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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=”#1e73be” next_background_color=”#000000″][et_pb_row][et_pb_column type=”4_4″][et_pb_toggle admin_label=”Index” _builder_version=”3.0.105″ title=”Section 1A – Index” open=”off”]
1A.1.1 Extract from FRS102: Section 1A.1-1A.4
1A.2.1 Section 1A – As applicable to the republic of Ireland
1A.2.1.2 Which companies can avail of Section 1A/Small Company’s regime?
1A.2.1.3 What remains the same?
1A.2.2 Section 1A and UK Companies
1A2.3 Choice to apply section 1A of FRS 102
1A.3.1 Extract from FRS102: Section 1A.5-.1A.6
1A.3.2 OmniPro comment – True and fair view
1A.4 Complete set of financial statements of a small entity
1A.4.1 Extract from FRS102: Section 1A.7-1A.11, Section 1AD.1 and Section 1A.16-1A.20
1A.4.2.1 What Section 1 means in practical terms?
1A.4.2.2 The minimum disclosure requirements and the requirements to still show a true and fair view
1A.4.2.3 Disclosure encouraged under S.1A
1A.4.2.4 Formats of Balance Sheet and profit and Loss Account
1A5 Information to be presented in the statement of financial position
1A5.1 Extract from FRS102: Section 1A.12-1A.13
1A6 Information to be presented in the income statement
1A6.1 Extract from FRS102: Section 1A.14-1A.15
1A7 Voluntary preparation of consolidated financial statements
1A7.1 Extract from FRS102: Section 1A.21-1A.22
1A8.1.1 Guidance on adapting the balance sheet formats
1A8.1.1.1 Extract from FRS102: Section 1AA.1
1A8.1.1.2.2 Required formats for entities
1A8.1.1.2.2.2 Format 1 – Balance sheet – set out in legislation – Schedule 3A
1A8.1.1.2.2.3: Format 2 – balance sheet – set out in legislation – Schedule 3A
1A8.1.1.2.2.4 Example – Format 1 – Balance sheet – practical application
1A8.1.1.2.2.5 Notes required to balance sheet
1A8.2.1 Abridged balance sheet
1A8.2.1.1 Extract from FRS102: Section 1AA.2
1A8.3.1.1 Extract from FRS102: Section 1AA.3-1AA.6
1A8.3.1.2.2 Example adapted/IFRS layout – Balance sheet
1A9.1.1 Guidance on adapting the profit and loss account formats
1A9.1.1.1 Extract from FRS102: Section 1AB.1
1A9.1.1.2.2 Application of format 1 profit and loss account set out in legislation
1A9.1.1.2.3 Application of format 2 – profit and loss account set out in legislation
1A9.1.1.2.4 Example format 1 – profit and loss account.
1A9.1.1.2.5 Notes required to profit and loss account at a minimum
1A9.9.1.2.5.1 Consolidated profit and loss note requirements
1A9.2 Abridged Profit and Loss Account
1A9.2.1 Extract from FRS102: Section 1AB.2
1A9.3 Adapted Profit and Loss Account
1A9.3.1 Extract from FRS102: Section 1AB.3-1AB.4
1A9.3.2.2: Example adapted/IFRS layout on the profit and loss accounts
1AC10 Appendix C to Section 1A (Applicable for UK entities)
1AC10.1 Disclosure requirements for small entities
1AC10.1.1 Extract from FRS102: Section 1AC.1-1AC.2
1A10.1.2.2 What entities must comply with Appendix C
1AC10.2.1 Extract from FRS102: Section 1AC.3-1AC.
