FRS 102
The New UK GAAP
Tuesday 8th September 2015 Steve Neal & Ed Porter
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FRS 102: Understanding the New UK GAAP - Changes, Implementation, and Impact, Lecture notes of Financial Economics
An overview of FRS 102, the new UK GAAP, including how it will be implemented, what changes to expect, and who it affects. Topics covered include accounting policies, bank debt, forward contracts, intercompany loans, deferred tax, intangibles, employee benefits, investment properties, business combinations, and financial statement formats. Dates of implementation and early adoption are discussed, as well as the impact on small and medium-sized companies.
What you will learn
- When is FRS 102 being implemented for non-small and small companies?
- What accounting policies are most likely to affect owner-managed companies under FRS 102?
- How does the treatment of bank debt change under FRS 102?
- What is FRS 102 and how does it differ from the previous UK GAAP?
- How are intangible assets recognized and accounted for under FRS 102?
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FRS 102The New UK GAAP Tuesday 8
th
September 2015
Steve Neal & Ed Porter
Today’s briefing: what will we cover
HOW will we implement
WHAT will change
WHEN is it to be implemented
WHOdoes itaffect
CommunicateCommunicate
DecideDecide
UnderstandUnderstand
When is it implemented
From 1 January 2015 for ‘non-small’, 1January 2016 for ‘small’
Early adoption is permissible
Comparatives will be needed for 2014 &2015 and therefore dates of transition are1 January 2014 & 1 January 2015 These are already in the past!
Dates for implementation ‘small’
Date of Transition to
FRS 102
Date current
GAAP reporting
ends
First FRS 102 financialstatements
01.01.
31.12.
31.12.
Time
Early adoption???
From 1 January 2015 small co thresholdsincreased:^ Turnover £6.5m - £10.2mGross assets
£3.26m - £5.1m
Employees
(no change)
Some medium co’s now small so canapply reduced framework in advance
Accounting policies - Some keyareas of change
Focus on those mostlikely to affect ownermanaged companies
Bank Debt
Does it qualify as 'basic‘
Yes? Measured initiallyat ‘cost’, and then in thebalance sheet atamortised cost
No? Measured at fair value and thenre-valued at each reporting date.
Intercompany loans
Loans to/from subsidiaries have beenrecognised at face value
Under FRS 102, apply market rate ofinterest and record at net present value(discounted amount)
Deferred tax
Currently no requirement to provide fordeferred tax on non-monetary assetswhen they are revalued
Under FRS 102 likely to be additionalprovisions on revalued assets
May result in a reduction in distributableprofits & net assets
Employee Benefits Accruals forholiday pay whereholiday year doesnot matchfinancial year
-^
To be valued at Fair value - at each reporting date
-^
Definition will include properties rented withingroups
-^
Changes in value will go to Profit and Loss (notrevaluation reserve)
Investment Properties
Some other issues
Lease incentives
Derivatives
and hedging
Impairment
of stock
Related
party transactiondisclosures
Treatmentof errors
Borrowing
costs
Definedbenefitpension obligations
Listed investmentsat Fair value
Government
grants