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Contents
5.2 Small companies – exemptions.
5.2.1 Extract from FRS102: Section 5.1A.
5.3 Presentation of total comprehensive income.
5.3.1 Extract from FRS102: Section 5.2-5.3.
5.3.2.2 Implications of changing between the two layouts.
5.4 Single-statement approach.
5.4.1 Extract from FRS102: Section 5.5-5.6, Section 5.7D and Section 5.9.
5.4.2.2.1 Profit and loss account/income statement.
5.4.2.2.2 Other comprehensive income.
5.4.2.3 Practical application of format 1 showing the single statement approach for group.
5.4.2.3.1 Practical application of single statement approach for an individual entity.
5.5.1 Extract from FRS102: Section 5.7-5.7D and Section 5.9.
5.5.2.2.1 Profit and loss account/income statement formats.
5.5.2.2.2 Other comprehensive income – statement of comprehensive income.
5.5.2.3 Practical application of the two statement approach showing format 1.
5.5.2.3.1 Two statement approach for a Group.
5.5.2.3.2 Two statement approach for an individual entity (i.e. not group accounts).
5.6 Alternative profit and loss format.
5.6.1 Extract from FRS102: Section 5.7B-5.7C.
5.7.1 Extract from FRS102: Section 5.7E-5.7F.
5.7.2.1 Discontinued operation and when it is to be considered to be discontinued.
5.7.2.2 Disclosure requirements for discontinued operations.
5.8 Prior year/period adjustments.
5.8.1 Extract from FRS102: Section 5.8.
5.9 Exceptional items and extraordinary items.
5.9.1 Extract from FRS102: Section 5.9A and Section 5.10-5.10B.
5.9.2.1.1 Exceptional items defined.
5.9.2.1.2 Examples of exceptional items.
5.9.2.1.4 Disclosure requirements of exceptional items in the notes.
5.9.2.1.5 Illustration of disclosure of exceptional items.
5.9.2.1.5.1 Exceptional items shown on face of profit and loss account.
5.9.2.1.5.2 Exceptional items shown in notes and not of the face of profit and loss account.
5.9.2.1.5.3 Exceptional itekm accounting policy disclosure.
5.10.1 Extract from FRS102: Section 5.9B.
5.11.1 Extract from FRS102: Section 5.11.
5.11.2.2 Analysis by function of expense.
5.11.2.2.2 Format 1 Companies Act 2014 – for Republic of Ireland entities.
5.11.2.2.2 Format 1 of Companies Act 2006 – for UK entities.
5.11.2.3 Analysis by nature of expense.
5.11.2.3.1 Format 2 of Companies Act 2006 – for UK entities.
5.11.2.3.2 Format 2 of Companies Act 2014 for Republic of Ireland entities.
5.12.1.2 For UK Parent Company.
5.12.1.3 For Republic of Ireland Parent Company.
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5.11 Analysis of expenses
5.11.1 Extract from FRS102: Section 5.11
5.11 Unless otherwise required under the Regulations, an entity shall present an analysis of expenses using a classification based on either the nature of expenses or the function of expenses within the entity, whichever provides information that is reliable and more relevant.
Analysis by nature of expense
(a) Under this method of classification, expenses are aggregated in the statement of comprehensive income (or in the income statement, under the two-statement approach) according to their nature (e.g. depreciation, raw materials and consumables and staff costs), and are not reallocated among various functions within the entity.
Analysis by function of expense
(b) Under this method of classification, expenses are aggregated according to their function as part of cost of sales or, for example, the costs of distribution or administrative activities.
5.11.2 OmniPro comment
5.11.2.1 Overview
Section 5.11 of FRS 102 gives an entity a choice to apply the analysis by function expense approach or the analysis by nature of expense approach.
5.11.2.2 Analysis by function of expense
Where format 1 of the Companies Act is adopted then this represents the analysis by function approach. This is the approach taken in the examples above. Care must be given to ensure expenses actually included within the function actually relate to that function. For example professional fees for preparation/audit of financial statements should not be included within cost of sales.
