Section 1 – Disclosures

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Section 1: Scope of Financial Reporting Standard

Example 1: Disclosure example for a qualifying entity

‘FRS 102 sets out a reduced disclosure framework for a ‘qualifying entity’ as defined in FRS 102 which addresses the financial reporting requirements and disclosure exemptions in the financial statements of qualifying entities that otherwise apply the recognition, measurement and disclosure requirements of FRS 102.

The company is a qualifying entity for the purposes of FRS 102. Note X gives details of the company’s parent and from where its consolidated financial statements prepared in accordance with (insert GAAP) GAAP may be obtained. The company has notified its shareholders in writing about, and they do not object to, the use of disclosure exemptions availed of by the company in these financial statements.’

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Example 2: Disclosure detailing application of July 2015 amendments

NOTE: the below is only applicable to UK companies at this time as republic of Ireland entities cannot adopt these amendments at this time as the EU directive 2013/34 has not been adopted in Ireland ‘The FRC issued amendments to FRS 102 called ‘Amendments to FRS 102-Small entities and other minor adjustments’ which can be applied for accounting periods beginning on or after 1 January 2016 with early adoption permitted. The company has adopted these amendments in these financial statements.’ [/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Main Body Text 3″ background_layout=”light” text_orientation=”justified” text_font_size=”14″ use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

Example 3 – Extract from the Consolidated Balance Sheet

Extract from the Consolidated Balance Sheet At 31 December 2015

	€	€
Fixed assets
Tangible assets	XXXX	XXXX
Negative goodwill	(XXXX)	–
Intangible assets	XXXX	XXXX
Financial assets	XXXX	XXXX
	XXXX	XXXXX
Current assets
Stocks	XXXXX	XXXXX
Debtors	XXXXX	XXXXX
Cash at bank and in hand	XXXXX	XXXXX
	XXXXX	XXXXX
Creditors – amounts falling due within one year	(XXXXX)	(XXXXX)
Net current assets	XXXXX	XXXXX
Total assets less current liabilities	XXXXX	XXXXX
Creditors – amounts falling due after more than one year	(XXXX)	(XXXX)

Provisions for liabilities
Capital grants	(XXXX)	(XXXX)
Deferred taxation	(XXXX)	(XXXX)
Net assets excluding pension liability	XXXXX	XXXXX

Defined benefit pension liability	(XXXXX)	(XXXXX)
Net assets including pension liability	XXXXXX	XXXXXX

Capital and reserves
Called up share capital presented as equity	XXXXX	XXXXX
Share premium account	XXXXX	XXXXX
Capital redemption reserve	XXXXX	XXXXX
Revaluation reserve	XXXXX	XXXXX
Non-distributable reserve	XXXXX	XXXXX
Profit and loss account	XXXXX	XXXXX
Equity attributable to owners of the parent company	XXXXX	XXXXX

Non-controlling interest	XXXXX	XXXXX
Total equity	XXXXX	XXXXX

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Example 4 – Abridged Balance Sheet

See example below of format 1. You will note there are no notes included to certain items as they are not required under the abridged balance sheet. Example of disclosure notes have been included in Appendix D below. (NOTE: 4 below would require the debtors to be split between trade debtors, amounts owed by group undertakings and undertakings in which the company has a participating interest, and other debtors). Extract from the Abridged Balance Sheet – Format 1 At 31 December 2015

	Notes	2015	2014
		€	€
Fixed assets
Tangible assets	1	XXXX	XXXX
Intangible assets	2	XXXX	XXXX
Investments	3	XXXX	XXXX
		XXXX	XXXXX
Current assets
Stocks		XXXXX	XXXXX
Debtors	4	XXXXX	XXXXX
Prepayments and accrued income		XXXXX	XXXXX
Investments		XXXXX	XXXXX
Cash at bank and in hand		XXXXX	XXXXX
		XXXXX	XXXXX

Creditors – amounts falling due within one year		(XXXXX)	(XXXXX)

Net current assets		XXXXX	XXXXX
Total assets less current liabilities		XXXXX	XXXXX

Creditors – amounts falling due after more than one year		(XXXX)	(XXXX)

Provisions for liabilities
Capital grants		(XXXX)	(XXXX)
Deferred taxation		(XXXX)	(XXXX)
Net assets excluding pension liability		XXXXX	XXXXX

Defined benefit pension liability		(XXXXX)	(XXXXX)
Net assets including pension liability		XXXXXX	XXXXXX

Capital and reserves
Called up share capital presented as equity		XXXXX	XXXXX
Share premium account		XXXXX	XXXXX
Capital redemption reserve		XXXXX	XXXXX
Revaluation reserve		XXXXX	XXXXX
Cash flow hedge reserve		XXXXX	XXXXX
Profit and loss account		XXXXX	XXXXX
Shareholders’ funds		XXXXX	XXXXX

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Example 5 – Consolidated Statement of Financial Position

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Notes	2015 €	2014 €
ASSETS

Non-current assets
Property, plant and equipment	13	XXX	XXX
Investment properties	14	XXX	XXX
Biological assets at cost		XXX	XXX
Biological assets at fair value		XXX	XXX
Goodwill and intangible assets	15	XXX	XXX
Financial assets	16	XXX	XXX
Investments in associates and joint ventures	16	XXX	XXX
Receivables	18	XXX	XXX
Deferred tax assets	23	XXX	XXX
Total non-current assets		XXX	XXX

Current assets
Inventory		XXX	XXX
Trade and other receivables	18	XXX	XXX
Derivative financial instruments		XXX	XXX
Cash and cash equivalents		XXX	XXX
Total current assets		XXX	XXX
TOTAL ASSETS		XXX	XXX

EQUITY
Called up share capital		XXX	XXX
Fair value reserve		XXX	XXX
Share premium		XXX	XXX
Retained earnings and other reserves		XXX ^___________	XXX ^___________
Total attributable to the equity holders of the parent		XXX	XXX

Non-controlling interest		XXX	XXX
TOTAL EQUITY		XXX	XXX


LIABILITIES
Non-current liabilities
Interest-bearing borrowings (optional)		XXXX	XXXX
Deferred tax liabilities		XXX	XXX
Contingent acquisition consideration (optional)		–	–
Other payables (note required if relate to trade or related parties)	16	–	–
Provisions		XXX	XXX
Employee benefit obligations (optional)		XXX	XXX
Derivative financial instruments		XXXX ^___________	XXXX
Total non-current liabilities		XXX ^___________	XXX

Current liabilities
Interest-bearing borrowings (optional)		XXX	XXX
Trade and other payables	20	XXX	XXX
Current tax payable		XXX	XXX
Contingent acquisition consideration (optional)		XXX	XXX
Employee benefit obligations (optional)		XXX	XXX
Provisions		XXX	XXX
Derivative financial instruments		XXX	XXX
Total current liabilities		XXX	XXX

TOTAL LIABILITIES		XXX	XXX

TOTAL EQUITY AND LIABILITIES		XXX	XXX

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Example 6 – Two Statement Approach for an Indiviudal Entity

Two statement approach for an individual entity (i.e. not group accounts)

Profit and Loss Account
For the Year Ended 31 December 2015
	Notes	2015	2014
		€	€
Turnover	1	XXXXX	XXXXX
Cost of sales		(XXXX)	(XXXX)

Gross profit		XXXX	XXXX

Selling and distribution costs		(XXX)	(XXX)

Administrative expenses		(XXX)	(XXX)

Other operating income		XXX	XXX

Operating profit	3	XXX	XXX

Income from shares in group undertakings	4	XXX	XXX
Income from shares in other fixed assets investments	4	XXX	XXX
Income from shares in participating interests	5	XXX	XXX

Profit on ordinary activities before interest and taxation		XXXX	XXXX

Interest receivable and similar income	6	XXX	XXX

Interest payable and similar income	7	(XXX)	(XXX)

Profit on ordinary activities before taxation		XXXX	XXXX

Tax on profit on ordinary activities	8	(XXX)	(XXX)

Profit for the financial year		1,000,000	500,000

Profit for the financial year attributable to:

Owners of the parent company	1,000,000	500,000
	1,000,000	500,000

NOTE: the below is encouraged to be provided where items have been posted to other comprehensive income Separate page in the financial statements include: Consolidated Statement of Comprehensive Income

Profit for the financial year	1,000,000	500,000
Cash flow hedges
– effective portion of changes in fair value to cash flow hedges	9 XXX	XXX
– fair value of cash flow hedges transferred to income statement	10 XXX	XXX
Actuarial loss in respect of the defined pension scheme	11 (XXX)	(XXX)
Gain/(loss) on revaluation of intangible assets	12 XXX	(XXX)
Gain/(loss) on revaluation of property, plant and equipment	13 XXX	(XXX)
Gain/(loss) on revaluation of subsidiaries, associates, etc.	14 XXX	(XXX)
Deferred tax on components of other comprehensive income	15 XXX	XXX

Total other comprehensive income for the year net of tax	200,000	(100,000)

Total comprehensive income for the year	1,200,000	400,000

Total comprehensive income for the financial year attributable to:

Owners of the parent company	XXX	XXX
	1,200,000	400,000

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Example 7 – Abridged Profit and Loss Account

Profit and Loss Account
For the Year Ended 31 December 2015
	Notes	2015	2014
		€	€

Gross profit		XXXX	XXXX

Selling and distribution costs		(XXX)	(XXX)

Administrative expenses		(XXX)	(XXX)
Operating profit	3	XXX	XXX

Income from shares in group undertakings		XXX	XXX
Income from shares in other fixed assets investments		XXX	XXX
Income from shares in participating interests		XXX	XXX
Profit on ordinary activities before interest and taxation		XXXX	XXXX

