FRS 102 Section 1A For a large majority of accountants that had entities that met the thresholds of and therefore applied the FRSSE (Financial Reporting Standard for Smaller Entities) this will be the first year transitioning to FRS 102 as the FRSSE is abolished for...
Section 1 deals with the scope of FRS 102 and the exemptions which can be claimed. FRS 102 is available for use by unlisted groups and listed or unlisted individual entities preparing financial statements that are intended to give a true and fair view.
Section 2 describes the objective of financial statements, which is to provide useful information about the entity’s financial position, performance and cash flows, and establishes the concepts and underlying principles of preparation.
Section 3 explains that the financial statements of an entity shall give a true and fair view, what a complete set of financial statements is and what compliance with FRS 102 requires.
Section 4 deals with the presentation of the statement of financial position. The statement of financial position (also known as the balance sheet) presents an entity’s assets, liabilities and equity at the end of the reporting period.
Section 5 deals with the presentation of total comprehensive income for the reporting period. It allows presentation in one or two statements and sets out the information to be presented in those statements.
FRS 102 Summary – Section 6 – Statement of Changes in Equity and Statement of Income and Retained Earnings (SOCE)
Section 6 deals with the requirements for the presentation of changes in an entity’s equity for a period.
Section 7 deals with the information that is to be presented in a statement of cash flow and identifies which entities may qualify for exemption from preparing cash flow statements.
Section 8 describes the principles underlying the information that is to be presented in the notes to the financial statements.
Section 9 deals with the requirement to present consolidated financial statements, the consolidation procedures to be performed, accounting for acquisitions and disposals in a group and the presentation of non-controlling interests.
Section 10 deals with the selection and application of accounting policies used in preparing financial statements. It also details how changes in accounting policies and prior period adjustments should be accounted for.
Section 11 defines basic financial instruments for all companies with the exception of public benefit entities.
Section 12 – Other Financial Instruments issuesSummarySection 12 deals with more complex financial instruments and transactions which do not come within the scope of Section 11 and also have similar exceptions to Section 11 (as detailed in Section 11 of the guide)...
Section 13 deals with the recognition, measurement, costing, impairment of inventories and allocation of production overheads to inventory.
Section 14 – Investment in AssociatesSummarySection 14 defines what an associate is, how it should be recognised, measured, derecognised and disclosed.An associate is an entity over which the investor has significant influence and which is not a subsidiary or a joint...
Section 15 deals with the recognition, measurement and disclosure for joint ventures.
Section 16 deals with the accounting for investment property. It only applies to investment property whose fair value can be measured reliably without undue cost or effort. If this is not the case then the property falls within the scope of section 17, property, plant and equipment. If it cannot be measured without undue cost then the depreciated cost model applies.
Section 17 deals with the initial recognition, subsequent measurement, depreciation and impairment for property, plant and equipment (PPE) held for use in the production, or supply of goods and services, for rental to others or administrative purposes. All items of PPE are expected to be used during more than one period.
Section 18 deals the recognition, measurement, amortisation and disclosure for intangible assets other than goodwill.
Section 19 deals with business combinations.
Section 20 applies to all leases, including some arrangements that do not take the legal form of a lease but convey rights to use assets in return for payments. It deals with the recognition, measurement and disclosures of operating and finance leases.
Section 21 applies to all provisions, contingent liabilities and contingent assets, except those covered by other sections of FRS 102. For example, leases, construction contracts, employee benefits and income tax. It does not apply to executory contracts unless they are onerous contracts.
Section 22 addresses classification of financial instruments as a liability or equity and accounting for compound financial instruments. It applies to the accounting for equity instruments issued to owners of the entity and purchases of own equity.
Section 23 applies to the accounting for revenue arising from the sale of goods, rendering of services, construction contracts and the use by others of entity assets yielding interest, royalties or dividends.
Section 24 deals with the recognition, measurement and disclosures for government grants. Government grants are assistance in the form of a transfer of resources to an entity in return for past or future compliance with specific conditions.
Section 25 deals with the recognition and disclosures of borrowing costs. Borrowing costs are interest and other costs that an entity incurs in connection with the borrowing of funds. It covers interest expense using the effective interest method, finance charges in relation to finance leases and exchange differences arising from foreign currency borrowings.
Section 26 deals with the accounting for all share based payment transactions settled directly by the entity or another group entity on behalf of the entity including required disclosures.
Section 27 deals with the measuring, recognising and disclosing impairments for all assets with the exception of assets arising from construction contracts covered by Section 23;
Section 28 deals with the recognition, measurement and disclosure of employees benefits to include the recognition and measurement of defined benefit and contribution pension schemes, short term employee benefits and termination benefits.
Section 29 deals with the recognition, measurement and disclosure of current and deferred tax, VAT and withholding tax on dividends.
Section 30 applies to foreign currency transactions and foreign operations in the financial statements of an entity. It also prescribes the translation of financial statements into a presentation currency.
Section 31 applies to an entity whose functional currency is the currency of a hyper-inflation economy. It details with the adjustments required to exclude the effects of hyper-inflation.
Section 32 deals with the treatment of events after the balance sheet date and whether they are considered an adjusting or non-adjusting post balance sheet event.
Section 33 deals with disclosures required for all related party transactions and includes the definition of related parties.
Section 34 deals with the reporting requirements for entities applying FRS 102 in the specialist areas of agriculture, extractive activities, service concession arrangements, financial institutions, heritage assets, funding commitments and public benefit entities.
Section 35 deals with the exemptions available to first time adopters on transition to FRS 102 so as to make the transition easier on companies.