Example 7: See below the extract from format 1 of the Companies Act 2006 for the UK
- Turnover
- Cost of sales
- Gross profit or loss
- Distribution costs
- Administrative expenses
- Other operating income
- Income from shares in group undertakings
- Income from participating interests
- Income from other fixed asset investments
- Other interest receivable and similar income
- Amounts written off investments
- Interest payable and similar expenses
- Tax on profit or loss
- Profit or loss after taxation
- Other taxes not shown under the above items
- Profit or loss for the financial year
5.11.2.2.2 Format 1 Companies Act 2014 – for Republic of Ireland entities
Example 8: See below the extract from format 1 of the Companies Act 2014 for the Republic of Ireland:
- Turnover
- Cost of sales
- Gross profit or loss
- Distribution costs
- Administrative expenses
- Other operating income
- Income from shares in group undertakings
- Income from participating interests
- Income from other financial assets
- Other interest receivable and similar income
- Value adjustments in respect of financial assets and investments held as current assets
- Interest payable and similar expenses
- Tax on profit or loss
- Profit or loss
- Other taxes not shown under the above items
5.11.2.2.2 Format 1 of Companies Act 2006 – for UK entities
5.11.2.3 Analysis by nature of expense
Where format 2 of the Companies Act is adopted then this represents the analysis by nature of expense approach.
5.11.2.3.1 Format 2 of Companies Act 2006 – for UK entities
Example 10: See below the extract from format 2 of the Companies Act 2006 for the UK:
- Turnover
- Change in stock of finished goods and in work in progress
- Own work capitalised
- Other operating income
- Raw materials and consumables
- Other external charges
- Staff costs:
- Wages and salaries
- Social insurance costs
- other retirement benefit costs
- other compensation costs
- Depreciation and other amounts written off tangible and intangible fixed assets
- Amounts written off current assets to the extent that they exceed write-offs which are normal in the undertaking concerned.
- Other operating expenses
- Income from shares in group undertakings
- Income from participating interests
- Income from other fixed asset investments
- Other interest receivable and similar income
- Amounts written off investments
- Interest payable and similar expenses
- Tax on profit or loss
- Profit or loss after taxation
- Other taxes not shown under the above items
- Profit or loss for the financial year
5.11.2.3.2 Format 2 of Companies Act 2014 for Republic of Ireland entities
Example 9: See below the extract from format 2 of the Companies Act 2014 for the Republic of Ireland:
- Turnover
- Variation in stock of finished goods and in work in progress
- Own work capitalised
- Other operating income
- Raw materials and consumables
- Other external expenses
- Staff costs:
- Wages and salaries
- Social insurance costs
- other retirement benefit costs
- other compensation costs
- Depreciation and other value adjustments in respect of tangible and intangible fixed assets
- Valuing adjustment in request of current assets to the extent they exceed value adjustments that are normal in the understanding concerned
- Other operating expenses
- Income from shares in group undertakings
- Income from participating interests
- Income from other financial assets
- Other interest receivable and similar income
- Value adjustment in respect of financial assets and investments held as current assets
- Interest payable and similar expenses
- Tax on profit or loss
- Profit or loss
- Other taxes not shown under the above items
- Profit or loss for the financial year
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Example 1: Example of Single statement approach for a Group.
Example 2: Example of Single statement approach for an individual entity (i.e. not group accounts).
Example 3: Two statement approach for a Group.
Example 3(a): Two statement approach for an individual entity (i.e. not group accounts).
Example 4: Consolidated Statement of Comprehensive/Income statement approach – Alternative Approach.
Example 5: Discontinued operations not ceased.
Example 6: Exceptional item disclosure note for an accounting policy.
Example 7: See below the extract from format 1 of the Companies Act 2006 for the UK.
Example 8 See below the extract from format 1 of the Companies Act 2014 for the Republic of Ireland.
Example 9 See below the extract from format 2 of the Companies Act 2014 for the Republic of Ireland.
Example 10: See below the extract from format 2 of the Companies Act 2006 for the UK.
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