Interest receivable and similar income		XXX	XXX

Interest payable and similar income		(XXX)	(XXX)
Profit on ordinary activities before taxation		XXXX	XXXX

Tax on profit on ordinary activities		(XXX)	(XXX)
Profit for the financial year		1,000,000	500,000

Profit for the financial year attributable to:

Owners of the parent company	1,000,000	500,000
	1,000,000	500,000

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Example 8 – Adapted Profit and Loss Account

	Consolidated Statement of Comprehensive Income
	For the Year Ended 31 December 2015
		Notes	2015		2014
			€		€
	Revenue	1	XXXXX		XXXXX
	Cost of sales		(XXXX)		(XXXX)

	Gross profit		XXXX		XXXX

	Selling and distribution costs		(XXX)		(XXX)

	Administrative expenses		(XXX)		(XXX)

	Other operating income		XXX		XXX

	Group operating profit	3	XXX		XXX

	Share of profit in associates		XXX		XXX
	Share of profit in joint venture		XXX		XXX

	Profit before interest and taxation		XXXX		XXXX

	Finance income		XXX		XXX

	Finance costs		(XXX)		(XXX)

	Profit on before taxation		XXXX		XXXX

	Income tax on profit		(XXX)		(XXX)
	Profit for the year		1,000,000		500,000
Cash Flow Hedge
– effective portion of changes in fair value to cash flow hedges				XXX	XXX
– fair value of cash flow hedges transferred to income statement				XXX	XXX
Actuarial loss in respect of the defined pension scheme				(XXX)	(XXX)
Share of other comprehensive income of associates				XXX	(XXX)
Share of other comprehensive income of joint controlled entities				XXX	(XXX)
Gain/(loss) on revaluation of intangible assets				XXX	(XXX)
Gain/(loss) on revaluation of property, plant and equipment				XXX	(XXX)
Gain/(loss) on revaluation of subsidiaries, associates, etc.				XXX	(XXX)
Deferred tax on components of other comprehensive income				XXX	XXX

Total other comprehensive income for the year net of tax				200,000	(100,000)

Total comprehensive income for the year				1,200,000	400,000

Total comprehensive income for the financial year attributable to:

Owners of the parent company	1,200,000	400,000
	1,200,000	400,000
Profit for the financial year attributable to:

Owners of the parent company	1,000,000	400,000

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Example 9 – Accounting Policies

See extract of examples of accounting policies note below:

General information

XXXXX Limited is primarily engaged in the provision of construction services to both the private and commercial sectors. From their operations base and depot in Construction Place, Builders Lane, Dunblock, Any County they also sell pre-cast concrete products to private individuals and the construction industry.

The company is a limited liability company limited by shares (change if limited by guarantee) please state) incorporated and domiciled in Ireland. The company is tax resident in Ireland.

The below paragraph is optional but encouraged under Appendix D

This is the first set of financial statements prepared by XXXXX Limited in accordance with accounting standards issued by the Financial Reporting Council, including the FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”). The company transitioned from previously extant Irish and UK GAAP to FRS 102 as at 1 January 2014. An explanation of how transition to FRS 102 has affected the reported financial position and financial performance is given in note 2.

The FRC issued amendments to FRS 102 called ‘Amendments to FRS 102-Small entities and other minor adjustments’ which can be applied for accounting periods beginning on or after 1 January 2016 with early adoption permitted. The company has adopted these amendments in these financial statements.

The significant accounting policies adopted by the Company and applied consistently in the preparation of these financial statements are set out below.

The significant accounting policies adopted by the Company and applied consistently are as follows:

(i) Basis of preparation

The below paragraph is not required but encouraged under Appendix D (note is required if not prepared on a going concern)

The Financial Statements are prepared on the going concern basis (NOTE CHANGE THIS HERE IF THE BASIS IS NOT GOING CONCERN AND PROVIDE THE BASIS FOR WHY THEY HAVE NOT BEEN PREPARED ON A GOING CONCERN), under the historical cost convention, [as modified by the revaluation of investment property, the revaluation of land and buildings and intangibles] and the measurement of certain assets and liabilities measured at fair value and comply with the financial reporting standards of the Financial Reporting Council [and promulgated by Chartered Accountants in the UK] and the Companies Act 2006.

The financial statements are prepared in Euro which is the functional currency of the company. OR The company has chosen to present the financial statement in a currency that differs from its functional currency so that it can be easily consolidated into the parent company’s financial statements. The functional currency of the company is XXX.

(ii) Consolidation

DISCLOSURES REQUIRED WHERE CONSOLIDTED FINANCIAL STATEMENTS ARE NOT PREPARED

NOTE: the below is to be included where the parent company is exempt from consolidation due to its immediate parent company (which is in the eea) preparing consolidated financial statements.

Consolidated accounts

The company has not prepared consolidated accounts for the period as, being a wholly owned subsidiary of the ultimate parent company, XXXXXX Limited, it is exempted from doing so under Section 9 of FRS 102 which is accommodated under Section 299 of the Companies Act 2014.

NOTE: the below is to be included where the parent company is exempt from consolidation due to its ultimate parent company (which is in or outside the eea) preparing consolidated financial statements.

Consolidated accounts

NOTE: the below is to be included where the parent company is exempt from consolidation due to the group being considered a small company under company law.

Consolidation

The company and its subsidiaries combined meet the size exemption criteria for a group and the company is therefore exempt from the requirement to prepare consolidated financial statements by virtue of Section 297 of the Companies Act 2014. Consequently, these financial statements deal with the results of the company as a single entity.

NOTE: basis of consolidation disclosures required where consolidted financial statements are prepared.

Basis of consolidation

The Group financial statements reflect the consolidation of the results, assets and liabilities of the parent undertaking, the Company and all of its subsidiaries, together with the Group’s share of profits/losses of associates and joint ventures. Where a subsidiary, associate or joint venture is acquired or disposed of during the financial year, the Group financial statements include the attributable results from, or to, the effective date when control passes, or, in the case of associates, when significant influence is lost.

Subsidiary undertakings

Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition related costs are capitalised with the cost of the investment. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the group’s share of identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised as negative goodwill on the balance sheet and amortised through the profit and loss account in the period in which the non-monetary assets are recovered.

Associates and joint ventures

Associates are those entities in which the Group has significant influence over, but not control of, the financial and operating policies. Joint ventures are those entities over which the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic, financial and operating decisions. Investments in associates and joint ventures are accounted for using the equity method of accounting.

Under the equity method of accounting, the Group’s share of the post-acquisition profits or losses of its associates and joint ventures is recognised in the income statement. The income statement reflects, in profit before tax, the Group’s share of profit after tax of its associates and joint ventures in accordance with Section 14, ‘Investments in Associates’ and Section 15, ‘Interests in Joint Ventures’. The Group’s interest in their net assets is included as investments in associates and joint ventures in the Group Statement of Financial Position at an amount representing the Group’s share of the fair value of the identifiable net assets at acquisition plus the Group’s share of post acquisition retained income and expenses. The Group’s investment in associates and joint ventures includes goodwill on acquisition. The amounts included in the financial statements in respect of the post acquisition income and expenses of associates and joint ventures are taken from their latest financial statements prepared up to their respective year ends together with management accounts for the intervening periods to the Group’s year end. The fair value of any investment retained in a former subsidiary is regarded as a cost on initial recognition of an investment in an associate or joint venture. Where necessary, the accounting policies of associates and joint ventures have been changed to ensure consistency with the policies adopted by the Group.

Transactions eliminated on consolidation

Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions, are eliminated in preparing the Group financial statements. Unrealised gains and income and expenses arising from transactions with associates and joint ventures are eliminated to the extent of the Group’s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that they do not provide evidence of impairment.

Business combinations and goodwill

All business combinations are accounted for by applying the purchase method. Goodwill represents amounts arising on acquisition of subsidiaries, associates and joint ventures. In respect of acquisitions that have occurred since XXXXX (INSERT DATE OF TRANSITION WHERE SECTION 35.10(A) EXEMPTION IS CLAIMED), goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. In respect of acquisitions prior to this date, goodwill is included on the basis of its deemed cost, i.e. original cost less accumulated amortisation from the date of acquisition up to XXXXX, which represents the amount recorded under Irish GAAP. Goodwill is now stated at cost or deemed cost less any accumulated amortisation and impairment losses. In respect of associates and joint ventures, the carrying amount of goodwill is included in the carrying amount of the investment.

(iii) Goodwill

Positive goodwill acquired on each business combination is capitalised, classified as an asset on the balance sheet and amortised on a straight line basis over its useful life of 10 years. Goodwill acquired in a business combination is, from the date of acquisition, allocated to each cash generating unit that is expected to benefit from the synergies of the combination. If an investment is disposed of any unamortised goodwill is subsumed within goodwill in the profit and loss on sale on discontinuance. Useful life is determined by reference to the period over which the values of the underlying businesses are expected to exceed the values of their identifiable net assets.

Goodwill is reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable.

Negative goodwill represents the fair value of net assets on acquisition in excess of the fair value of consideration. Negative goodwill is capitalised and amortised through the profit and loss account in the period in which the non-monetary assets are recovered. In the case of fixed assets acquired, this is the period over which they are depreciated and in the case of stocks it is the period over which they are sold or otherwise realised.

(iv) Impairment

The carrying amounts of the Group’s/Company’s assets, other than inventories (which are carried at the lower of cost and net realisable value), deferred tax assets (which are recognised based on recoverability), investment properties (which are carried at fair value), and those financial instruments, which are carried at fair value, are reviewed to determine whether there is an indication of impairment when an event or transaction indicates that there may be. If any such indication exists, an impairment test is carried out and the asset is written down to its recoverable amount.

