassesswhethertheflowofeconomicbenefitsisprobable,theevidenceavailablewhenthefinancialstatements

arepreparedthatrelatestotheconditionsattheendofthereportingperiodisassessed.Theassessmentiseither

madeindividuallyorforagroupofitems,dependingontheirsignificance.[FRS102.2.29]

3.33 Thecostorvalueofanitemisoftenknownorareasonableestimatecanbemade.Ifareasonableestimatecannotbemadetheitemisnotrecognisedinthefinancialstatements.[FRS102.2.30]Anunrecogniseditemmayqualifyfor

recognitionatalaterdateifeventsandcircumstanceschange.[FRS102.2.31]Itmayalsowarrantdisclosureinthe

notestothefinancialstatementswhenitisrelevanttotheevaluationofperformanceorfinancialpositionbyusersof

thefinancialstatements.[FRS102.2.32]

3.34 Therecognitionofincomeandexpensesresultsdirectlyfromtherecognitionandmeasurementofassetsand

liabilities.Income/expenseisrecognisedinthestatementofcomprehensiveincome(orincomestatement)whenan

increase/decreaseinfutureeconomicbenefithasarisenasaresultofanincrease/decreaseinanassetordecrease/

increaseinaliabilitythatcanbemeasuredreliably.[FRS102.2.24,FRS102.2.4142]

3.35 Thearithmeticdifferencebetweenincomeandexpensesistotalcomprehensiveincome.[FRS102.2.43]Profitorloss

isthearithmeticdifferencebetweenincomeandexpensesotherthanincomeorexpensesclassifiedunderFRS102

asothercomprehensiveincome.[FRS102.2.44]Seeparagraph5.3ofthispublication.

3.36 Disclosureoftheaccountingpoliciesusedoradditionalexplanatorymaterialinthenotesdoesnotrectifyfailureto

recogniseanitemthatmeetsthecriteria.[FRS102.2.28]

3.37 Assetsandliabilitiesthatdonotmeettherecognitioncriteriaarenotrecognisedinthebalancesheetregardlessof

applyingthesocalled‘matchingconcept’toitemsinprofitorloss.The‘matchingconcept’referstotherecognitionin

thesameperiodofallgainsandlossesrelatingtothesameoveralltransactionorevent.[FRS102.2.45]

3.38 Contingentassetsarenotrecognisedinthefinancialstatements.However,whentheflowofeconomicbenefits

associatedwithacontingentassetbecomesvirtuallycertaintheassetmeetstheassetrecognitioncriteriaandis

recognised.[FRS102.2.38]

3.39 Acontingentliabilityiseitherapresentobligationthatdoesnotmeettherecognitioncriteriaofaliabilityorisa

possiblebutuncertainobligation.Contingentliabilitiesarenotrecognisedunlessacquiredaspartofabusiness

combination.[FRS102.2.40]Seeparagraph19.10ofthispublication.

Measurement of assets, liabilities, income and expenses

3.40 Assets,liabilities,incomeandexpensesaremeasuredtodeterminetheamountatwhichtheyarerecognisedinthe

financialstatements.FRS102specifiesthemeasurementbasistobeusedfordifferenttypesofassets,liabilities,

incomeandexpense,includinghistoricalcostorfairvalue.[FRS102.2.33]

3.41 Historicalcost,forassets,isthefairvalueatthedateofacquisitionoftheconsiderationgiventoacquiretheasset.

Forliabilitiesthehistoricalcostisthefairvalueoftheproceedsorassetsreceivedinexchangefortheobligationat

thedateofthetransaction.However,insomecasestheamountofcashorcashequivalentsexpectedtobepaidto

settletheobligationmaybeamoreappropriatemeasurement.[FRS102.2.34]

3.42 Amortisedhistoricalcostisthehistoricalcostoftheassetorliabilitylessanyportionofthehistoricalcostalready

recognisedasanexpenseorincome.Fairvalueistheamountatwhichanassetcouldbeexchanged,aliabilitysettled,oranequityinstrumentgrantedcouldbeexchangedbetweenknowledgeable,willingpartiesinanarm’s

lengthtransaction.[FRS102.2.34]

3.43 AssetsandliabilitiesarerecognisedathistoricalcostoninitialrecognitionunlessrequiredbyanothersectionofFRS

102toberecognisedonadifferentmeasurementbasis(e.g.fairvalue).[FRS102.2.46]

3.44 Subsequenttoinitialrecognition,basicfinancialassetsandliabilities(asdefinedinSection11)arerecognisedat

amortisedcostlessimpairment,exceptfor:

• investmentsinnonconvertibleandnonputtablepreferencesharesandnonputtableordinarysharesthatare

publiclytradedorwhosefairvaluecanotherwisebemeasuredreliably;and

• anyfinancialinstrumentthatuponinitialrecognitionwasdesignatedbytheentityasatfairvaluethroughprofitorloss.