1AC10.2.2.1.1 Accounting police disclosure
1AC10.2.2.1.1.2 Basis of preparation
1AC10.2.2.1.1.4 Basis of consolidation (if applicable)
1AC10.2.2.1.4.1 Subsidiary undertakings
1AC10.2.2.1.1.4.2 Associates and joint ventures
1AC10.2.2.1.1.5 Business combinations and goodwill [if applicable]
1AC10.2.2.1.1.8 Intangible assets
1AC10.2.2.1.1.9 Contingent acquisition consideration
1AC10.2.2.1.1.10 Financial assets
1AC10.2.2.1.1.11 General turnover accounting policy notes
1AC10.2.2.1.1.11.2 Turnover accounting policy for an insurance broker Turnover – commission income
1AC10.2.2.1.1.11.4 Turnover accounting policy note where turnover is derived from investments
1AC.10.2.2.1.1.11.5 Turnover accounting policy for a software
1AC10.2.2.1.1.11.6 Turnover accounting policy for a construction company
1AC10.2.2.1.1.12 Government grants
1AC10.2.2.1.1.12.1 Accruals model
1AC10.2.2.1.1.12.2 Performance model
1AC10.2.2.1.1.13 Dividend income
1AC10.2.2.1.1.14 Dividend distribution
1AC10.2.2.1.1.16 Financial instruments
1AC10.2.2.1.1.16.1 Trade and other debtors
1AC10.2.2.1.1.16.2 Cash and cash equivalents.
1AC10.2.2.1.1.16.3 Other financial assets.
1AC10.2.2.1.1.16.4 Trade and other creditors.
1AC10.2.2.1.1.16.7 Offsetting financial instruments.
1AC10.2.2.1.1.17 Compound financial instruments.
1AC10.2.2.1.1.19 Hedge accounting
1AC10.2.2.1.1.20.1 Environmental liabilities
1AC10.2.2.1.1.20.2 Closure costs
1AC10.2.2.1.1.21 Contingencies
1AC10.2.2.1.1.22 Employee Benefits
1AC10.2.2.1.1.23 Preference share capital
1AC10.2.2.1.1.24 Share capital
1AC10.2.2.1.1.25 Related party transactions
1AC10.2.2.1.1.26 Interest income
1AC10.2.2.1.1.28 Tangible fixed assets
1AC10.2.2.1.1.30 Investment properties
1AC10.2.2.1.1.31.1 Finance leases
1AC10.2.2.1.1.31.2 Operating leases
1AC10.2.2.1.1.31.3 Lease incentives
1AC10.2.2.1.1.32 Leasing company accounting policy
1AC10.2.2.1.1.33 Intangible assets
1AC10.2.2.1.1.35 Exceptional items
1AC10.2.2.1.1.36 Share based costs
1AC10.2.2.1.1.37 Investment properties
1AC10.2.2.1.1.38 Biological assets (where fair value is used)
1AC10.2.2.1.1.39 Biological assets – Livestock (where fair value model is adopted)
1AC10.2.2.1.1.40 Biological assets – Forestry (where cost model is adopted)
1AC10.2.2.1.1.41 Biological assets – Livestock (where cost model is adopted)
1AC10.3 Changes in presentation and accounting policies and corrections of prior period errors
1AC10.3.1 Extract from FRS102: Section 1AC.7-1AC.9
1AC10.3.2.2. Prior period adjustment disclosure
1AC10.3.2.2.1 Option 1 – Analysis of prior period adjustments
1AC10.3.2.2.2 Option 2: Analysis of prior period adjustments
1AC10.3.2.2.2.3 Profit and Loss reserves note/statement of changes in equity
1AC10.3.2.2.3 Statement in changes in equity note – prior period error/change in accounting policy
1AC10.3.2.2.4 Illustration of change in accounting policy disclosure
1AC10.3.2.2.4.1 Example extract of a change in accounting policy disclosure
1AD11.3.2.5 Change in classification from prior period
1AC10.4 True and fair override
1AC10.4.1 Extract from FRS102: Section 1AC.10
1AC10.5 Notes supporting the statement of financial position
1AC10.5.1 Extract from FRS102: Section 1AC.11-1AC.19
1AC10.5.2.1 Property, plant and equipment/tangible fixed assets. Including revaluation
1AC 10.5.2.1.1 Borrowing costs
1AC10.5.2.2 Intangible assets including revaulation
1AC10.5.2.4 Illustration of the revaluation reserve disclosures.