The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Value in use is defined as the present value of the future pre-tax and interest cash flows obtainable as a result of the asset’s continued use. The pre-tax and interest cash flows are discounted using a pre-tax discount rate that represents the current market risk free rate and the risks inherent in the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. An impairment loss is recognised in the profit and loss account, unless the asset has been revalued when the amount is recognised in other comprehensive income to the extent of any previously recognised revaluation. Thereafter any excess is recognised in profit or loss.

Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then, to reduce the carrying amount of the other assets in the unit on a pro rata basis.

An impairment loss, other than in the case of goodwill, is reversed if there has been a change in the estimates used to determine the recoverable amount. If an impairment loss is subsequently reversed, the carrying amount of the asset (or asset’s cash generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the revised carrying amount does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised in prior periods. A reversal of an impairment loss is recognised in the profit and loss account.

(v) Intangible assets

Intangible assets acquired as part of a business combination are initially recognised at fair value being their deemed cost as at the date of acquisition. These generally include brand and customer related intangible assets. Computer software that is not an integral part of an item of computer hardware is also classified as an intangible asset. Where intangible assets are separately acquired, they are capitalised at cost. Cost comprises purchase price and other directly attributable costs.

Intangible assets with finite lives are amortised over the period of their expected useful lives in equal annual instalments, as follows;

Brands 5 to 10 years

Customer related 5 to 20 years

Supplier agreements 4 to 10 years

Computer related 3 to 7 years

Subsequent to initial recognition, intangible assets are stated at cost less accumulated amortisation and impairment losses incurred.

Contingent acquisition consideration

Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with Section 21. Any adjustments to the estimated contingent consideration are accounted for as an adjustment to goodwill as a current period adjustment as it reflects a change in estimate and the adjusted goodwill is amortised from that date. Contingent consideration that is classified as equity is not remeasured and its subsequent settlement is accounted for within equity. To the extent that contingent acquisition consideration is payable after more than one year from the date of acquisition, it is discounted at an appropriate loan interest rate and, accordingly, carried at net present value on the Balance Sheet. An appropriate interest charge, at a constant rate on the carrying amount adjusted to reflect market conditions, is reflected in the Profit and Loss over the earnout period, increasing the carrying amount so that the obligation will reflect its settlement at the time of maturity.

(vi) Financial assets

Financial assets in subsidiaries and other financial fixed assets are stated at cost less provision for any diminution in value.

AND/OR

The company has adopted a policy of measuring investments in financial assets which can be reliably measured at their fair value, with changes in the fair value recognised in the profit and loss.

AND/OR

Financial assets which can be reliably measured are measured at their fair value, with changes in the fair value recognised in other comprehensive income and the revaluation reserve.

(vii) General turnover accounting policy notes

(vii) (a) Turnover

Turnover represents net sales to customers and excludes trade discounts and Value Added Tax.

Turnover from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on dispatch of the goods. Turnover from the provision of services is recognised in the accounting period in which the services are rendered and the outcome of the contract can be estimated reliably. The company uses the percentage of completion method based on the actual service performed as a percentage of the total services to be provided.

Revenue in relation to maintenance and support is recognised on a straight line basis over the term of the contract with any unearned revenue included in deferred revenue.

(viii) (b) Turnover accounting policy for an insurance broker

Turnover – commission income

Turnover represents commissions earned in the period together with overrider and profit commissions receivable. Commission income is recognised in the accounting period in which the policy commences. To the extent that future services need to be provided over the life of the policy which straddles an accounting period, revenue is deferred. Commission income in relation to claims handling is recognised in the accounting period in which the claims are settled. Overrider and profit commissions, if any, are recognised in line with the underlying agreements and amounts confirmed by product providers.

(viii) (c) Turnover accounting policy for a manufacturng company that produces, install and also engage in long term contracts using the stage of completion using the contract activity

Turnover

Turnover, excluding value added tax, represents the income received and receivable from third parties, in the ordinary course of business, for goods and services provided. Any discounts given to customers are deducted from turnover.

Revenue from the sale of products is recognised when the goods are dispatched to the customer. Revenue from the servicing of machines is recognised over the period of the performance of the service. Proceeds received in advance of product dispatch or performance of service are recorded as deferred revenue in the balance sheet.

Revenue from the sale of machines and manufactured steel components is recognised over the period of the design, build and installation contract. Where the outcome of a long-term contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date. This is normally measured by surveys of work performed to date. Variations in contract work are included to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.

When the outcome of a long-term contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred and that it is probable it will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

(viii) (d) Turnover accounting policy note where turnover is derived from investments

Turnover

Turnover represents dividends and other income received on investments held, net of irrecoverable withholding taxes. Dividends are recognised in the period to which the dividends relate.

(viii) (e) turnover accounting policy for a software company

Turnover

Turnover, which excludes value added tax, represents the invoiced value of goods and services supplied and the value of long term contract work done, as outlined below.

The company usually sells its software as part of an overall solution offered to a customer, in which significant customisation and modification to the company’s software generally is required. As a result, revenue generally is recognised over the course of these long term projects.

Initial license fee for software revenue is recognised as work is performed, under the percentage of completion method of accounting. Subsequent license fee revenue is recognised upon completion of the specified conditions in each contract. Service revenue that involves significant ongoing obligations, including fees for customisation, implementation and modification, is recognised as work is performed, under the percentage of completion method of accounting.

Software revenue that does not require significant customisation and modification, is recognised upon delivery and installation. In managed service contracts, revenue from operation and maintenance of customers’ billing systems is recognised in the period in which the bills are produced. Revenue from ongoing support is recognised as work is performed. Revenue from third–party hardware and software sales is recognised upon delivery and installation, and recorded at gross or net amount according to whether the company acts as a Principal or as an Agent. Maintenance revenue is recognised ratably over the term of the maintenance agreement, which in most cases is one year or less. Losses are recognised on contracts in the period in which the liability is identified.

(viii) (f) Turnover accounting policy for a construction company

Turnover – contracting work

Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date. This is normally measured by reference to the proportion of costs incurred up to the date of the balance sheet to the estimated total costs. Variations in contract work, claims and incentive payments are included to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred and that it is probable it will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.

(ix) Government grants

Example using an accruals model

Government grants are recognised at their fair value when it is reasonable to expect that the grants will be received and all related conditions will be met.

Grants that relate to specific capital expenditure are treated as deferred income which is then credited to the profit and loss account over the related asset’s useful (i.e. an accruals basis). Revenue grants are credited to the profit and loss account when receivable so as to match them with the expenditure to which they relate. Government grants received are included in ‘other income’ in profit or loss

Example using the performance model

Government grants are recognised when it is reasonable to expect that the grants will be received and all related conditions will be met.

Grants that relate to specific capital expenditure are treated as deferred income which is then credited to the profit and loss account once the performance conditions of the grant have been met. Revenue grants are credited to the profit and loss account when the performance conditions for the grant are fulfilled.

(x) Dividend income

Dividend income from subsidiaries is recognised when the Company’s right to receive payment has been established.

(xi) Dividend distribution

Dividend distribution to the company’s shareholders is recognised as a liability in the Company’s financial statements in the period in which the dividends are approved by the company’s shareholders.

(xii) Currency

a) Functional and presentation currency

Items included in the financial statements of the company are measured using the currency of the primary economic environment in which the company operates (“the functional currency”). The financial statements are presented in euro, which is the company’s functional and presentation currency and is denoted by the symbol “€”. OR The company has chosen to present the financial statement in a currency that differs from its functional currency so that it can be easily consolidated into the parent company’s financial statements.

b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the profit and loss account within ‘finance (expense)/income’. All other foreign exchange gains and losses are presented in the profit and loss account within ‘Other operating (losses)/gains’.

(xiii) Financial instruments

The company has adopted Section 11 and Section 12 of FRS 102 when accounting for financial instruments.

(xiii) (a) Trade and other receivables.

Trade and other receivables including amounts owed to group companies are recognised initially at transaction price (including transaction costs) unless a financing arrangement in exists in which case they are measured at the present value of future receipts discounted at a market rate. Subsequently these are measured at amortised cost less any provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. All movements in the level of the provision required are recognised in the profit and loss.

(xiii) (b) Cash and cash equivalents.

Cash and cash equivalents include cash on hand, demand deposits and other short- term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

(xiii) (c) Other financial assets.

Other financial assets include investment which are not investments in subsidiaries, associates or joint ventures. Investments are initially measured at fair value which usually equates to the transaction price and subsequently at fair value where investments are listed on an active market or where non listed investments can be reliably measured. Movements in fair value is measured in the profit and loss.

Where fair value cannot be measured reliably or can no longer be measured reliably, investments are measured at cost less impairment.

(xiii) (d) Trade and other payables.

Accounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade payables, other payable and amounts due to group companies are recognised initially at the transaction price net of transaction costs and subsequently measured at amortised cost using the effective interest method.

(xiii) (e) Borrowings.

Borrowings are recognised initially at the transaction price (present value of cash payable to the bank, including transaction costs). Borrowings are subsequently stated at amortised cost.

Interest expense is recognised on the basis of the effective interest method and is included in finance costs. OR

Borrowing costs – capitalisation rate

The company has adopted a policy of capitalising qualifying borrowing costs. The company capitalises general borrowing costs which are directly attributable to the acquisition of the qualifying asset. The capitalisation rate used is a weighted average of the rates applicable to the company’s general borrowings that are outstanding during the period. Given that weighted averages are utilised this results in a level of estimation. In determining the capitalisation rate the company excludes any specific borrowings related to obtaining non-qualifying assets.

Preference shares, which are mandatorily redeemable on a specific date, are classified as borrowings. The dividends on these preference shares are recognised in the profit and loss as a finance cost.

