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[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section bb_built=”1″ 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″ custom_padding_tablet=”0px||0px|” custom_padding_last_edited=”on|desktop” prev_background_color=”#ffffff” next_background_color=”#000000″][et_pb_row][et_pb_column type=”4_4″][et_pb_toggle admin_label=”Index” _builder_version=”3.0.106″ title=”Index” open=”off”]Contents
6.2 Small Companies Exemption.
6.2.1 Extract from FRS102: Section 6.1A..
6.3 Statement of changes in equity.
6.3.1 Extract from FRS102: Section 6.2-6.3A.
6.3.2.1.1 Specific items to be included in the Statement of changes in Equity.
6.3.2.1.2 Where to show the breakdown of the movement of other comprehensive income.
6.3.2.1.3 The requirements to provide a description of each equity reserve and where to include it.
6.3.2.1.4 The get out of from presenting a statement of changes in Equity.
6.3.2.1.5 Practical illustration of the requirements for a statement of changes in Equity.
6.3.2.1.5.1 Consolidated Statement of Changes in Equity.
6.3.2.1.5.1.1 Description of reserves in equity and the reason for movement.
6.3.2.1.5.2 Individual entity Statement of Changes in Equity.
6.3.2.1.5.2.1 Description of reserves in equity and the reason for movements.
6.4 Statement of income and retained earnings.
6.4.1 Extract from FRS102: Section 6.4-6.5.
6.4.2.1 Statement of Income and retained earnings defined.
6.4.2.2 When can the statement of income and retained earnings be adopted.
6.4.2.3 Illustrations practically of the Statement of income and retained earnings.
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6.3.1 Extract from FRS102: Section 6.2-6.3A
Purpose
6.2 The statement of changes in equity presents an entity’s profit or loss for a reporting period, other comprehensive income for the period, the effects of changes in accounting policies and corrections of material errors recognised in the period, and the amounts of investments by, and dividends and other distributions to, equity investors during the period.
Information to be presented in the statement of changes in equity
6.3 An entity shall present a statement of changes in equity showing in the statement:
(a) total comprehensive income for the period, showing separately the total amounts attributable to owners of the parent and to non-controlling interests;
(b) for each component of equity, the effects of retrospective application or retrospective restatement recognised in accordance with Section 10 Accounting Policies, Estimates and Errors; and
(c) for each component of equity, a reconciliation between the carrying amount at the beginning and the end of the period, separately disclosing changes resulting from:
(i) profit or loss;
(ii) other comprehensive income; and
(iii) the amounts of investments by, and dividends and other distributions to, owners, showing separately issues of shares, purchase of own share transactions, dividends and other distributions to owners, and changes in ownership interests in subsidiaries that do not result in a loss of control.
Information to be presented in the statement of changes in equity or in the notes
6.3A For each component of equity, an entity shall present, either in the statement of changes in equity or in the notes, an analysis of other comprehensive income by item (see paragraph 6.3(c)(ii)).
6.3.2 OmniPro comment
6.3.2.1 Analysis
6.3.2.1.1 Specific items to be included in the Statement of changes in Equity
Section 6.2 and 6.3 of FRS102 requires a Statement of Changes in equity and as per the aforementioned, the following are required to be disclosed in same (split between non -controlling and parent entity for consolidated financial statement):
-the profit for the year
-the other comprehensive income
-distributions of owners/shareholders
-purchase of own shares
-transfers between various sources of equity
-changes in ownership interest in subsidiaries that does not result in loss of control (for consolidated financial statements only) See section 19 and 22 of FRS102
-impact of prior period adjustments
-Capital Contributions
6.3.2.1.2 Where to show the breakdown of the movement of other comprehensive income
Section 6.3 of FRS102 requires the make-up of the other comprehensive income to be shown either in the notes to the financial statements or in the statement of changes in equity (usually covered off in other comprehensive income in the statement of comprehensive income).
6.3.2.1.3 The requirements to provide a description of each equity reserve and where to include it
Section 4.12 of FRS102 requires a description of each reserve in equity
This can be shown in the notes or on the face of the statement of changes in equity
6.3.2.1.4 The get out of from presenting a statement of changes in Equity
Section 6.5 of FRS102 makes it clear that a statement of changes in equity is not required and instead a statement of income and retained earnings can be presented on the face of the profit and loss if the conditions stated at 6.4.2 are met.