1AC10.5.2.5 Investment properties note
1AC10.5.2.6 Alternative layout for the investments note and illustration of financial assets
1AC10.6 Details of indebtness and securities held (if any) 91
1AC10.6.2 Extract from FRS 102: Section 1AC.27
1AC10.7.1 Extract from FRS102: Section 1AC.20-1AC.21
1AC10.8 Fair value measurement
1AC10.8.1 Extract from FRS102: Section 1AC.22-Section 1AC.24 and section 1AC.26
1AC10.8.2.2 Extract from the notes to the financial statements – note on investment property
1AC10.8.2.3 Investment note with investment in subsidiary, joint ventures and other investments
1AC10.8.2.4 Extract of notes to the financial statements – Financial instruments note disclosures
1AC10.8.2.4.1 Extract of notes to the financial statements – Interest receivable and similar income
1AC 8.2.4.2 Extract of notes to the financial statements – interest payable and similar expenses
1AC10.8.2.4.3 Alternative disclosure for profit and loss
1AC10.8.2.4.4 Extract from other comprehensive income showing activity on cash flow hedges:
1AC10.8.2.4.4.1 Cash flow fair value hedge reserve disclosure requirements:
1AC10.9 Indebtedness, guarantees and financial commitments
1AC10.9.1 Extract from FRS102: Section 1AC.27-1AC.31
1AC10.9.2.2 Contingencies note
1AC10.9.2.3 Off-balance sheet arrangements note (section 1AC.31 od Appendix C of FRS 102)
1AC10.9.2.4 Commitments notes (section 1AC.31 of Appendix C of FRS 102)
1AC10.9.2.5 Indebtness note and security disclosures
1AC10.10 Notes supporting the income statement / profit and loss accounts
1AC10.10.1 Extract from FRS102: Section 1AC.32-1AC.33
1AC10.10.2.2 Extract to show required profit and loss disclosures
1AC10.10.2.2.1 Exceptional item defined and the disclosure requirements
1AC10.10.2.2.2 Exceptional item disclosure
1AC10.10.2.3 Employee numbers disclosure:
1AC10.10.2.4 Other profit and loss disclosures
1AC10.11 Related party disclosures
1AC10.11.1 Extract from FRS102: Section 1AC.34-1AC.36
1AC10.11.2.1.1 Related party defined
1AC10.11.2.2 Related party note – with related entities
1AC10.11.2.3 Loans, guarantees, credit transactions entered into the benefit of directors
1AC10.11.2.4 Directors remuneration
1AC10.11.7 Controlling Party disclosure
1AC10.12.1 Extract from FRS102: Section 1AC.37-1AC.39
1AC10.12.2.1 Disclosures required describing the entity
1AC10.12.2.2 Post balance sheet events
1AC10.13.1 Auditors remuneration, Interest income or expense from loans to and from group entities
1AC10.13.1.1 Interest income or expense from loans to and from group entities
1AC10.13.1.2 Auditors remuneration
1AC10.13.2 Debtors and Creditors Note as required by Formats
1AC10.13.3 Share capital disclosures
1AD11 Appendix D to Section 1A (applicable for Republic of Ireland entities only)
1AD11.1 Disclosure requirements for small entities in the Republic of Ireland
1AD11.1.1 Extract from FRS102: Section 1AD.1-1AD.2
1A11.1.2.1 Summary section 1A disclosure checklist
1AD11.2.1 Extract from FRS102: Section 1AD.3-1AD.6
1AD11.2.2.1.1 General information
1AD11.2.2.1.2 Basis of preparation
1AD11.2.2.1.3 Consolidation exemption
1AD11.2.2.1.4 Basis of consolidation – (If Applicable)
1AD11.2.2.1.4.1 Subsidiary undertakings
1AD11.2.2.1.4.2 Associates and joint ventures
1AD11.2.2.1.4.3 Transactions eliminated on consolidation
1AD11.2.2.1.5 Business combinations and goodwill
1AD11.2.2.1.8 Intangible assets
1AD11.2.2.1.9 Contingent acquisition consideration
1AD11.2.2.1.10 Financial assets
1AD11.2.2.1.11.1 General turnover accounting policy notes
1AD11.2.2.11.2 Turnover accounting policy for an insurance broker
1AD11.2.2.11.4 Turnover accounting policy note where turnover is derived from investments Turnover
1AD11.2.2.11.5 Turnover accounting policy for a software company
1AD11.2.2.11.6 Turnover accounting policy for a construction company
1AD11.2.2.12 Government grants
1AD11.2.2.12.2 Performance model
1AD11.2.2.14 Dividend distribution
1AD11.2.2.16 Financial instruments
1AD11.2.2.16.1 Trade and other debtors
1AD11.2.2.16.2 Cash and cash equivalents.