Borrowings are classified as current liabilities unless the Company has a right to defer settlement of the liability for at least 12 months after the reporting date.

(f) Derivatives.

Derivatives are initially measured recognised at fair value on the date the contract is entered into and subsequently re-measured at their fair value. Changes in the fair value are recognised in the profit and loss within finance costs or finance income as appropriate, unless they are included in a hedging arrangement.

Derivative financial instruments are not basic.

Hedge accounting is not applied.

OR WHERE HEDGE ACCOUNTING IS APPLIED

Derivative financial instruments are used to manage the Group’s exposure to foreign currency risk and interest rate risk through the use of forward currency contracts and interest rate swaps. These derivatives are generally designated as cash flow hedges in accordance with Section 12. The Group does not enter into speculative derivative transactions.

g) Financial liabilities are derecognised when the liability is extinguished, that being when the contractual obligation is discharged

h) Offsetting financial instruments.

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

i) Compound financial instruments.

Compound financial instruments issued by the company comprise of convertible preference shares which can be converted to a set amount of ordinary shares at a future date. The liability component of the compound instrument is initially recognised at the fair value of a similar liability where the conversion to equity option is not available. Subsequently this is measured at amortised cost using the effective interest rate method. The equity component is measured the difference between the fair value of the liability component and the fair value of the instrument as a whole. The equity component is not re-measured. Transaction costs are apportioned to the equity and liability component as a proportion that each type instrument is to the total fair value of the compound instrument.

j) Hedge accounting

Cash flow hedges

Subject to the satisfaction of certain criteria, relating to the documentation of the risk, objectives and strategy for the hedging transaction and the ongoing measurement of its effectiveness, cash flow hedges are accounted for under hedge accounting rules. In such cases, any unrealised gain or loss arising on the effective portion of the derivative instrument is recognised in the cash flow hedging reserve, a separate component of equity and posted to other comprehensive income. Unrealised gains or losses on any ineffective portion of the derivative are recognised in the income statement. When the hedged transaction occurs the related gains or losses in the hedging reserve are transferred to the Income Statement.

The company engages in hedge accounting for forward contracts in order to manage foreign currency fluctuations as well as interest rate swaps.

Changes in fair values of derivatives designated as cash flow hedges which meet the conditions for hedge accounting are recognised directly in equity through other comprehensive income to the extent that they are effective. Any ineffectiveness is charged to the profit and loss. Any gain or loss recognised in OCI is transferred from equity to the profit and loss when the hedge relationship ends.

Cash flow hedges are those of highly probable forecasted future income or expenses. In order to qualify for hedge accounting, the Group is required to document the relationship between the item being hedged and the hedging instrument and demonstrate, at inception, that the hedge relationship will be highly effective on an ongoing basis. The hedge relationship must be tested for effectiveness on subsequent reporting dates.

There is no significant difference between the timing of the cash flows and income statement effect of cash flow hedges.

Fair value hedges

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the profit and loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to the profit and loss.

(xiv) Provisions

Provisions are recognised when the company has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount of the obligation can be estimated reliably.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as a finance cost.

The extent a legal or constructive obligation exists, the acquisition costs include the present value of estimated costs of dismantling and removing the asset and restoring the site. A change in estimated expenditures for dismantling, removal and restoration is added to/and or deducted from carrying value of the related asset. To the extent the change results in a negative carrying amount, the difference is recognised in the profit and loss. The change in depreciation is recognised prospectively.

OR where remediation provisions are required include the below:

(xiv) (a) Environmental liabilities

Liabilities for environmental costs are recognised when environmental assessments determine clean-ups are probable and the associated costs can be reasonably estimated. Generally the timing of these provisions coincides with the commitment to a formal plan of action or, if earlier, on divestment or on closure of active sites. The amount recognised at the balance sheet date is the latest best estimate of the expenditure required.

Discounted liabilities in respect of environmental liabilities and closures costs have been classified between amounts due within one year and due after one year. Provisions for long term obligations are discounted at a rate of X%.

OR where closure costs include the below

(xiv) (b) Closure costs

All costs associated with the decision to cease trading have been recognised in these financial statements. These include a write down of assets, provisions for expected closure costs together with profit and losses expected to be incurred up to date of cessation of trading.

(xv) Contingencies

Contingent liabilities, arising as a result of past events, are not recognised when (i) it is not probable that there will be an outflow of resources or that the amount cannot be reliably measured at the reporting date or (ii) when the existence will be confirmed by the occurrence or non-occurrence of uncertain future events not wholly within the company’s control. Contingent liabilities are disclosed in the financial statements unless the probability of an outflow of resources is remote.

Contingent assets are not recognised. Contingent assets are disclosed in the financial statements when an inflow of economic benefits is probable.

(xvi) Employee Benefits

The company provides a range of benefits to employees, including annual bonus arrangements, paid holiday arrangements and defined contribution pension plans.

Short term benefits

Short term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in the period in which the service is received.

Annual bonus plans

The company recognises a provision and an expense for bonuses where the company has a legal or constructive obligation as a result of past events and a reliable estimate can be made.

Defined contribution pension plans

The Company operates a defined contribution plan. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate fund. Under defined contribution plans, the company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

For defined contribution plans, the company pays contributions to privately administered pension plans on a contractual or voluntary basis. The company has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

d) Defined benefit pension plan

Defined benefit pension scheme assets are measured at fair value. Defined benefit pension scheme liabilities are measured on an actuarial basis using the projected unit credit method. The excess of scheme liabilities over scheme assets is presented on the balance sheet as an asset or liability. Deferred tax is shown separately within deferred tax. The defined benefit pension charge to operating profit comprises the current service cost, past service costs, introductions, curtailments and settlements. The net interest cost on the scheme liabilities is presented in the profit and loss account as other finance expense. Actuarial gains and losses arising from changes in actuarial assumptions and from experience surpluses and deficits are recognised in other comprehensive income for the year in which they occur together with the return on plan assets, less amounts included in net interest.

(xvii) Preference share capital

Redeemable preference shares and the cumulative preference dividend reserve have been classified as liabilities in the balance sheet. The preference dividend is charged in arriving at the interest cost in the profit and loss account. (include the following where applicable) However no dividends will be paid on the cumulative preference shares until the company has positive profit and loss reserves.

(xviii) Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(xix) Related party transactions

The company discloses transactions with related parties which are not wholly owned with the same group. It does not disclose transactions with members of the same group that are wholly owned.

(xx) Interest income

Interest income is recognised using the effective interest method.

(xxi) Taxation

The company is managed and controlled in the XXXX and, consequently, is tax resident in XXXX. Tax is recognised in the profit and loss account, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case tax is also recognised in other comprehensive income or directly in equity respectively.

Current tax

Current tax is calculated on the profits of the period. Current tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax arises from timing differences that are differences between taxable profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements.

Deferred tax is provided in full on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial

Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred tax liability is Deferred tax is recognised in the profit and loss account or other comprehensive income depending on where the revaluation was initially posted

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be

Current or deferred taxation assets and liabilities are not discounted.

NOTE: include the below if consolidated financial statements are being prepared.

If a temporary difference arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction does not affect accounting or taxable profit or loss, no deferred tax is recognised. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates and joint ventures, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

(xxii) Property plant and equipment

a) Cost

Property, plant and equipment are recorded at historical cost or deemed cost (note include valuation here where appropriate), less accumulated depreciation and impairment losses. Cost includes prime cost, overheads and interest incurred in financing the construction of tangible fixed assets. Capitalisation of interest ceases when the asset is brought into use.

Freehold premises are stated at cost (or deemed cost for freehold premises held at valuation at the date of transition to FRS 102) less accumulated depreciation and accumulated impairment losses.

The company previously adopted a policy of revaluing freehold premises and they were stated at their revalued amount less any subsequent depreciation and accumulated impairment losses. The company has adopted the transition exemption under FRS 102 paragraph 35.10(d) and has elected to use the previous revaluation as deemed cost OR The company has adopted the transition exemption under FRS 102 paragraph 35.10(C) and has elected to use the fair value as deemed cost.

The difference between depreciation based on the deemed cost charged in the profit and loss account and the asset’s original cost is transferred from the non-distributable reserve to retained earnings through equity.

Equipment and fixtures and fittings are stated at cost less accumulated depreciation and accumulated impairment losses.

Where investment property can no longer be reliably measured without undue cost or effort these assets are reclassified to property, plant and equipment at the carrying amount prior to the transfer and depreciated over the useful economic lives.

Spare parts that are acquired as part of an equipment purchase which are only to be used in connection with these specific assets are initially capitalised and amortised as part of the equipment. Spare parts which are expected to be used during more than one period are capitalised as property, plant and equipment.

NOTE: Policy to be included where a policy of revaluation has been chosen:

The company has adopted a policy of revaluing freehold premises. Freehold premises are included in the balance sheet at their fair value on the basis of a periodic professional valuation less accumulated depreciation. The difference between depreciation based on the revalued amount is charged in the profit and loss account and the asset’s original cost is transferred from revaluation reserve to retained earnings. Annually the carrying values are reviewed for appropriateness by the directors. Any changes in the value of freehold properties are reflected as a movement on the revaluation reserve except where the revaluation is below original cost in which case the balance is recognised in the profit and loss account.

b) Depreciation

Depreciation is provided on property, plant and equipment, on a straight-line basis, so as to write off their cost less residual amounts over their estimated economic lives.

The estimated economic lives assigned to property, plant and equipment are as follows:

Freehold Premises 2% straight line on cost

Motor vehicles 25% straight line on cost

Office Equipment, fixtures & fittings 12½% straight line on cost

Computer equipment 25%/33⅓% straight line on cost

Service equipment and spare parts 10% straight line on cost

The company’s policy is to review the remaining economic lives and residual values of property, plant and equipment on an on-going basis and where indicators exist adjust the depreciation charge to reflect the remaining estimated life and residual value.

