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[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section admin_label=”Section” fullwidth=”off” specialty=”off” transparent_background=”off” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off”][et_pb_row admin_label=”Row”][et_pb_column type=”1_2″][et_pb_button admin_label=”FRS 102 Main Menu” button_url=”https://uk.frs102.com/members/premium-toolkit/” url_new_window=”off” button_text=” Return to FRS 102 Main Index” button_alignment=”center” background_layout=”dark” custom_button=”on” button_bg_color=”#1e73be” button_letter_spacing=”0″ button_use_icon=”default” button_icon_placement=”right” button_on_hover=”on” button_letter_spacing_hover=”0″ button_border_radius=”7″] [/et_pb_button][/et_pb_column][et_pb_column type=”1_2″][et_pb_button admin_label=”FRS 105 Main Menu” button_url=”https://uk.frs102.com/members/premium-toolkit/frs-105″ url_new_window=”off” button_text=” Return to FRS 105 Main Index” button_alignment=”center” background_layout=”dark” custom_button=”on” button_bg_color=”#1e73be” button_letter_spacing=”0″ button_use_icon=”default” button_icon_placement=”right” button_on_hover=”on” button_letter_spacing_hover=”0″ button_border_radius=”7″] [/et_pb_button][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section admin_label=”Video Heading – Sections” fullwidth=”off” specialty=”off” transparent_background=”off” background_color=”#ffffff” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” padding_mobile=”off” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off” gutter_width=”3″][et_pb_row admin_label=”Row” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” use_custom_gutter=”off” padding_mobile=”off” allow_player_pause=”off” parallax=”off” parallax_method=”off” make_equal=”off” parallax_1=”off” parallax_method_1=”off” parallax_2=”off” parallax_method_2=”off” column_padding_mobile=”on” custom_padding=”10px|10px|10px|10px” padding_top_1=”20px” padding_top_2=”20px” padding_left_1=”10px” padding_right_2=”10px” parallax_3=”off” parallax_method_3=”off”][et_pb_column type=”1_4″][/et_pb_column][et_pb_column type=”1_2″][et_pb_text admin_label=”Section Introduction Video Heading” background_layout=”dark” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid” text_text_color=”#ffffff” background_color=”#1e73be” custom_padding=”0px||0px|20px”]Section 20 – Overview
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- Section 1
- Section 2
- Section 3
- Section 4
- Section 5
- Section 6
- Section 7
- Section 8
- Section 9
- Section 10
- Section 11
- Section 12
- Section 13
- Section 14
- Section 15
- Section 16
- Section 17
- Section 18
- Section 19
- Section 20
- Section 21
- Section 22
- Section 23
- Section 24
- Section 25
- Section 26
- Section 27
- Section 28
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- Section 1
- Section 2
- Section 3
- Section 4
- Section 5
- Section 6
- Section 7
- Section 8
- Section 9
- Section 10
- Section 11
- Section 12
- Section 13
- Section 14
- Section 15
- Section 16
- Section 17
- Section 18
- Section 19
- Section 20
- Section 21
- Section 22
- Section 23
- Section 24
- Section 25
- Section 26
- Section 27
- Section 28
- Section 29
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Section Downloads
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Downloads
Download “FRS 105 Quick Guide”
50.01.06-FRS-105-Quick-Guide-UK.pdf – Downloaded 4016 times – 1.64 MB
Downloads
Download “Section 20 FRS 105 Detailed Guide”
101.02.20-Section-20-FRS-105.pdf – Downloaded 145 times – 851.28 KB
Website Links
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Downloads
Download “Detailed Differences on Transition Checklist”
60.03.500-FRS105-detailed-differences-on-transition-guide.pdf – Downloaded 2542 times – 393.52 KB
Download “Simple transition case study – FRSSE/Old GAAP to FRS 105”
80.07.10-Simple-transition-case-study-FRSSEOld-GAAP-to-FRS-105.pdf – Downloaded 2583 times – 2.79 MB
Download “Simple Transition Case Study - FRS 102 to FRS 105”
80.07.09-Simple-Transition-Case-Study-FRS-102-to-FRS-105.pdf – Downloaded 2581 times – 2.46 MB
Download “FRS 105 Complex Case Study – FRSSE/old UK & Irish GAAP to FRS 105”
80.07.06-FRS-105-Complex-Case-Study-FRSSEold-UK-Irish-GAAP-to-FRS-105.pdf – Downloaded 2596 times – 2.89 MB
Download “FRS 105 Complex Case Study FRS 102 to FRS 105”
80.07.05-FRS-105-Complex-Case-Study-FRS-102-to-FRS-105.pdf – Downloaded 2578 times – 2.62 MB
Downloads
Download “FRS 105 Micro Companies Regime Disclosure Checklist”
75.06.503-FRS-105-Micro-Companies-Regime-Disclosure-Checklist.pdf – Downloaded 2396 times – 240.10 KB
Section 20: Borrowing Costs
Summary
Section 20 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 constant rate of return, deemed interest costs, finance charges in relation to finance leases and exchange differences arising from foreign currency borrowings.
What is new when compared to previous GAAPs – General?
Section 20 does not permit borrowing costs to be capitalised. Borrowing costs must be expensed.
What is new when compared to FRSSE/old GAAP?
Old GAAP/FRSSE does not have a specific standard on borrowing costs. While some guidance appears in FRS 15, this only relates to tangible fixed assets, therefore has a potentially narrower scope than Section 20.
Section 20 specifically deals with exchange differences on borrowing costs whereas under old GAAP this was not specifically addressed.
What are the key points?
Borrowing costs must be expensed.
A policy of capitalisation cannot be used.
No disclosure required other than including it in interest costs in the Profit and Loss Account.
What do accountants need to do?
Be aware of the differences between old GAAP/FRSSE/FRS 102 and Section 20.
Advise companies on the benefits and drawbacks of capitalising borrowing costs so that they can make an informed decision to move to FRS 105 or not.
Where entities adopted a policy of capitalisation under previous GAAP, then a transition adjustment will be required to derecognise the amount capitalised under old GAAP to the profit and loss reserves and an adjustment to reverse the depreciation recognised on these borrowing costs in the comparative year.
What do Companies need to do?
Be aware of the differences between old GAAP/FRSSE/FRS 102 and Section 20.
Where the company has previously applied a policy of capitalising qualifying borrowing costs, the company will need to assess whether the adjustment is material enough to expense these borrowing costs on transition to FRS 105.
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