1AD11.2.2.16.3 Other financial assets.
1AD11.2.2.16.4 Trade and other creditors.
1AD11.2.2.16.7 Offsetting financial instruments.
1AD11.2.2.17 Compound financial instruments.
1AD11.2.2.20.1 Environmental liabilities
1AD11.2.2.22 Employee Benefits
1AD11.2.2.23 Preference share capital
1AD11.2.2.25 Related party transactions
1AD11.2.2.28 Tangible fixed assets
1AD11.2.2.30 Investment properties
1AC10.2.2.1.1.31.1 Finance leases
1AD11.2.2.31.2 Operating leases
1AD11.2.2.31.3 Lease incentives
1AC10.2.2.1.1.32 Leasing company accounting policy
1AD11.2.2.33 Intangible assets
1AD11.2.2.35 Exceptional items
1AD11.2.2.36 Share based costs
1AD11.2.2.37 Investment properties
1AD11.2.2.38 Biological assets (where fair value is used)
1AD11.2.2.39 Biological assets – Livestock (where fair value model is adopted)
1AD11.2.2.40 Biological assets – Forestry (where cost model is adopted)
1AD11.2.2.41 Biological assets – Livestock (where cost model is adopted)
1AD11.2.2.1.42 Prior period adjustment – Change in accounting policy
1AD11.2.2.43 Change in accounting estimate
1AD11.3 Changes in presentation and accounting policies and corrections of prior period errors
1AD11.3.2 Extract from Section 1AD.8 to 1AD.10 of S1A of FRS 102
1AD11.3.2.2 Prior year adjustment disclosure
1AD11.3.2.2.1 Option 1: Analysis of prior year adjustments
1AD11.3.2.2.2 Option 2 – Analysis of prior year adjustments
AD11.3.2.2.3 Movement in profit and loss reserves note or statement of changes in equity
1AD11.3.2.4 Example extract of a change in accounting policy disclosure
1AD11.3.2.5 Change in classification from prior period
1AD11.4 True and fair view override
1AD11.4.1 Extracts from FRS 102: Section 1AD.11
1AD11.5 Notes to the statement of financial position – fixed assets
1AD11.5.1 Extract from FRS 102: Section 1AD.13 – 1AD.18
1AD11.5.2.1.3 Intangible assets
1AD11.5.2.1.5 Example disclosure for a revaluation reserve
1AD11.5.2.1.6 Investment properties
1AD11.5.2.1.7 Financial assets note
1AD11.6.1 Extracts from FRS 102: Section 1AD.20 – 1AD.21
1AD11.7 Borrowing/creditors details
1AD11.7.1 Extracts from FRS 102: Sction 1AD.26 – 1AD.28
1AD11.8 Appropriation of profit or loss/profit and loss reserve movements
1AD11.8.1 Extract from FRS 102: Section 1AD.35
1AD11.9 Fair value measurement
1AD11.9.1 Extract from FRS 102; Section 1AC.22 to 1AC.25
1AD11.9.2.1 Analysis – fair value disclosure requirements
1AD11.9.2.2 Extract from the notes to the financial statements
1AD11.9.2.2.1 Investment property
1AD11.9.2.2.3 Financial instrument note disclosures
1AD11.9.2.2.4 Fair value reserve disclosures
1AD11.10 Notes to the income statements/profit and loss account
1AD11.10.1 Extract from FRS 102: Sections 1AD.36 to 1AD .37
1AD11.10.2.2 Extract to show required profit and loss disclosures
1AD11.10.2.2.1 Exceptional item defined and the disclosure requirements
1AD11.10.2.2.1.1 Exceptional item disclosure
1AD11.10.2.2.2 Employee note disclosure
1AD11.10.2.2.3 other profit and loss disclosures
1AD11.11 Related party disclosures – director’s remuneration
1AD11.11.1 Extract from FRS 102: sections 1AD.38 to 1AD.40
1AD11.11.2.1 Related parties defined
1AD11.11.2.1.1 Connected person defined
1AD11.11.2.2 Directors remuneration disclosure
1AD11.11.2.2.1 Make up of director’s remuneration
1AD11.12.1 Extracts from FRS 102: 1AD.41 to 1AD.47
1AD11.12.2.1.1 Application to non-companies
1AD11.12.2.1.2 Get out from disclosure if below a specified value.
