[et_pb_section bb_built=”1″ admin_label=”Header – All Pages” transparent_background=”off” background_color=”#1e73be” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”off” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off” custom_padding=”0px||0px|” global_module=”1221″][et_pb_row admin_label=”row” global_parent=”1221″ make_fullwidth=”off” use_custom_width=”off” width_unit=”on” use_custom_gutter=”off” custom_padding=”||5px|” allow_player_pause=”off” parallax=”off” parallax_method=”on” make_equal=”off” parallax_1=”off” parallax_method_1=”off”][et_pb_column type=”4_4″][et_pb_post_title admin_label=”Post Title” global_parent=”1221″ 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)” use_border_color=”off” border_color=”#ffffff” border_style=”solid” custom_padding=”10px|||” /][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section bb_built=”1″ admin_label=”Section” fullwidth=”off” specialty=”off” transparent_background=”off” background_color=”rgba(30,115,190,0.07)” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”on” custom_padding=”40px|||” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off”][et_pb_row admin_label=”Row” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” use_custom_gutter=”off” custom_padding=”0px||0px|” allow_player_pause=”off” parallax=”off” parallax_method=”on” make_equal=”off” parallax_1=”off” parallax_method_1=”off”][et_pb_column type=”4_4″][et_pb_text admin_label=”Text” background_layout=”light” text_orientation=”left” use_border_color=”off” border_color=”#ffffff” border_style=”solid”] [breadcrumb] [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section bb_built=”1″ admin_label=”Section” fullwidth=”off” specialty=”off” transparent_background=”off” background_color=”rgba(30,115,190,0.07)” allow_player_pause=”off” inner_shadow=”off” parallax=”off” parallax_method=”on” custom_padding=”0px|||” make_fullwidth=”off” use_custom_width=”off” width_unit=”on” make_equal=”off” use_custom_gutter=”off”][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_text admin_label=”FRS 105 Heading” background_layout=”light” text_orientation=”center” use_border_color=”off” border_color=”#ffffff” border_style=”solid”]
FRS 105 – Section-by-Section Analysis
[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row admin_label=”Row”][et_pb_column type=”4_4″][et_pb_toggle admin_label=”Section 1 – Scope” saved_tabs=”all” title=”Section 1 – Scope” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 1 deals with the scope of FRS 105 and from when the standard can be applied from.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 2 – Concepts and Pervasive Principles” saved_tabs=”all” title=”Section 2 – Concepts and Pervasive Principles” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 2 outlines the concepts and persuasive principals to assist preparers in determining the accounting treatment in a transaction and provides guidance on the principles to be used where a transaction is not covered by the specific standards.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 3 – Financial Statement Presentation” saved_tabs=”all” title=”Section 3 – Financial Statement Presentation” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 3 explains that the financial statements of an entity shall give a true and fair view once all of the disclosure requirements of Company Law for Companies applying the Small Companies Regime have been met, what a complete set of financial statements is and what compliance with FRS 105 requires.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 4 – Statement of Financial Position” saved_tabs=”all” title=”Section 4 – Statement of Financial Position” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 4 details the information to be included in the statement of financial position/Balance Sheet and how it is to be presented. It applies to all entities that are eligible as a micro entity and that choose to apply the micro companies/entities regime.
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Section 5 deals with the presentation of the income statement/profit and loss account. It applies to all entities that are eligible as a micro entity and that choose to apply the micro companies/entities regime.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 6 – Notes to the Financial Statements” saved_tabs=”all” title=”Section 6 – Notes to the Financial Statements” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 6 details the notes which are required to be disclosed in the financial statements. It applies to all entities that are eligible as a micro entity and that choose to apply the micro companies/entities regime.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 7 – Subsidiaries, Associates, Jointly Controlled Entities and Intermediate Payment Arrangements” saved_tabs=”all” title=”Section 7 – Subsidiaries, Associates, Jointly Controlled Entities and Intermediate Payment Arrangements” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 7 provides the recognition and measurement criteria for investments in subsidiaries, associates and jointly controlled entities including accounting for intermediate payment arrangements.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 8 – Accounting Policies, Estimates and Errors” saved_tabs=”all” title=”Section 8 – Accounting Policies, Estimates and Errors” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 8 deals with the selection and application of accounting policies used in preparing financial statements. It also details how changes in accounting policies and prior period adjustments should be accounted for.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 9 – Financial Instruments” saved_tabs=”all” title=”Section 9 – Financial Instruments” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 9 deals with the recognition, derecognition and measurement criteria of all financial instruments including investments in subsidiaries, associates and joint ventures. It also details the indicators or impairment for financial assets that are classed as financial instruments under Section 9.