Fully depreciated property, plant & equipment are retained in the cost of property, plant & equipment and related accumulated depreciation until they are removed from service. In the case of disposals, assets and related depreciation are removed from the financial statements and the net amount, less proceeds from disposal, is charged or credited to the income statement.

(xxiii) Inventories

Inventories comprise consumable items and goods held for resale. Inventories are stated at the lower of cost and net realisable value. Cost is calculated on a first in, first out basis and includes invoice price, import duties and transportation costs. Net realisable value comprises the actual or estimated selling price less all further costs to completion or to be incurred in marketing, selling and distribution.

At the end of each reporting period inventories are assessed for impairment. If an item of inventory is impaired, the identified inventory is reduced to its selling price less costs to complete and sell and an impairment charge is recognised in the profit and loss account. Where a reversal of the impairment is recognised the impairment charge is reversed, up to the original impairment loss, and is recognised as a credit in the profit and loss account.

(xxiv) Investment properties

The group owns a number of freehold office buildings that are held to earn long term rental income and for capital appreciation. The property is not occupied by any group companies. Investment properties are initially recognised at cost. Investment properties whose fair value can be measured reliably are measured at fair value. Changes in fair value are recognised in the profit and loss account.

(xxv) Leases

Finance leases

Leases in which substantially all the risks and rewards of ownership are transferred by the lessor are classified as finance leases.

Tangible fixed assets acquired under finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments and are depreciated over the shorter of the lease term and their useful lives. The capital element of the lease obligation is recorded as a liability and the interest element of the finance lease rentals is charged to the profit and loss account on an annuity basis.

Each lease payment is apportioned between the liability and finance charges using the effective interest method.

Operating leases

Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.

Lease incentives

Incentives received to enter into a finance lease reduce the fair value of the asset and are included in the calculation of present value of future minimum lease payments.

Incentives received to enter into an operating lease are credited to the profit and loss account, to reduce the lease expense, on a straight-line basis over the period of the lease.

NOTE: Extract for a leasing company

Gross earnings

Gross earnings comprises the finance charge element of lease rentals, the profit or loss generated on the termination of lease agreements and administration fees pertaining to lease agreements. Gross earnings are stated net of trade rebates and trade discounts, and exclusive of value added tax.

Finance lease and hire purchase agreements

Finance charges are allocated to periods so as to give a constant rate of return on the net cash investment in the lease. The total net investment included in the balance sheet represents total lease payments receivable, net of finance charges relating to future periods. Bad debts are charged to the profit and loss account in the period in which they occur. Recoveries of bad debts previously charged to the profit and loss account are credited to the profit and loss account upon recovery of the bad debt. The net investment in finance lease and hire purchase agreements is stated net of a bad and doubtful debt provision.

(xxvi) Intangible assets

Intangible assets acquired separately from a business are capitalised at cost. Intangible assets acquired as part of an acquisition of a business are capitalised separately from goodwill if the fair value can be measured reliably on initial recognition. Intangibles assets as part of an acquisition are not recognised where they arise from legal or other contractual rights, and where there is no history of exchange transactions. Intangible assets excluding development costs, created within the business are not capitalised and instead expenditure is charged against profit in the year. Developments costs are only capitalised where they meet the strict conditions in Section 18 of FRS 102.

Subsequent to initial recognition, intangible assets are stated at cost less accumulated amortisation and impairments.

Intangible assets are amortised on a straight line basis over their estimate useful lives is included within administration expenses in the profit and loss. The useful economic life is determined to be the life over which economic benefits are utilised. The carrying value of intangible assets are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable. The useful economic lives of intangible assets are as follows:

Development costs 5 years straight line

Patents 10 years straight line

Customer lists 7 years straight line

The company’s policy is to review the remaining economic lives and residual values of intangible assets on an on-going basis and to adjust the amortisation charge to reflect the remaining estimated life where applicable and residual value where indicators of a change are present.

(xxvii) Investment properties

The group owns a number of freehold office buildings that are held to earn long term rental income and for capital appreciation. Investment properties are initially recognised at cost. Investment properties whose fair value can be measured reliably are measured at fair value. Changes in fair value are recognised in the profit and loss account.

For investment properties which cannot be reliably measured without undue cost or effort these are included within property, plant and equipment and depreciated.

(xxviii) Goodwill

Intangible fixed assets comprises purchased goodwill which represents the excess of the fair value of consideration paid for the acquisition of a XXX business, over the fair value of identifiable assets acquired.

Goodwill is reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable.

(xxix) Exceptional items

Exceptional items are those that the Directors’ view are required to be separately disclosed by virtue of their size or incidence to enable a full understanding of the Company’s’ financial performance. The Company believe that this presentation provides a more informative analysis as it highlights one off items. Such items may include significant restructuring costs. The Group has adopted an income statement format that seeks to highlight significant items within the Group results for the year.

OR THE BELOW CAN BE USED

The Group has adopted an income statement format that seeks to highlight significant items within the Group results for the year. Such items may include restructuring, impairment of assets, profit or loss on disposal or termination of operations, litigation settlements, legislative changes and profit or loss on disposal of investments. Judgement is used by the Group in assessing the particular items, which by virtue of their scale and nature, should be disclosed in the income statement and notes as exceptional items.

(xxx) Share based costs

The company participates in a number of equity-settled, share based compensation plans operated by its parent company, XXXXX Limited. The fair value of the employee services received in exchange for the grant of the options or shares is recognised as an expense. The parent undertaking does not immediately recharge the company for these expenses so they are shown as a capital contribution from the parent undertaking within other reserves. Where any subsequent recharge is not, in the opinion of the directors, clearly linked to the share based payment charge, the amount is treated in a manner similar to a management recharge.

The total amount to be expensed over the vesting period is determined by reference to the fair value of the options, shares or Restricted Stock Units (RSU’s) granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options or shares that are expected to vest. At each balance sheet date, the entity revised its estimates of the number of options of shares that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.

Fair value of options is measured using the Black Scholes model.

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Example 10 – Prior Period Error

Example 3: Prior period error

During the 31 December 2015 year end, Company A noticed that the prior year financial statements omitted stock of €100,000 which was material to the financial statements. Stock in the same location was also omitted at year ended 31 December 2013. The inventory in this location at that time was €95,000. Given the materiality, this error requires a prior year adjustment. Assume a corporation tax rate of 10%. The adjustments required to correct this error are:

In the 31 December 2014 accounts to restate the opening balance

Dr inventory €95,000

Cr profit and loss reserves €85,500 (€95,000-€9,500)

Cr current income tax in P&L €9,500 (€95,000*10%)

Being journal to reflect adjustment in respect of prior years including the additional tax payable

Cr cost of sales €5,000

Dr inventory €5,000

Dr current income tax in P&L €500 (€5,000*10%)

Cr corporation tax liability €500

Being journal to reflect interest earned on the bank account during the year and related tax expenses. See below an example of how this should be disclosed so as to meet the disclosure requirements.

	2015	2014 Restated
	€	€
Turnover	1,600,000	1,500,000
Cost of sales	(1,220,000)	(1,100,000)
Operating profit	380,000	400,000
Interest receivable	5,000	5,000
Interest payable	(1,000)	(10,000)
Profit on ordinary activities before taxation	384,000	395,000

Tax on profit on ordinary activities	(38,400)	(39,500)
Profit on ordinary activities after taxation and profit for the financial year	345,600	355,500

Retained earnings brought forward at 1 January 2015 (1 January 2014) as previously reported	414,600		63,600
Prior period adjustment – change in accounting policy	9 XXX		XXX
Prior period adjustment – correction of error	10 90,000		85,500
Retained earnings brought forward at 1 January 2015 (1 January 2014) as restated	11 504,600		504,600
Dividend paid	12 XXX		(XXX)
Retained earnings brought forward at 1 January 2015 (1 January 2014)	13 604,600		504,600
		2015		2015 Restated
Fixed assets		€		€
Tangible assets		190,000		150,000
Current assets
Inventory		400,000		300,000
Cash at bank and in hand		360,000		150,000
		760,000		450,000
Creditors – amounts falling due within one year		(99,700)		(95,300)
Net current assets		660,300		354,700
Total assets less current liabilities		850,300		504,700
Capital and reserves
Called up share capital		100		100
Profit and loss account		850,200		504,600
Shareholders’ funds		850,300		504,700
Prior year adjustment

Prior year adjustment – material error

The prior year adjustment is due to the omission of inventory located in an outside warehouse being excluded from the inventory at 31 December 2014 and 31 December 2013. The value of the inventory at 31 December 2014 was €100,000 and the value of the inventory at 31 December 2013 was €95,000. The financial statements for 2014 has been restated to correct this error.

The prior year adjustment resulted in an increase to the inventory balance at 31 December 2013 and 2014 of €95,000 and €100,000 respectively. This has resulted in the cost of sales for 31 December 2014 year end decreasing by €5,000 and the profit and loss reserves increasing by €85,500 being the net of tax adjustment and the tax charge for 2014 increasing by €500. The effect of the restatement on each financial statement line item affected is shown below.