1AD11.12.2.2 Disclosures of loans and guarantees for the benefit of directors.
1AD11.13 Related party transactions material transactions with directors
1AD11.13.1 Extracts from FRS 102: Secton 1AD.48
1AD11.13.2.2 Is there exemptions from the disclosure?
1AD11.14 Other related party transactions (other than transactions with director)
1AD11.14.1 Extracts from FRS 102: Section 1AD.51
1AD11.15 Ultimate controlling party
1AD11.15.1 Extract from FRS 102: Section 1A.50
1AD11.16 Post balance sheet events
1AD11.16.1 Extracts from FRS 102: Sections 1A.54
1AD.11.17 Guarantees, financial commitments and contingencies
1AD.11.17.1 Extract from FRS 102: Sections 1AD.28 to 1AD.34
1AD11.17.2.2 Contingencies (1AD.31 and 1AD.34 of Appendix D of FRS 102)
1AD11.18 Holding of own shares
1AD11.18.1 Extract form FRS 102; Section 1AD.49
1AD11.19.1 Extract from FRS 102; Sections 1AD.52 – 1AD.53 and 1AD.55
1AD11.19.2.1 Disclosing legal form, registered office, basis of preparation
1AD11.20 Other items required by the formats under Companies Act
1AD11.20.4 Creditors: amounts falling due within one-year note
1AD11.20.5 Creditors: Amounts falling due after more than one-year note
1AD11.20.6 provision for liabilities
1AE.13.1 Additional disclosures encouraged for small entities
1AE.13.1.1 Extract from FRS102: Section 1AE.1
1AE.13.1.2.2 Statement of compliance
1AE.13.1.2.3.1 Transition note adjustments example
1A11.2.2.1 Transition to FRS 102 – first time exemption – Section 1A
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1AD11 Appendix D to Section 1A (applicable for Republic of Ireland entities only)
1AD11.1 Disclosure requirements for small entities in the Republic of Ireland
1AD11.1.1 Extract from FRS102: Section 1AD.1-1AD.2
This appendix is an integral part of Section 1A. This appendix sets out the disclosure requirements for small entities based on the requirements of company law in the Republic of Ireland. These are shown in italic font in the paragraphs below. The drafting is as close as possible to that set out in company law, other than, for example, substituting company law terminology with the equivalent terminology used in FRS 102 (see Appendix III). References in this appendix to sections of the Companies Act 2014 are to the sections of that Act as amended by the Companies (Accounting) Act 2017 and references to Schedule 3A are to Schedule 3A to the Companies Act 2014.
When there is a similar disclosure requirement in FRS 102 this has been indicated and those paragraphs of FRS 102 that have been cross-referenced are also highlighted by including an * in the left-hand margin. In many cases compliance with the similar requirement of FRS 102 will result in compliance with the requirements below, however a small entity in the Republic of Ireland must ensure it complies with all the disclosure requirements of this appendix.
1AD.1 As a minimum, when relevant to its transactions, other events and conditions, a small entity in the Republic of Ireland shall provide the disclosures set out in this appendix.
1AD.2 These notes shall be presented in the order in which, where relevant, the items to which they relate are presented in the statement of financial position and in the income statement. (Schedule 3A, paragraph 43(2)) Paragraphs 8.3 and 8.4 address similar requirements
Paragraphs 8.3 and 8.4 address similar requirements.