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Section 10 deals with the recognition, measurement, costing, impairment of inventories and allocation of production overheads to inventory.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 11 – Investments in Joint Ventures” saved_tabs=”all” title=”Section 11 – Investments in Joint Ventures” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
This section defines jointly controlled operations and jointly controlled assets. It also sets out how such ventures should be accounted for on the balance sheet. Joint ventures which are jointly controlled entities do not come within the scope of this Section 11 instead these are dealt with in Section 7 and Section 9 of FRS 105.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 12 – Property, Plant and Equipment and Investment Property” saved_tabs=”all” title=”Section 12 – Property, Plant and Equipment and Investment Property” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 12 deals with the initial recognition, subsequent measurement, depreciation and impairment for property, plant and equipment (PPE) held for use in the production, or supply of goods and services, for rental to others or administrative purposes. All items of PPE are expected to be used during more than one period.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 13 – Intangible Assets other than Goodwill” saved_tabs=”all” title=”Section 13 – Intangible Assets other than Goodwill” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 13 deals the recognition, measurement, amortisation and disclosure for intangible assets other than goodwill. Section 13 defines an intangible asset as an identifiable non-monetary asset without physical substance. To count as identifiable, it must be separable, or must arise from contractual or other legal rights.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 14 – Business Combinations and Goodwill” saved_tabs=”all” title=”Section 14 – Business Combinations and Goodwill” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 14 deals with business combinations which relate to the acquisition of trade assets of another business. It does not apply to the acquisition of shares as FRS 105 does not permit consolidated financial statements to be prepared.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 15 – Leases” saved_tabs=”all” title=”Section 15 – Leases” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 15 applies to all leases, including some arrangements that do not take the legal form of a lease but convey rights to use assets in return for payments. It deals with the recognition, measurement and disclosures of operating and finance leases.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 16 – Provisions and Contingencies” saved_tabs=”all” title=”Section 16 – Provisions and Contingencies” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 16 applies to all provisions, contingent liabilities and contingent assets, except those covered by other sections of FRS 105. For example, leases, construction contracts, employee benefits and income tax. It does not apply to executory contracts unless they are onerous contracts.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 17 – Liabilities and Equity” saved_tabs=”all” title=”Section 17 – Liabilities and Equity” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 17 addresses classification of financial instruments as a liability or equity and accounting for compound financial instruments. It applies to the accounting for equity instruments issued to owners of the entity and purchases of own equity.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 18 – Revenue” saved_tabs=”all” title=”Section 18 – Revenue” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 18 applies to the accounting for revenue arising from the sale of goods, rendering of services, construction contracts and the use by others of entity assets yielding interest, royalties or dividends. It does not apply to revenue or income arising from transactions and events dealt with in other sections of the standard (e.g. leases, changes in fair value in investment property).
[/et_pb_toggle][et_pb_toggle admin_label=”Section 19 – Government Grants” saved_tabs=”all” title=”Section 19 – Government Grants” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 19 deals with the recognition, measurement and disclosures for government grants. Government grants are assistance in the form of a transfer of resources to an entity in return for past or future compliance with specific conditions. It excludes transactions with governments that cannot be distinguished from the normal trading transactions of the entity.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 20 – Borrowing Costs” saved_tabs=”all” title=”Section 20 – Borrowing Costs” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 20 deals with the recognition and disclosures of borrowing costs. Borrowing costs are interest and other costs that an entity incurs in connection with the borrowing of funds. It covers interest expense using the constant rate of return, deemed interest costs, finance charges in relation to finance leases and exchange differences arising from foreign currency borrowings.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 21 – Share-Based Payment” saved_tabs=”all” title=”Section 21 – Share-Based Payment” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 21 deals with the accounting for equity settled and cash settled share based payment transactions.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 22 – Impairment of Assets” saved_tabs=”all” title=”Section 22 – Impairment of Assets” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 22 deals with the measuring, recognising and disclosing impairments for the following types of assets – property, plant and equipment, goodwill, intangible assets, investment property classified within property, plant and equipment due to it not being able to be reliably measured without any undue cost or effort.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 23 – Employee Benefits” saved_tabs=”all” title=”Section 23 – Employee Benefits” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 23 deals with the recognition, measurement and disclosure of employees benefits to include the recognition and measurement of defined benefit and contribution pension schemes, short term employee benefits and termination benefits.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 24 – Income Tax” saved_tabs=”all” title=”Section 24 – Income Tax” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 24 deals with the recognition, measurement and disclosure of current and deferred tax, VAT and withholding tax on dividends.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 25 – Foreign Currency Translation” saved_tabs=”all” title=”Section 25 – Foreign Currency Translation” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
This section applies to foreign currency transactions and foreign operations in the financial statements of an entity.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 26 – Events after the End of the Reporting Period” saved_tabs=”all” title=”Section 26 – Events after the End of the Reporting Period” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 26 deals with the treatment of events after the balance sheet date and whether they are considered an adjusting or non-adjusting post balance sheet event.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 27 – Specialised Activities” saved_tabs=”all” title=”Section 27 – Specialised Activities” open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 27 deals with the reporting requirements for entities applying FRS 105 in the specialist area of agriculture.
[/et_pb_toggle][et_pb_toggle admin_label=”Section 28 – Transition to FRS 105″ saved_tabs=”all” title=”Section 28 – Transition to FRS 105″ open=”off” title_font_size=”16″ use_border_color=”off” border_color=”#ffffff” border_style=”solid” module_class=”custom-toggle-2 blue-heading”]
Section 28 deals with the exemptions available to first time adopters on transition to FRS 105 so as to make the transition easier on companies and when any adjustments should be posted on transition.
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