3.45

Theseinstrumentsaremeasuredatfairvaluewithchangesinfairvaluerecognisedinprofitorloss.[FRS102.2.47]3.46 Otherfinancialassetsandliabilitiesaremeasuredatfairvaluewithchangesinfairvaluerecognisedinprofitorloss,

unlessFRS102requiresorpermitsanothermeasurementbasissuchasamortisedcost.[FRS102.2.48]

3.47 Mostnonfinancialassetsaresubsequentlymeasuredonadifferentbasisfromtheirinitialmeasurementathistorical




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cost,forexamplethecostmodelorrevaluationmodelforproperty,plantandequipment;thelowerofcostandselling

pricelesscoststocompleteandsellforinventories;orthecostorfairvaluemodelforinvestmentsinassociatesand

jointventuresandagriculturalassets.[FRS102.2.4950]

3.48 InvestmentpropertyisrequiredtobemeasuredatfairvalueunderFRS102whenthefairvalueisreadilydeterminablewithoutunduecostoreffort:seeChapter16ofthispublication.[FRS102.2.50]

3.49 Mostliabilitiesotherthanfinancialliabilitiesaresubsequentlymeasuredatthebestestimateoftheamountrequired

tosettletheobligationatthereportingdate.[FRS102.2.51]

Pervasive recognition and measurement principles

3.50 TherecognitionandmeasurementcriteriasetoutinFRS102arebasedonthepervasiveprinciplesthatarederived

fromtheIASB’sFramework for the Preparation and Presentation of Financial Statements (nowcalledtheConceptual

Framework for Financial Reporting )andfromEUIFRS.Whenspecificguidanceonatransactionoreventisnotgiven

inFRS102,theguidanceonthejudgementandselectionofaccountingpoliciesinSection10Accounting policies,

estimates and errors isfollowed(seeparagraph10.2ofthispublication).Afterconsiderationofspecificguidance

withinFRS102,theconceptsandprinciplesofSection2Concepts and pervasive principles ,discussedinthischapter,

arefollowed.[FRS102.2.35]

Accruals basis

3.51 Exceptforcashflowinformation,financialstatementsarepreparedonanaccrualsbasis.Assuch,itemsare

recognisedwhentheymeetthedefinitionsandrecognitioncriteriasetoutinFRS102.[FRS102.2.36]

Offsetting

3.52 AssetsandliabilitiesarenotoffsetunlessrequiredorpermittedbyFRS102.However,measuringassetsnetofa

valuationallowanceisnotoffsetting.Also,ifbuyingandsellingnoncurrentassetsisnotpartoftheentity’snormal

operatingactivities,thenanygainsandlossesondisposaloftheseassetsarereportedbydeductingthecarrying

amountandanysellingexpensesfromtheproceedsofsale.[FRS102.2.52]

Fair presentation

3.53 Financialstatementspresentfairlyanentity’sfinancialposition,financialperformanceandcashflows.Thisrequires

faithfulpresentationofalltransactionsandothereventsandconditionsinaccordancewiththerecognitioncriteriaof

Section2.ApplicationofFRS102isassumedtoresultinafairpresentationoffinancialstatementswhencoupled

withanyadditionaldisclosuresgivenwhentherequirementsofFRS102areinsufficientforuserstounderstandfully

theeffectofcertaintransactions.[FRS102.3.2]