1A11.1.2 OmniPro comment
1A11.1.2.1 Analysis
Section 1AD.1 of Appendix D of section 1A of FRS 102 makes it clear that Appendix D of section 1A sets out the minimum note disclosures to be included in a section 1A set of financial statements for an entity in the Republic of Ireland (for UK entities refer to Appendix C of FRS 102). Further disclosures on top of the requirements in section D of S1A FRS 102 must be included if they are required to show a true and fair view. The notes should be disclosed in the order to which they relate (section 1AD.2 of Appendix C of section 1A of FRS 102):
See below a summary of the disclosures required under the Companies (Accounting) Act 2017 and Appendix A to B and D of section 1A of FRS 102 and the legislative references (refer to the simple S1A FRS 102 and complex FRS 102 S1A disclosures checklis)
1A11.1.2.1 Summary section 1A disclosure checklist
| Details | Required | Encouraged in FRS 102 |
|
Directors report – as previously except: – business review not required. If presented must include non-KPI, environmental & employee matters where necessary for understanding (this was not previously required) – disclosure of reason for acquisition of own shares and % held as a proportion of total shares issued |
N/a
Yes |
N/a |
|
Auditors report – as previously except reference to cash flow statement to be deleted and possibly the ‘statement of changes in equity’ if not presented |
Yes | N/a |
| Primary statements | ||
|
Profit and loss account/Income statement – laid out in accordance with Schedule 3A (similar to existing Sch 3 CA 2014 however the words ‘ordinary activities’ is removed and word ‘charges’ changed to ‘expenses’) IFRS layout can be utilised Include movement on profit and loss reserve including details of dividend if not disclosed in the SOCE or in the notes. |
Yes | N/a |
|
Other comprehensive income – Statement of Comprehensive income Sch 3A requires details of movement in revaluation reserve, fair value reserve and profit and loss reserves to be disclosed therefore the presentation of this would meet the requirements. |
Yes if movement not presented elsewhere |
Yes |
|
Balance sheet – laid out in accordance with Schedule 3A (similar to existing Sch 3 CA 2014) – Investment property to be shown separately. Different wording for certain items. IFRS layout can be utilised • Requirement to detail the fact that the small companies regime has been followed and this be included above the directors signature. |
Yes
Yes |
N/a |
|
Statement of changes in equity – not specifically required however Sch 3A requires: – movement of profit and loss reserves to be disclosed including details of transfers – movement on revaluation reserve to be disclosed including details of transfers etc. – movement on fair value reserves to be disclosed In order to cover off the above requirements it would make sense to include a SOCE |
Yes if movement not presented elsewhere |
N/A |
| Notes to the financial statements | ||
|
Disclosure of accounting policies (section 321 of Companies Act 2014) as before. New requirement to (section 1AD.3 FRS102) – disclose a change in accounting policy in the accounting policy section |
Yes | N/a |
| Include a statement of compliance with Appendix E of Section 1A of FRS 102 | No | Yes |
| Include a statement that the entity is a public benefit entity if applicable | No | Yes |
| Going concern disclosure | Yes | N/a |
| Details of dividend paid/payable/declared | Yes | N/a |
| Disclose principal place of business, registered office, legal form and company registration number (S.291-295 CA 2014) | Yes | N/a |
| Departure from the requirements of Companies Act and FRS 102 to be disclosed (Sch 3A(19)) | Yes | N/a |
|
Where transition adjustments arise include a note in line with full FRS 102 (i.e. disclose: – equity at date of transition, and end of comparative year under old GAAP reconciling to equity at each period under FRS 102 with notes on the reasons for adjustments; and – profit/loss for comparative period as report under old GAAP, reconciling to profit/loss under FRS 102 with notes on the reasons for adjustments. |
No however would be considered necessary to show true and fair view as required under S.289 CA 2014 |
Yes |
|
Directors remuneration including connected parties/shadow/defacto directors –(Section 305,305A & 306 CA 2014) Includes amounts paid to third parties for making services of any person available as director/de-facto or shadow director |
Yes | N/a |
|
Loans/quasi loans/ given to directors (inc. de facto & shadow) and any guarantees/credit transactions entered into for benefit of directors (Section 307-308); • No need to disclose max amount O/s in year – instead disclose amount written off • Usual disclosures required with regard to movement, terms of arrangements, names of directors, % of loan to net assets etc. |
Yes | |
| Other transactions entered into in which director has a material interest (Section 309 CA 2014). As before provide details of the arrangements, the names of the directors, terms of the arrangements etc. | Yes | N/a |