Analysis of prior year adjustments	2014
	€
Cost of sales for year ended 31 December 2014
Cost of sales as previously stated	1,005,000
Adjustment for inventory previously excluded	(5,000)
Cost of sales as restated	1,100,000

Inventory for year ended 31 December 2014
Inventory at 31 December 2014 as previously stated	200,000
Adjustment for inventory previously excluded	100,000
Inventory as restated	300,000
Income tax expense for year ended 31 December 2014
Income tax expense as previously stated	39,000
Tax effect on adjustment for inventory previously excluded	500
Income tax expense as restated	39,500

Income tax payable
Income tax payable at 31 December 2014 as previously stated	(39,000)
Tax effect on adjustment for inventory previously excluded	(9,500)
Tax effect on adjustment for inventory previously excluded	(500)
Income tax payable as restated	(49,000)

Profit and loss reserves at 31 December 2014
Profit and loss reserves at 31 December 2014 as previously stated	414,600
Adjustment for inventory previously excluded net of tax at 31 December 2013	85,500
Adjustment for movement of inventory previously excluded net of tax in the 31 December 2014 year	4,500
Profit and loss reserves at 31 December 2014 as restated	504,600

Profit and loss reserves at 1 January 2014
Profit and loss reserves at 1 January 2014 as previously stated	63,600
Adjustment for inventory previously excluded net of tax	85,500
Profit and loss reserves at 1 January 2014 as restated	149,100

Profit for the year after taxation for year ended 31 December 2014
Profit after tax for year ended 31 December 2014 as previously stated	351,000
Movement on inventory previously excluded net of tax	4,500
Profit after tax for year ended 31 December 2014 as restated	355,500

Profit for the year after taxation for year ended 31 December 2013
Profit after tax for year ended 31 December 2013 as previously stated	63,600
Inventory previously excluded net of tax	85,500
Profit after tax for year ended 31 December 2013 as restated	149,100

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Example 11 – Extract from the Notes to the Financial Statements – Property, Plant and Equipment Note

Extract from the notes to the financial statements – property, plant and equipment note

Property, plant and equipment

	Freehold Premises	Motor Vehicles	Plant and machinery	Computer Equipment	Total
	€	€	€	€	€
Costs
At beginning of year	207,473	150,038	488,979	144,523	891,013
Additions in year	1,295,000	165,000	91,733	34,704	1,586,437
Revaluation	500,000	–	–	–	500,000
Transfer from investment property	100,000	–	–	–	100,000
Disposals in year	–	(93,359)	–	–	(93,359)
At end of year	1,502,473	221,679	580,712	179,227	2,984,091

Depreciation
At beginning of year	187,723	111,836	270,802	134,767	705,128
Charge for Year	37,543	26,799	29,015	56,642	149,999
Revaluation	(125,000)	–	–	–	(125,000)
On disposals	–	(42,060)	–	–	(42,060)
Impairment	–	–	100,000	–	100,000
At end of year	100,266	96,575	399,817	191,409	788,067
Net book value
At 31 December 2015	1,752,207	125,104	80,895	(12,182)	2,196,024
At 31 December 2014	19,750	38,202	18,177	9,756	85,885

The following assets were held under finance lease:

	2015	2014
	€	€
Net Book Value	66,884	129,389
Depreciation Charge for the Year	29,015	31,317

(a) The land and buildings which are used as part of the company’s core business were revalued by [state name], [state qualification] to an open market value basis reflecting existing use [or state alternate basis if appropriate if this Is higher] on [state date] 20XX. The valuation was carried out in accordance with the SCS Appraisal and Valuation Manual. {If the valuer is an officer or employee of the company or a group company this fact must be stated}. These valuations have been incorporated into the financial statements and the resulting revaluation adjustments have been taken to the revaluation reserve. The revaluations during the year ended 30th June 2015 resulted in a revaluation surplus of 375,000.

(b) The historical cost of the freehold premises is as follows:

At 31 December 2015 20,020

At 31 December 2014 24,165

(c) As a result of falling profits and in accordance with Section 27 of FRS 102, the carrying values of the plant and machinery assets in the widget segment have been compared to their recoverable amounts. As a result of this exercise an impairment charge of €100,000 was recognised in the financial statements. The value in use has been derived from the future cash flow projections using a pre-tax discount rate of X%. Cash flows have been projected over the next five years based on management’s business plan, and thereafter a steady growth rate of 1% has been applied which is consistent with the company’s growth rate over the past number of years.

(d) The freehold property has been pledged as security on loans taken out by the company.

(e) The company capitalised €XXX (2014: €XXXX) in borrowing costs during the year. The capitalisation rate used was X% (2014: X%)

Extract from the notes to the financial statements – property, plant and equipment note

Property, plant and equipment

	Freehold Premises	Motor Vehicles	Plant and machinery	Computer Equipment	Total
	€	€	€	€	€
Costs
At beginning of year	207,473	150,038	488,979	144,523	891,013
Additions in year	1,295,000	165,000	91,733	34,704	1,586,437
Revaluation	500,000	–	–	–	500,000
Transfer from investment property	100,000	–	–	–	100,000
Disposals in year	–	(93,359)	–	–	(93,359)
At end of year	1,502,473	221,679	580,712	179,227	2,984,091

Depreciation
At beginning of year	187,723	111,836	270,802	134,767	705,128
Charge for Year	37,543	26,799	29,015	56,642	149,999
Revaluation	(125,000)	–	–	–	(125,000)
On disposals	–	(42,060)	–	–	(42,060)
Impairment	–	–	100,000	–	100,000
At end of year	100,266	96,575	399,817	191,409	788,067
Net book value
At 31 December 2015	1,752,207	125,104	80,895	(12,182)	2,196,024
At 31 December 2014	19,750	38,202	18,177	9,756	85,885

The following assets were held under finance lease:

	2015	2014
	€	€
Net Book Value	66,884	129,389
Depreciation Charge for the Year	29,015	31,317

(b) The historical cost of the freehold premises is as follows:

At 31 December 2015 20,020

At 31 December 2014 24,165

(d) The freehold property has been pledged as security on loans taken out by the company.

(e) The company capitalised €XXX (2014: €XXXX) in borrowing costs during the year. The capitalisation rate used was X% (2014: X%).

Extract from notes to the financial statements (assuming revaluation upwards of €375,000 and there was an active market available to value the asset) Intangible assets

The patents have been pledged as security on loans taken out by the company. There were no capital commitments at the year end. The customer lists are valued based on market value at 31 December 2015 as determined from an active market in which they are traded. The remaining useful life on the customer lists is 3 years The historical cost of the customer list is as follows:

At 31 December 2015 20,020

At 31 December 2014 24,165

As a result of falling profits and in accordance with Section 27 of FRS 102, the carrying values of the patent assets have been compared to their recoverable amounts. As a result of this exercise an impairment charge of €100,000 was recognised in the financial statements. The value in use has been derived from the future cash flow projections using a pre-tax discount rate of X%. Cash flows have been projected over the next five years based on management’s business plan, and thereafter a steady growth rate of 1% has been applied which is consistent with the company’s growth rate over the past number of years. Extract from the notes to the financial statements – note where a joint venture, subsidiary or associate is fair valued through OCI and the others are stated at cost

Financial assets	Subsidiary Undertakings	Joint Venture and associates	Other investments	Total
	€	€	€	€
Cost
At 1 January 2015, 1 January 2014 & 1 January 2013	XXX	XXX	XXX	XXX
Additions	XXX	XXX	XXX	XXX
Fair value adjustments	XXX	–	XXX
Disposals	–	(XXX)	–	(XXX)
At 31 December 2015	XXX	XXX	XXX	XXX
Amounts provided:
At 1 January 2015, 1 January 2014 & 1 January 2013	XXX	–	XXX	XXX
Additional provision	XXX	–	–	XX
At 31 December 2015	XXX	XXX	XXX	XXX
Carrying amount
At 31 December 2015	XXXX	XXXX	XXXX	XXXX
At 31 December 2014	XXXX	XXXX	XXXX	XXXX

a) Investment in Subsidiary undertakings are stated at cost less impairment. Other investments are held at cost less impairment. Investments in joint ventures are measured at fair value based on valuation models which make the most of external market data such that the fair value represents the estimated value that could be obtained in an arm’s length transaction under normal business conditions. The discounted cash flows use a discount rate of 10%. The valuation used a multiple of earnings which is consistent with industry norms.

	Customer lists	Development expenditure	Patents	Goodwill	Total
	€	€	€	€	€
Costs
At beginning of year	207,473	150,038	488,979	144,523	891,013
Additions in year	1,295,000	165,000	91,733	34,704	1,586,437
Revaluation	500,000	–	–	–	500,000
Acquisition of subsidiary undertaking	–	–	–	100,000	100,000
Disposals in year	–	(93,359)	–	–	(93,359)
At end of year	1,402,473	221,679	580,712	279,227	2,984,091
Depreciation
At beginning of year	187,723	111,836	270,802	134,767	705,128
Charge for Year	37,543	26,799	29,015	56,642	149,999
Revaluation	(125,000)	–	–	–	(125,000)
On disposals	–	(42,060)	–	–	(42,060)
Impairment	–	–	100,000	–	100,000
At end of year	100,266	96,575	399,817	191,409	788,067
Net book value
At 31 December 2015	1,652,207	125,104	80,895	87,818	2,196,024
At 31 December 2014	19,750	38,202	18,177	9,756	85,885

19 Reserves		Revaluation reserve
		€
At 1 January 2015		XXXX
Revaluation of property, plant and equipment net of deferred tax of X%		XXXX
Revaluation of subsidiaries, associates etc net of deferred tax of X%		XXXX
Revaluation of intangibles net of deferred tax of X%		XXXX
At 31 December 2015	XXXX

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Example 12 – Impairment of Assets

Extract from the notes to the financial statements Operating profit Operating profit is stated after charging/(crediting):

	2015	2014
	€	€
Impairment of goodwill (included within administrative expenses)	–	–
Impairment of property, plant and equipment (included within administrative expenses)	–	–
Impairment of investment in subsidiary/associate/joint venture	–	–
Reversal of impairment of property, plant and equipment (included within administrative expenses) (See note 1)	–	–
Reversal of impairment of goodwill/intangibles (included within administrative expenses)	–	–
Reversal of impairment of inventory (included within cost of sales)	–	–
Impairment of inventory (included within cost of sales)	–	–

Note 1: The directors have reviewed the carrying value of tangible fixed assets, net of associated deferred grants, at the year end in accordance with Section 27 “Impairment of Assets”. As a result of this exercise performed, a reversal of a previous impairment loss of €8,000 (2014: €Nil) has been credited to the profit and loss account for the year. The reversal of the impairment of €8,000 represents a reversal of an impairment of tangible fixed assets net of a release of related deferred grants of €500. The reversal of the impairment loss previously recognised has been allocated to fixed assets categories on a pro-rata basis relative to their post-impairment carrying values at the date of the reversal. The amount of impairment reversed was limited to the amount the fixed assets would have been carried at if no impairment had previously been booked.