3.54 Fairpresentationisthesameasa‘trueandfairview’asrequiredforcompaniesbysection393oftheCompaniesAct.

3.55 InthenotestothefinancialstatementsanexplicitstatementismadethatthefinancialstatementscomplywithFRS

102whenthisisthecase.[FRS102.3.3]Inaddition,apublicbenefitentitymakesanexplicitandunreservedstatement

thattheyareapublicbenefitentitywhentheyhaveappliedthe‘PBE’prefixedparagraphs.Insomeextremelyrare

cases,compliancewithFRS102orapplicablelegislationmaybesomisleadingthatmanagementbelievesitconflictswiththeobjectiveofthefinancialstatements.[FRS102.3.4]Inthiscase,managementdepartsfromtherequirements

ofFRS102andmakescertaindisclosures,includingthereasonswhytheapplicationoftherequirementsofFRS102

orapplicablelegislationwouldbemisleading.Thisisknownasa‘trueandfairoverride’.[FRS102.3.5]

Going concern

3.56 Managementmakesanassessmentoftheentity’sabilitytocontinueasagoingconcernwhenpreparingfinancial

statements.Unlessmanagementintendsorhasnorealisticalternativebuttoliquidateorceaseoperationsofthe

entity,theentityisagoingconcern.Inmakingthisassessmentallrelevantinformationaboutthefutureisconsidered,

thatcoversaperiodofatleast12monthsfromthedateofapprovalofthefinancialstatements.[FRS102.3.8]

3.57 Ifmaterialuncertaintiesexistthatcastsignificantdoubtontheentity’sabilitytocontinueasagoingconcern,then

thoseuncertaintiesaredisclosed.[FRS102.3.9]

3.58 Ifthefinancialstatementsarenotpreparedonagoingconcernbasis,thenthebasisusedtopreparethefinancial

statementsandthereasonswhytheentityisnotconsideredtobeagoingconcernaredisclosed.[FRS102.3.9]




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Frequency of reporting

3.59 Atleastannualpresentationofacompletesetoffinancialstatementsisgenerallyrequired,althoughmoreorless

frequentreportingmayapplyiftheentitychangesitsreportingdate.Iftheperiodislongerorshorterthanoneyear

duetoachangeinreportingdate,thatfactisdisclosedalongwiththerelevantrationale.Thedisclosurealsostatesthatcomparativeinformationmaynotbeentirelycomparable.[FRS102.3.10]

Consistency of presentation

3.60 Thepresentationandclassificationoffinancialstatementsisconsistentyearonyearunless:

• FRS102oranotherapplicableFRSorFRCAbstractrequiresachangeinpresentation;or

• asignificantchangeinthenatureoftheentity’soperationsorareviewofthefinancialstatementsindicatesthata

differentpresentationwouldbemoreappropriate(seeChapter10ofthispublication).[FRS102.3.11]

3.61 Comparativeamountsarereclassifiedwhenachangeinpresentationoccurs,unlessitisimpracticabletodoso.

Disclosureismadeofthenature,amountandreasonforthereclassification.[FRS102.3.12]

Comparatives3.62 ComparativeinformationisalwaysdisclosedforthepreviousreportingperiodunlessFRS102permitsorrequires

otherwise.[FRS102.3.14]Forexample,Section17Property, plant and equipment doesnotrequirethereconciliationof

thecarryingamountatthebeginningandendoftheperiodtobepresentedforthepriorperiod.

Materiality and aggregation

3.63 Eachmaterial(seeparagraph3.13ofthispublication)classofsimilaritemsispresentedseparately.[FRS102.3.15]

Transactionsareaggregateddependingontheirnatureorfunctionandthenclassifiedaslineitemseitherinthe

financialstatementsornotesdependingonmateriality.[FRS102.3.16]Disclosuresneednotbegiveniftheinformation

isnotmaterial.[FRS102.3.16A]

Complete set of financial statements

3.64 Acompletesetoffinancialstatementsincludesastatementoffinancialposition(balancesheet)atthereportingdate,

eitherasinglestatementofcomprehensiveincomeforthereportingperiodoraseparateincomestatement(profit

andlossaccount)andstatementofcomprehensiveincome,astatementofchangesinequityforthereportingperiod,

astatementofcashflowsforthereportingperiod(whenapplicable,seeChapter7ofthispublication)andrelated

notes.[FRS102.3.17]Onthebasisthatcomparativesarerequiredforthepreviousreportingperiod(seeparagraph

3.62ofthispublication),thiseffectivelymeansthatacompletesetoffinancialstatementsincludestwoofeachofthe

abovestatementsandnotes.

