[et_pb_section admin_label=”Header – All Pages” global_module=”1221″ transparent_background=”off” background_color=”#1e73be” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” padding_mobile=”off” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off” gutter_width=”3″ custom_padding=”||0px|”][et_pb_row global_parent=”1221″ admin_label=”row”][et_pb_column type=”4_4″][et_pb_post_title global_parent=”1221″ admin_label=”Post Title” title=”on” meta=”off” author=”on” date=”on” categories=”on” comments=”on” featured_image=”off” featured_placement=”below” parallax_effect=”on” parallax_method=”on” text_orientation=”left” text_color=”light” text_background=”off” text_bg_color=”rgba(255,255,255,0.9)” module_bg_color=”rgba(255,255,255,0)” title_all_caps=”off” use_border_color=”off” border_color=”#ffffff” border_style=”solid” title_font=”|on|||” title_font_size=”35″ custom_padding=”10px|||”] [/et_pb_post_title][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section admin_label=”Section” global_module=”1228″ fullwidth=”off” specialty=”off” transparent_background=”off” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” custom_padding=”0px||0px|” padding_mobile=”on” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off” gutter_width=”3″][et_pb_row global_parent=”1228″ admin_label=”Row” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” use_custom_gutter=”off” gutter_width=”3″ custom_padding=”0px||0px|” padding_mobile=”off” allow_player_pause=”off” parallax=”off” parallax_method=”off” make_equal=”off” parallax_1=”off” parallax_method_1=”off” column_padding_mobile=”on”][et_pb_column type=”4_4″][et_pb_text global_parent=”1228″ admin_label=”Text” background_layout=”light” text_orientation=”left” text_font_size=”14″ use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section admin_label=”Section” fullwidth=”off” specialty=”off”][et_pb_row admin_label=”Row”][et_pb_column type=”1_2″][et_pb_text admin_label=”Text” background_layout=”light” text_orientation=”center” text_font_size=”14″ use_border_color=”off” border_color=”#ffffff” border_style=”solid”] [button link=”http://www.frs102.com/members/premium-toolkit/” type=”big” color=”red”] Return to Main Index[/button] [/et_pb_text][/et_pb_column][et_pb_column type=”1_2″][et_pb_text admin_label=”Text” background_layout=”light” text_orientation=”center” text_font_size=”14″ use_border_color=”off” border_color=”#ffffff” border_style=”solid”] [button link=”https://uk.frs102.com/members/premium-toolkit/section-5/” type=”big” color=”red”] Return to Section 5 Home[/button] [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section admin_label=”Section” fullwidth=”off” specialty=”off” transparent_background=”off” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” padding_mobile=”off” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off” gutter_width=”3″][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_text admin_label=”Main Body Text” background_layout=”light” text_orientation=”justified” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]Principal transition adjustments
1) Definition of discontinued operations
Under FRS 102 in order for an operation/business to be disclosed as discontinued, the operation/business must have been disposed of (in relation to a sale) or have been closed (in relation to a termination) by the balance sheet date. FRS 102 also allow a subsidiary which was acquired exclusively with a view to resale to be shown as a discontinued operation.
This differs under old GAAP whereby an operation/business could be classified as discontinued if the sale or termination was completed within three months of the balance sheet date. Subsidiaries which were acquired exclusively with a view to resale were not included in the definition of discontinued operations.
2) Layout of the profit and loss
Old GAAP differs in some respects to old GAAP as it provides entities with a choice to show a singular or two statement approach. The STRGL under old GAAP is now referred to as Statement of Other Comprehensive Income. Entities on adoption will need to ensure the financial statements are in line with FRS 102 requirements on transition.
3) Exceptional items
Under old GAAP, FRS 3 was very specific as to what could be included as an exceptional item on the face of the profit and loss. It also required the below exceptional items to be disclosed after operating profit:
- Profit and losses on sale or termination of an operation
- Cost of a fundamental reorganisation or restructuring that have a material effect on the nature and focus of the company’s operations.
- Profit and losses on disposal of fixed assets.
Under FRS 102 material items which are exceptional in nature need to be separately disclosed, however where the exceptional item is in relation to operating activities and operating profit is shown on the face of the profit and loss account, the exceptional cost must be included within the functional expense above the operating profit line. However the exceptional item can be highlighted on the face of the profit and loss in a box presentation showing the operating profit before exceptional costs and after exceptional costs.
Therefore if an exceptional item was included on the face of the profit and loss account below the operating profit line in the comparative year of the first set of FRS 102 financial statements, the layout of the exceptional item may change by moving the exceptional item above the operating profit line into its expense by function and then including a box presentation to highlight the exceptional item. It may also be possible to identify more exceptional items on the face of the profit and loss under FRS 102. See example of the box presentation below:
|
Profit and Loss Account |
|
|
|
|
For the Year Ended 31 December 2015 |
|
|
|
|
|
Notes |
2015 |
2014 |
|
|
|
CU |
CU |
|
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 before interest and taxation |
|
XXXX |
XXXX |
|
Interest receivable and similar income |
6 |
XXX |
XXX |
|
Interest payable and similar income |
7 |
(XXX) |
(XXX) |
|
Profit before taxation |
|
XXXX |
XXXX |
|
Tax on profit on ordinary activities |
8 |
(XXX) |
(XXX) |
|
Profit for the financial year |
|
1,000,000 |
500,000 |
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