The company’s activities were considered, due to their nature, to form one income-generating unit for the purposes of the impairment review. A pre-tax discount rate of 6%, representing the estimated market rate of return on an investment with equal risk, was applied to the expected future cash flows in the value in use calculation. Value in use was considered to exceed estimated net realisable value. Cash flows have been projected over five years based on management forecasts and budgets. After that a steady growth rate of 1% has been assumed. The reversal of the impairment arose due to the fact that the market in which the company operates has significantly improved and the previous estimates included in the initial impairment review were too pessimistic.

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Example 13 – Investment Properties

Extract from the notes to the financial statements – note on investment property

During the year the company completed the construction of a number of units which are now rented to third parties. As a result these units were transferred at cost from work in progress to investment properties.
The land and buildings of the company were valued by [state name], [state qualification] to open market value reflecting existing use [or state alternate basis if appropriate] on [state date] 20XX. The valuation was carried out in accordance with the SCS Appraisal and Valuation Manual. {If the valuer is an officer or employee of the company or a group company this fact must be stated}. The critical assumptions made relating to the valuations are set out below:

OR WHERE APPLICABLE WHERE NO VALUATION WAS COMPLETED AT THE YEAR END

The land and buildings of the company were valued by [state name], [state qualification] to fair value reflecting existing use [or state alternate basis if appropriate] on [state date] 20XX. The valuation was carried out in accordance with the SCS Appraisal and Valuation Manual. {If the valuer is an officer or employee of the company or a group company this fact must be stated}. An updated valuation was not performed by the company as the directors believe the valuation performed in XXX is not materially different from the carrying valye at 31 December 2015.

iii) At 31 December 2015, the company could no longer reliably estimate the fair value of the investment property held at XXX due to market conditions in that location. As a result, in accordance with Section 16 of FRS 102, the property has been transferred from investment property and reclassified to property, plant and equipment at the carrying amount of €50,000 and is depreciated from that date.

At 31 December 2015, the company could no longer estimate the fair value of the investment property without undue cost and effort, therefore, the property has been transferred from investment property and reclassified to property, plant and equipment at the carrying amount of €50,000 and is depreciated from that date.

iv) At 31 December 2015, a property which met the definition of investment property but which could not be classified as investment property due the inability to reliably measure its fair value due to market conditions can now be reliably measured. As a result, in accordance with Section 16 of FRS 102, the property has been transferred from property, plant and equipment and reclassified to investment property at its fair value at that date with the uplift recognised in the profit and loss.

At 31 December 2015, a property which met the definition of investment property but which could not be classified as investment property due the inability to reliably measure its fair value without undue cost or effort can now be reliably measured. As a result, in accordance with Section 16 of FRS 102, the property has been transferred from property, plant and equipment and reclassified to investment property at its fair value at that date with the uplift recognised in the profit and loss.

v) All investment property has been pledged as security on loans taken out by the company

vi) The historical cost of the investment properties is as follows:

At 31 December 2015 600,000

At 31 December 2014 800,000

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Example 14 – Joint Venture, Subsidiary or Associate is Far Value through the Profit and Loss

Extract from the notes to the financial statements – note where a joint venture, subsidiary or associate is fair valued through the profit and loss

Financial assets	Subsidiary Undertakings	Joint Venture and associates	Other investments	Total
	€	€	€	€
Cost
At 1 January 2015, 1 January 2014 & 1 January 2013	XXX	XXX	XXX	XXX
Additions	XXX	XXX	XXX	XXX
Fair value adjustments	XXX	–	XXX
Disposals	–	(XXX)	–	(XXX)
At 31 December 2015	XXX	XXX	XXX	XXX

Amounts provided:
At 1 January 2015, 1 January 2014 & 1 January 2013	XXX	–	XXX	XXX
Additional provision	XXX	–	–	XX
At 31 December 2015	XXX	XXX	XXX	XXX

Carrying amount
At 31 December 2015	XXXX	XXXX	XXXX	XXXX

At 31 December 2014	XXXX	XXXX	XXXX	XXXX

(a) Investment in Subsidiary undertakings are stated at cost less impairment. Other investments are held at cost less impairment.

Investments in joint ventures are measured at fair value based on valuation models which make the most of external market data such that the fair value represents the estimated value that could be obtained in an arm’s length transaction under normal business conditions. The discounted cash flows use a discount rate of 10%. The valuation used a multiple of earnings which is consistent with industry norms.

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Example 15 – Finanical Statements – Financial Instruments are not Disclosures

Extract of notes to the financial statements – Financial instruments note disclosures

	2015	2014
Financial assets at fair value through profit or loss
Listed investments	2000	3000

Financial assets which are equity instruments carried at amortised cost	2000	3000

Financial assets that are equity instruments measured at cost less impairment

Financial liabilities at fair value through profit and loss
Derivative financial instruments – Forward foreign contracts (see note 1)	3000	2000

Note 1: The company takes out foreign currency contracts to hedge against the risk of foreign exchange movements. At 31 December 2015, the company had forward contracts to purchase GBP£100,000 at a rate of €1=.80p. These contracts expire within 6 months of the year end. The fair value of these instruments at 31 December 2015 was €10,000 (2014: €2,000). This has been recognised in the profit and loss.
The forward contracts are measured at fair value by utilising observable market date, more specifically quoted prices. OR WHERE HEDGING IS APPLIED Derivatives – forward foreign exchange contracts Forward foreign exchange contracts are marked to market using quoted forward exchange rates at the reporting date. The absolute principal amount of the outstanding forward foreign exchange contracts at 31 December 2015 was €XXXX (2014: €XXXXXXX). The hedged highly probable forecast transactions denominated in foreign currency are expected to occur at various dates during the next 12 months. Gains and losses recognised in the hedging reserve in equity (note XX) on forward foreign exchange contracts as of 31 December 2015 are recognised in the profit and loss in the period or periods during which the hedged transaction affects the income statement. This is generally within 12 months of the end of the reporting period. Derivatives – Interest Rate Swaps The fair value of interest rate swaps is calculated as the present value of the expected future cash flows based on observable yield curves. The notional principal amounts of the outstanding interest rate swap contracts at 31 December 2015 were €xxxxx (2014: €xxxxxx). At 31 December 2015, the average fixed interest rate on the swap portfolio was X% (2014: X%). The main floating rates are EURIBOR and LIBOR. Gains and losses recognised in the hedging reserve in equity (note XX) on interest rate swap contracts as of December 2015 will be continually released to the income statement within finance cost until the maturity of the relevant interest rate swap. Note 2: At the year end the fair value of certain equity investments could not be determined. As a result the carrying value prior to this date has now been deemed to be the cost of the investments.

Extract of notes to the financial statements Included within interest income and similar income is as follows:

Note: Interest receivable and similar income	2015	2014
Movement on fair value of listed investments	XXX	XXX
Gain on derivative financial instruments	2,000	2,000
	12000	4000

Included within interest expense and similar charges is as follows:

Note: Interest payable and similar charges

Movement on fair value of listed investments

Loss on derivative financial instruments

Extract from operating profit note OPERATING PROFIT Operating profit is stated after charging:

Depreciation

Directors’ remuneration:

(Gain)/loss on fair value of investment properties (see note X)

Extract from other comprehensive income showing activity on cash flow hedges Consolidated Statement of Comprehensive Income

Profit for the financial year	1,000,000	500,000
Exchange differences on retranslation of foreign operations	XXX	XXX
Cash flow hedges
– effective portion of changes in fair value to cash flow hedges	9 XXX	XXX
– fair value of cash flow hedges transferred to income statement	10 XXX	XXX
Actuarial loss in respect of the defined pension scheme	11 (XXX)	(XXX)
Gain/(loss) on revaluation of intangible assets	12 XXX	(XXX)
Gain/(loss) on revaluation of property, plant and equipment	13 XXX	(XXX)
Gain/(loss) on revaluation of subsidiaries, associates, etc.	14 XXX	(XXX)
Deferred tax on components of other comprehensive income	15 XXX	XXX
Total other comprehensive income for the year net of tax	200,000	(100,000)
Total comprehensive income for the year	1,200,000	400,000

Reserve in line with Section 12 disclosure requirements

	Reserve
	€
Balance at 1 January 2014	1,000

Effective portion of changes in fair value to cash flow hedges
fair value of cash flow hedges transferred to income statement
Balance at 31 December 2014	1,000

Balance at 1 January 2015	1,000
Transfer
Effective portion of changes in fair value to cash flow hedges
fair value of cash flow hedges transferred to income statement
Balance at 31 December 2015	16,000

Cash flow hedge reserve The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments related to hedged transactions that have not yet occurred since XXXXX.