3.65 Ifthereisnoothercomprehensiveincomeinthecurrentorcomparativeperiods,theentitymaypresentonlyan

incomestatementratherthananincomestatementandaseparatestatementofcomprehensiveincome.Iftheonly

changestoequityintheperiodsforwhichthefinancialstatementsarepresentedarefromprofitorloss,dividends,and

correctionofpriorperioderrorsorchangesinaccountingpolicy,asinglestatementofincomeandretainedearnings

maybepresentedinplaceofastatementofcomprehensiveincomeandstatementofchangesinequity.[FRS102.3.18]

3.66 Eachfinancialstatement(primarystatement)ispresentedwithequalprominence.[FRS102.3.21]Adifferenttitlemay

beusedtothoseoutlinedinFRS102aslongasitisnotmisleading.[FRS102.3.22]Entitiesarerequiredtocomply

withthefinancialstatementformatsofFRS102andwithcompany(orLLP)lawwherereferredtobyFRS102,except

totheextentthattheserequirementsarenotpermittedbyanystatutoryframeworkunderwhichsuchentitiesreport.

SeeAppendixIIofthispublicationforcommonprofitandlossaccountandbalancesheetformatsundertheAct.

Identification

3.67 Eachfinancialstatementanditsrelatednotesaredistinguishedclearlyfromotherinformationinthesamedocument.

3.68 Thereportingentitynameandanychangesinnameintheperiod,thereportingdateandperiod,thepresentation

currency,thelevelofroundingusedandwhetherthefinancialstatementsaregrouporindividualaredisplayed

prominentlyinthefinancialstatementsandrepeatedasnecessarytoaidunderstanding.Thedomicileandlegal

formoftheentity,countryofincorporationandregisteredaddressaredisclosedinthefinancialstatements

alongsideadescriptionofthenatureoftheentity’soperationsandprincipalactivities.[FRS102.3.2324]




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04Statementof

financialposition(Balancesheet)





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04Statementoffinancialposition(Balancesheet)|36

• Thestatementoffinancialposition(whichmayalsobecalledthebalance

sheet)ispresentedinaccordancewiththeCompaniesActformats.This

applieseveniftheentityisnotrequiredtoprepareaccountsinaccordance

withtheCompaniesAct(forexampleanentitythatisnotacompany),unlesstheapplicablelegislationdoesnotpermitthis.




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vs previous UK GAAPApplicablestandards:FRS2,FRS25,FRS28,UITF4

pUK4.1 PreviousUKGAAPalsorequiresthebalancesheettobepresentedinaccordancewiththeCompaniesAct

schedulessothisisnotaGAAPdifferenceforcompanies.Forotherentities,theCompaniesActformatswillapply

underFRS102whereastheywerenotmandatedunderpreviousUKGAAP.AppendixIVtoFRS102detailsother

legalframeworksandtheAccountingCouncildoesnotbelievetheformatsrequiredbytheseframeworksare

inconsistentwithFRS102.

vs EU-IFRSApplicablestandards:IAS1,IAS8,IFRS5

IFRS4.1 IFRS5requirestheseparatepresentationofassetsclassifiedasheldforsaleorassetsandliabilitiesincludedina

disposalgroupheldforsaleeitherinthestatementoffinancialpositionorinthenotes.FRS102containsno

definitionofheldforsaleanditisnotincludedinthedefinitionofdiscontinuedoperations.FRS102requires

separatedisclosureofthedisposalgroupinthenotesonlywhenthereisabindingsaleagreement,whereas

IFRS5disclosureandremeasurementisrequiredalsowhenthesaleishighlyprobable.




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04Statementoffinancialposition(Balancesheet)|38

FRS 102

Section4

4.1 Thebalancesheetispreparedasatanentity’sreportingdate.[FRS102.4.1]

4.2 AnentitypresentsitsbalancesheetinlinewithPart1General Rules and Formats ofeither:

(a)Schedule1totheRegulations(appliestoallentitiesotherthanthoseapplying(b),(c),or(d),unlesslegislation

specifictotheentityrequiresadifferentformat,seeparagraph1.12ofthispublication);

(b) Schedule2totheRegulations(appliestobankingentities1);

(c)Schedule3totheRegulations(appliestoinsuranceentities1);or

(d)Schedule1totheLLPRegulations(appliestoLLPs).

