Changes to UK GAAP financial statements

Do you prepare UK GAAP financial statements? If so, you should be aware that it is being abolished in its current form and the way you report may significantly change.

Top 10 changes and considerations:

1. Format: Your profit and loss account and statement of total recognised gains and losses (STRGL) will be replaced by either one or two new performance statements.

2. Format: Statement of Changes in Equity or a Statement of Income and Retained Earnings now required as primary statement.

3. Format: Movements in cash and cash equivalents analysed between only three categories in the cash flow statement (previously nine).

4. Financial instruments: All derivatives will appear on your balance sheet at fair value, with changes in value normally affecting your profits.

5. Loans: If the interest rate differs from the market rate at inception, the loan will be stated at fair value using a market rate.

6. Operating leases: Commitment disclosure is of future minimum lease payments (previously annual commitment).

7. Deferred tax: Larger balances expected as now recognised on all revaluations and business combinations.

8. Property, plant and equipment (PPE): At date of transition you can elect to use fair value as deemed cost for a one-off uplift, before reverting back to cost model.

9. Intangible assets: Cannot have indefinite life under FRS 102. If no reliable estimate can be made of useful life - assumed to be max five years.

10. Bad debt provision: General bad debt provisions will be much harder to justify.

The new FRS 102 framework is mandatory for a/c periods starting 1 January 2015.

We can help your adoption process, contact us for more information or visit our webpage.
 

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