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Example 16 Extract from contingencies note

Contingencies A legal action is pending against the company for alleged unfair dismissal. The directors under advisement from their legal team expect that the claim will be successfully defended. Should the company be unsuccessful in the action the maximum estimated settlement is not expected to exceed €10,000. It is not practicable as yet to state the timing of the any possible payment.

A legal case has been taken against the company, the outcome of which is uncertain. There is a contingent liability in the range of €0 to €400,000 in respect of this case. It is not practicable as yet to state the timing of the any possible payment.

A customer has commenced a legal action against the company for defective workmanship. The directors under advisement by their legal team believe that it is possible but not probable the action will succeed and therefore no provision has been made in these financial statements. Should the action succeed the estimated liability would be €100,000.

There is a potential contingent asset/liability in the future in relation to profit commission agreements entered into with various product producers. However in the opinion of the directors it is not practicable to provide an estimate of the financial effect of this contingent asset/liability as it is based on future loss ratios in relation to unsettled claims.

It is not anticipated that any material liabilities will arise from the contingent liabilities other than those provided for.

Off-balance sheet arrangements

The company entered into a guarantee with XYZ Bank on behalf of another group company to guarantee the loans in order to allow the subsidiary to expand its operations.

Extract from commitments note

At 31 December 2015, the company had the following annual commitments under non-cancellable operating leases that expire as follows:

	2015	2014
	€	€
Within one year	145,000	145,000
Within two to five years	100,000	100,000
Greater than five years	–	–

The company had the following financial commitments at 31 December 201X

Capital commitments for Plant and Machinery €XXX (2014:XXX).
Contractual commitments in respect of supply contracts €XXX (2014: XXX).
The company has finance lease commitments for plant and machinery as disclosed in notes XX of the financial statements.

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Example 17 – Income Statement

See below an example of the types of disclosures required where the items is deemed so material that it should be shown on the face of the profit and loss.

Profit and Loss Account
For the Year Ended 31 December 2015
	Notes	2015	2014
		€	€
Turnover	1	XXXXX	XXXXX
Cost of sales		(XXXX)	(XXXX)
Gross profit		XXXX	XXXX

Selling and distribution costs		(XXX)	(XXX)
Administrative expenses		(XXX)	(XXX)
Other operating income		XXX	XXX

Operating profit	3	900,000	XXX

Operating profit before exceptional item		1,200,000	XXX
Impairment of tangible fixed assets		150,000	XXX
Restructuring provision		150,000	XXX
Operating profit		900,000	XXX


Income from shares in group undertakings	4	XXX	XXX
Income from shares in other financial assets	4	XXX	XXX
Income from shares in participating interests	5	XXX	XXX

Profit on ordinary activities before interest and taxation		XXXX	XXXX

Interest receivable and similar income	6	XXX	XXX

Interest payable and similar income	7	(XXX)	(XXX)

Profit on ordinary activities before taxation		XXXX	XXXX

Tax on profit on ordinary activities	8	(XXX)	(XXX)

Profit on ordinary activities after taxation		1,000,000	500,000

Extract from notes to the financial statements Exceptional item – impairment charge

	2015	2014
	€	€
Restructuring costs (see (i) below)	8,000	–
Impairment of tangible fixed assets	8,000	–
Amortisation of deferred grants arising on impairment of related assets	(500)	–
	7,500	–

(i) During the year the company announced a formal plan to restructure the operations and as a result announced a plan to let employees go. This amount represents the expected cost of redundancy as a result of this decision.

(ii) The directors have reviewed the carrying value of tangible fixed assets, net of associated deferred grants, at the year end in accordance with Section 27 “Impairment of Assets”. As a result, a net impairment loss of €8,000 (2014: €Nil) has been charged to the profit and loss account for the year. The impairment of €8,000 represents an impairment of tangible fixed assets net of a release of related deferred grants of €500. The impairment losses have been allocated to fixed assets categories on a pro-rata basis relative to their pre-impairment carrying values. The impairment loss arose as a result of the material change in the market in which the company operates. Deferred tax has been recognised as a result of this adjustment.

NOTE: where exceptional item not shown on the face of the profit and loss

Exceptional item	2015	2014
	€	€
Administrative expenses in the profit and loss account includes the following exceptional charges:
Provision against investment in subsidiary/joint venture/associate	XX	XX
	XX	XX

Exceptional item The exceptional item arose as a result of a settlement reached in respect of litigation initiated against the company upon termination of a licence agreement prior to the year end. This amount which includes provision for all legal and other costs relating to the matter which will be borne by the company is also included within accruals and other liabilities in note XX of the financial statements.

3 Exceptional items	2015	2014
	€	€
(i) Movement in provision for operating costs to date of closure	XX	XXX
(ii) Gain on settlement of pension scheme (see (a) below)	XX	(XXX)
Total	XXX	XXX

(a) Following the closure of the company, the defined benefit pension scheme was wound up with effect from 31 December XXX. On wind-up, the pension scheme had sufficient assets to meet the liabilities of the scheme. The gain arose on closure of the scheme.

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Example 18 – Related Part Note

Extract from the notes to the financial statements – Related party note Related party transactions

	Sales to related party €	Purchases from related party €	Amounts owed from related party €	Amounts owed to related party €

Entities with significant influence over the Company
2015	–	–	–	–
2014	–	–	–	–
Entities over which the company has control, joint control or significant influence
2015	–	–	–	–
2014	–	–	–	–
Entities providing key management personnel services
2015	–	–	–	–
2014	–	–	–	–

Terms and conditions of transactions with related parties Sales and purchases between related parties are made at normal market terms. Outstanding balances with entities are unsecured, interest free and cash settlement is expected within 30 days of invoice. A provision for bad debt has been created at the year end for €10,000 (2014: €nil) against an amount due from an associate company.

Director loan’s Included within other debtors/creditors, the below balances owed by/to directors is included:

Directors’ Loans	Directors A	Director B

Opening Balance	4,332	100,000
Repayments to directors	9,301	–
Advances from directors	1,000	–
Closing balance	12,633	100,000

The interest rate applied to this loan was 5% per annum on a compound interest basis and is repayable on demand.

The maximum amount outstanding to directors during the year was €xx,xxx. There were no amounts written off or waived during the year (2014: €nil).

Other related party transactions

AN Other, the director of the company, holds an interest in patents which are licensed to the company for the manufacture of certain machines. During the period, patent royalties of €XXXX (2014: €XXXX) were charged to the company in respect of the use of these patents. At 31 December 2015 an amount of €XXXX was due from the directors (2014: €XXXX amount due to the directors).

During the year the company was charged €XXX (2014: €XXX) by AN Other Limited for rental of the premises where the company operates. An amount of €XXX (2014: €XXX) was owed to AN Other Limited at the year end. AN Other Limited is related by virtue of common directors.

During the year the company paid expenses in the amount of €XXXX (2014: €XXXX) on behalf of an associate, Associate Limited. An amount of €XXXX (2014: €XXXX) remained outstanding from this company at the year end. A provision of €XXXXX (2014: €XXX) was provided against this balance at the 31 December 2015. Associate is related by virtue of common directors.

Guarantees The company has not provided or benefited from any guarantees for any related party receivables or payables. [/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Main Body Text 19″ background_layout=”light” text_orientation=”justified” text_font_size=”14″ use_border_color=”off” border_color=”#ffffff” border_style=”solid”]

Example 19 General information

General Information

The company is a limited liability company limited by shares (change if limited by guarantee) please state) incorporated and domiciled in Ireland. The company is tax resident in Ireland.

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Example 20 – Statement of Compliance with FRS 102

Example 4 statement of compliance with FRS 102

‘This is the first set of financial statements prepared by XXXXX Limited in accordance with accounting standards issued by the Financial Reporting Council, including the FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”). The company transitioned from previously extant Irish and UK GAAP to FRS 102 as at 1 January 2014. An explanation of how transition to FRS 102 has affected the reported financial position and financial performance is given in note 2. The FRC issued amendments to FRS 102 called ‘Amendments to FRS 102-Small entities and other minor adjustments’ which can be applied for accounting periods beginning on or after 1 January 2016 with early adoption permitted. The company has adopted these amendments in these financial statements on the basis that it meets the conditions for a small company.

NOTE: Going concern assumption to be included in the basis of preparation paragraph in the accounting policy notes

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Example 21 – Dividend Declared – Paid Disclosure

Example 5: Dividend declared/paid disclosure

Statement of Comprehensive Income
For the year ended 31 December 2015
	Notes	2015	2014 Restated
		€	€
Turnover	1	XXXXX	XXXXX
Cost of sales		(XXXX)	(XXXX)

Gross profit		XXXX	XXXX
Selling and distribution costs		(XXX)	(XXX)
Administrative expenses		(XXX)	(XXX)
Other operating income		XXX	XXX
Operating profit	3	XXX	XXX
Income from shares in group undertakings		XXX	XXX
Income from shares in other financial assets		XXX	XXX
Income from shares in participating interests		XXX	XXX

Profit on ordinary activities before interest and taxation		XXXX	XXXX
Interest receivable and similar income		XXX	XXX
Interest payable and similar income		(XXX)	(XXX)
Profit on ordinary activities before taxation		XXXX	XXXX
Tax on profit on ordinary activities		(XXX)	(XXX)
Profit on ordinary activities after taxation and profit for the financial year		100,000	355,500

Retained earnings brought forward at 1 January 2015 (1 January 2014) as previously reported	414,600	63,600
Prior period adjustment – change in accounting policy	9 XXX	XXX
Prior period adjustment – correction of error	10 90,000	85,500
Retained earnings brought forward at 1 January 2015 (1 January 2014) as restated	11 504,600	504,600
Dividend paid	12 XXX	(XXX)
Retained earnings brought forward at 1 January 2015 (1 January 2014)	604,600	504,600

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