Introduction to FRS 102 Cathal Melia Wednesday, 10 th June 2015
FRS 102 > Introduction and Background > New Terminology > Key Differences > Transitional larrangements & Planning Points
Introduction & Background > Implementing IFRS in Ireland and UK > FRS 100 ; FRS 101;FRS 102 > FRS 102-35 Sections circa 300 pages > Implementation ti Date Accounting periods commencing on or after 1 January 2015 > Transition Date 1 January 2014 (comparatives)
New Naming Conventions OLD IRISH/UK GAAP Profit and Loss Account Balance sheet Cash flow statement Profit and loss reserves Reconciliation of Changes in Shareholders funds Minority Interest Stock Trade Debtors FRS102 Income statement comprehensive income Statement of financial position Statement of cash flows Retained earnings Statement of changes in equity Non controlling interest Inventory Accounts Receivable
Key Differences Investment Property OLD IRISH/UK GAAP SSAP 19 Valued at Market Value with No Depreciation Movements in valuation posted through Revaluation Reserve FRS102 Fair Value however cost can be used if FV cannot be determined without undue expense! Movements in valuation go through P&L Onlyprovided deferred tax if binding sale agreement in place Properties used within the group cannot be treated as investment properties Full provision for deferred tax Includes investment property occupied by other group companies
Key Differences Financial Instruments OLD IRISH/UK GAAP Practice varies depending on whether FRS 226 Financial instruments Recognition and Measurement is adopted or not FRS102 Divides financial instruments into Basic and Other instruments Basic measured at amortised cost Other mostly at fair value through P&L Loans carrying zero or below market rate interest included on balance sheet at loan amount less repayments. Interest recognised based on rate applied Initially Recognised on balance sheet by discounting the expected cash flows using market rate of interest (Coupon is merely a cashflow) Subsequent recognition using amortised cost method
Key Differences Listed Investments OLD IRISH/UK GAAP Can be held in balance sheet at historic cost or valuation FRS102 Must be held in balance sheet at fair value (Market Value) Movements in valuation go through P&L Employment Benefits Short term entitlements such as unused sick leave or holiday pay generally not accrued Specific requirement to accrue for short term employee entitlements
Key Differences Operating Leases OLD IRISH/UK GAAP Rent free periods recognised equally over period up to first break clause FRS102 Rent free periods recognised equally over the life of the lease Define Benefit Pension Plans Exemption from application Group plans must be of FRS 17 recognition for recognised on the balance multi employer plans sheet of at least one group company
Key Differences Disclosures OLD IRISH/UK GAAP Disclose Directors remuneration FRS102 Disclose remuneration of Key Management Operating lease obligations for < 1 Year and 2 5 Years Operating lease commitments for < 1 Year; 2 5 Years and 5 Years + Cashflow analysed under 7 headings Cashflows analysed under as few as 3 headings
Key Differences Acquisition Accounting & Intangibles OLD IRISH/UK GAAP In consolidated accounts difference between fair value of assets and consideration was classified as goodwill FRS102 Fair value now need to be attributed to a broader range of intangible assets e.g. Brands, Trade Marks Licences Deferred Tax not recognised on acquisition Deferred tax mustbe recognised on difference between fair value of assets and liabilities and amounts assessed for tax Goodwill amortisation default 20 years or could have an indefinite life in certain circumstances Goodwill must be amortised Amortisation default 5 years if no reliable estimate of expected life can be made
Transitional Arrangements / Opportunities > Historic Business Combinations not restated > Fixed Assets Revaluation as deemed cost > Lease incentive rules need not apply to leases commenced pre transition date > Dormant Companies retain measurement policies i until activity re-commences P i ti b t i l i d fi i l t > Pre existing but previously unrecognised financial assets and liabilities
FRS 102 Planning Points > Do you have preferential or zero coupon loans > Do you have property carried at valuation > Do you have investment properties > Are your Financial i and holiday years end different > Do you have quoted investments on your balance sheet > Restate your comparative numbers now
FRS 102 Planning Points > Do you have forward contracts or other derivatives > Have you purchases forward > Do you have a defined benefit pension scheme
Thank You Cathal Melia Russell Brennan Keane Tel: (01) 644 0100 / (090) 6480600 Email: cmelia@rbk.ieie