6.3.2.1.5 Practical illustration of the requirements for a statement of changes in Equity
See illustration of the guidance in Section 6.2 to 6.3A of FRS102 below:
6.3.2.1.5.1 Consolidated Statement of Changes in Equity
Example 1: Consolidated Statement of Change in Equity
6.3.2.1.5.1.1 Description of reserves in equity and the reason for movement.
The below could be included in the notes to the financial statements
i) Revaluation reserve
The revaluation reserve arises as a result of the company’s policy of revaluing property, plant and equipment on a regular basis. During the year the depreciation net of the release of deferred tax on the uplift on the valuation was transferred from profit and loss reserves to the revaluation reserve. On inception of the revaluation reserve the reserve was recorded net of deferred tax.
ii) Cash flow hedge reserve
The cash flow hedge reserve is used to record transactions arising from the company’s cash flow hedging arrangements. These are expected to crystallise within the next 12 months as detailed in note X.
iii) Non-distributable reserve
This reserve arose on transition to FRS 102, where the entity applied the exemption in Section 35 of FRS 102 to deem a previous revaluation on property as deemed cost. The amount included in the reserve is net of deferred tax at the rate the asset is expected to be realised. During the year the depreciation net of the release of deferred tax on the uplift on the valuation was transferred from profit and loss reserves to the non-distributable reserve. On inception of the revaluation reserve the reserve was recorded net of deferred tax.
iv) Capital redemption reserve
The capital redemption reserve reflects the nominal value of shares bought back by the company. There was no activity on this reserve in the current year
v) Share premium
The share premium reflects the premium received on shares issued by the company. The increase arises due to the allotment of 10,000 shares above par during the year as detailed in note X.
vi) Capital development fund
The capital development fund is operated to accumulate funds to meet the cost of further development expenditure. It is envisaged that if the fund is not used for development, either ordinary shares will be issued in respect of amounts collected by the fund, or that contributions received will be refunded to the members. The issue of shares, refund of monies, or utilisation of the reserve for development purposes is at the discretion of the XXXXXX. No amount was allocated to the reserve during the year.
vii) Non-controlling interest
The non-controlling interest reserve reflects the proportion of the net assets owned by non-wholly owned subsidiaries. The movement in the year reflects the proportion of profits and other comprehensive income allocated to the non-controlling party.
Or
During the year the group acquired the remaining x% of XYZ Limited for XXX. As a result, the non-controlling interest was derecognised, and the balance was posted to profit and loss reserves in line with Section 22 of FRS 102.
viii) Other reserves
Other reserves relate to costs incurred on the issue of share-based payments to employees which was required to be accounted for in equity under Section 26 of FRS 102.
6.3.2.1.5.2 Individual entity Statement of Changes in Equity
The below example illustrates the requirements for a non-group company
Example 2: Statement of Change in Equity – Non-Group Company
6.3.2.1.5.2.1 Description of reserves in equity and the reason for movements.
The below could be included in the notes to the financial statements
i) Revaluation reserve
The revaluation reserve arises as a result of the company’s policy of revaluing property, plant and equipment on a regular basis. During the year the depreciation net of the release of deferred tax on the uplift on the valuation was transferred from profit and loss reserves to the revaluation reserve. On inception of the revaluation reserve the reserve was recorded net of deferred tax.
ii) Cash flow hedge reserve
The cash flow hedge reserve is used to record transactions arising from the company’s cash flow hedging arrangements. There are expected to crystallise within the next 12 months as detailed in note X.
iii) Non-distributable reserve
This reserve arose on transition to FRS 102, where the entity applied the exemption in Section 35 of FRS 102 to deem a previous revaluation on property as deemed cost. The amount included in the reserve is net of deferred tax at the rate the asset is expected to be realised. During the year the depreciation net of the release of deferred tax on the uplift on the valuation was transferred from profit and loss reserves to the non-distributable reserve. On inception of the revaluation reserve the reserve was recorded net of deferred tax.
iv) Capital redemption reserve
The capital redemption reserve reflects the nominal value of shares bought back by the company. There was no activity on this reserve in the current year
v) Share premium
The share premium reflects the premium received on shares issued by the company. The increase arises due to the allotment of 10,000 shares above par during the year as detailed in note X.
vi) Capital development fund
The capital development fund is operated to accumulate funds to meet the cost of further development expenditure. It is envisaged that if the fund is not used for development, either ordinary shares will be issued in respect of amounts collected by the fund, or that contributions received will be refunded to the members. The issue of shares, refund of monies, or utilisation of the reserve for development purposes is at the discretion of the XXXXXX. No amount was allocated to the reserve during the year.
viii) Other reserves
Other reserves relate to costs incurred on the issue of share-based payments to employees which was required to be accounted for in equity under Section 26 of FRS 102.
6.3.2.1.5.3 Statement of changes in Equity where prior period error /change in accounting policy disclosed
The below example illustrates the requirements where a prior year adjustment or change of accounting policy arises. See section 10 at 10.9.2.2 and 10.6.2 for further details in relation to prior period adjustments and changes in accounting policy.
Example 3: Prior year adjustments or change in policy reflected in Statement of Changes in Equity
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Examples
Example 1: Consolidated Statement of Change in Equity
Example 2: Statement of Change in Equity – Non-Group Company.
Example3: Prior year adjustments or change in policy reflected in Statement of Changes in Equity.
Example 4: Statement of income and retained earnings.
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