4.3 AgroupbalancesheetispresentedinlinewithSchedule6totheRegulationsorSchedule3totheLLP

Regulations.[FRS102.4.2]

4.4 Eachschedulespecifiesdifferentformatsfortheorderandterminologyforthebalancesheet.Forexample,

Schedule2allowsbankstopresenttheirassetsinorderofliquidity.AppendixIItothispublicationreplicates

Format1fromSchedule1totheRegulations.

4.5 Additionallineitemsarepresentedasnecessarytoaidusers’understandingoftheentity’sfinancialposition.

[FRS102.4.3]TheCompaniesActrequirestheheadingsandsubheadingstobeadaptedwhenthespecialnatureof

theentity’sbusinessrequiresit.

4.6 UndertheAct,andthereforeunderFRS102,creditorsaresplitbetweenamountsduewithinoneyearandamounts

dueafteroneyear.Ifanentitydoesnothaveanunconditionalright,attheperiodend,todefersettlementofaliability

foratleast12monthsafterthereportingdate,thenthatliabilityisclassifiedasduewithinoneyear.[FRS102.4.7]

4.7 DebtorsthataredueaftermorethanoneyeararerequiredbytheRegulationstobeincludedwithincurrentassets(asdefinedbytheAct).Ifthisbalanceissufficientlymaterialtothefinancialstatementsitisdisclosedonthefaceof

thebalancesheetwithincurrentassets,otherwiseitisdisclosedinthenotes.[FRS102.4.4A]

4.8 Detailsofsharecapital,includingthenumberofsharesinissue,aredisclosedeitheronthefaceofthebalancesheet

orinthenotes.[FRS102.4.12]Similarinformationispresentedforanentitywithoutsharecapital,suchasa

partnership,includingtherightsandrestrictionsofeachtypeofequity.[FRS102.4.13]

4.9 Ifabindingsaleagreementforamajordisposalofassets,orofadisposalgroup,isinplaceatthereportingdate,

adescriptionoftheassets(ordisposalgroup)anddetailsofthefactsandcircumstancesofthesalearedisclosed,

inadditiontothecarryingamountoftheassets(ordisposalgroup).Adisposalgroupisagroupofassetsandthe

liabilitiesassociatedwiththemthatwilltogetherbesold,transferredorotherwisedisposedofinasingle

transaction.Thedisposalgroupincludesacquiredgoodwillallocatedtoitinlinewithparagraphs27.20to

27.22ofthispublication.

1 ThedefinitionsofbankingandinsuranceentitiesarefoundintheCompaniesActsections1164and1165respectively.




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05Statementof

comprehensiveincomeandincomestatement


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05Statementofcomprehensiveincomeandincomestatement|40

• Thestatementofcomprehensiveincomecanbepresentedeitherasoneor

twostatements,asapolicychoice.

• Itemsofincomeandexpenditurewithinthestatementofcomprehensive

incomearepresentedinaccordancewiththeCompaniesActprofitandloss

accountformats.Thisapplieseveniftheentityisnotrequiredtoprepare

accountsinaccordancewiththeCompaniesAct(forexampleanentitythatis

notacompany),unlesstheapplicablelegislationdoesnotpermitthis.

• Othercomprehensiveincomeincludescertainforeignexchangegainsand

losses;actuarialgainsandlosses;andchangesinfairvalueofhedginginstruments,property,plantandequipment,investmentsandintangibleassets.

• Theresultsofdiscontinuedoperationsarepresentedseparatelyusinga

columnarapproach.

• Individuallymaterialitemsaredisclosedseparately.

• Extraordinaryitemsarehighlyabnormalandarenotexpectedtooccur

inpractice.




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vs previous UK GAAPApplicablestandards:FRS3,FRS28

pUK5.1 Theprofitandlossaccountandstatementoftotalrecognisedgainsandlosses(STRGL)cannotbepresentedasone

combinedstatementunderpreviousUKGAAP.TheSTRGLpresentsthetotalofrecognisedgainsandlosses

(incomeandexpense)recognisedintheperiodthatisattributabletoshareholders.Thisstatementincludesboththe

profitorlossrecordedintheprofitandlossaccount,andgainsandlossesrecordedelsewhere,suchasmovements

onarevaluationreserve,unrealisedforeignexchangetranslationdifferencesandactuarialgainsandlosseson

definedbenefitpensionschemes.Iftherearenorecognisedgainsorlossesotherthantheprofitorlossfortheyear,

cutting through uk gaap

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