| Disclose the amount of interest income recognised on loans to group companies in the P&L (Sch 3A Formats CA 2014) | Yes | N/a |
| Disclose the amount of interest expense recognised on loans from group companies in the P&L (Sch 3A Formats CA 2014) | Yes | N/a |
| Disclosures for credit institutions & specific disclosures (Section 310 -313 CA 2014) | Yes | N/a |
| Disclosure of average number of employees in year (Section 317(1)(a) CA 2014) | Yes | N/a |
|
Disclosure of holding of own shares or shares in holding company – detailing amount and nominal value by class and amount of profits restricted as a result to include the % of shares held to total shares in issue (Section 320 CA 2014). Investment in holding company shares should be disclosed in equity in the balance sheet as a deduction from capital and reserves. |
Yes | N/a |
| Approval by directors on financial statements noting that they show a true and fair view (Section 324 CA 2014). | Yes | N/a |
|
Acquisition or disposal of own shares disclosures (Section 328 CA 2014) – – detail movement at the beginning and end of each year – including details of shares acquired or held by subsidiary undertakings – number and nominal value of shares held by Co or Sub Co.’s – consideration paid for shares |
Yes | N/a |
| Exceptional item disclosures (Sch 3A)(53). | Yes | N/a |
| Dividends paid/declared (Sch 3A(48) split by amounts included in accruals at period end. | Yes | N/a |
| Investment properties and biological asset movements including disclosure of valuation method and amount recognised in P&L. | Yes | N/a |
| Accruals for pension liabilities. | Yes | N/a |
| Particulars of retirement commitment benefits included in the balance sheet and significant assumptions in the valuations (e.g. defined benefit scheme) – Sch 3A(35). | Yes | N/a |
| Impairment/reversal of impairment on financial assets (Sch 3A(23)). | Yes | N/a |
| Prior period errors resulting in change in prior year presentation (Sch 3A(5)). | Yes | N/a |
| Change in presentation from the prior year (Sch 3A(5)) inc. reasons for change | Yes | N/a |
|
When the reporting entity is controlled by another party, there should be disclosure of the: – related party relationship and the name of that party and, if different, that of the ultimate controlling party. If the controlling party or ultimate controlling party of the reporting entity is not known, that fact should be disclosed. Required by Sch 3A(58) of CA 2014. – registered office address – where consolidated accounts can be obtained from if applicable. |
Yes | N/a |
| Disclose change in accounting estimate, reason for same and impact (Sch3A(19) | Yes | N/a |
|
Details of indebtedness (Sch 3A(50)) – disclose: – amounts which are repayable after 5 yrs of period end – amount in total included in creditors where security is held – type and nature of securities held |
Yes | N/a |
| Detail useful life on development expenditure capitalised and goodwill and the reason for capitalisation and selecting useful life (Sch 3A(24)(25)) | Yes | N/a |
| Disclose impairment/reversal of impairments on all fixed assets (Sch 3A(23(2) | Yes | N/a |
| Details of guarantees and other financial commitments inc contingencies (Sch 3A(51)) | Yes | N/a |
| Details of events after year end (Sch 3A(56) | Yes | N/a |
|
Related party transactions (Sch 3A(55))-Note disclosures less than what is required currently. Disclose: – transactions as per S.305-S.309 CA 2014; and – other transactions to extent entered into under terms which is not under normal market conditions with the below with the exception of transactions with 100% owned companies: – holders of associate interest or more in Company.; and – Companies etc. in which Co. holds participating interest or more; and – Directors of the company or of a holding company of that company |
Yes | N/a |
|
Movement on profit and loss reserves including transfers in and out to be disclosed if not shown on face of profit and loss account or in SOCE. Movement in revaluation reserve and fair value reserve to be shown in tabular form |
Yes | N/a |
| All notes for items included in fixed asset section of balance sheet where held at cost/revalued amount – not including assets held at fair value through profit and loss account including details of movement on same for current year (Sch 3A(48)). No need for movement in prior year (Sch3A(5) CA 2014). | Yes | N/a |
| For fixed assets detailing impairments netted against cost where assets held at cost less impairment (Sch3A(45)) | Yes | N/a |
|
Where fixed assets revaluation policy is in place (Sch3A(49)): – provide basis of valuation. – movements in and out of revaluation reserve including tax effect – historical cost profit note – state NBV if it was carried at historical cost (not required for investment property |
Yes | N/a |
|
For financial instruments measured under Section 11 and 12 disclose for each instrument (Sch 3A(46)): – Significant assumptions underlying valuation models and techniques where fair value determined otherwise than by the market price in an active market – The fair value movement recognised in the financial statements – The amount credit or debited to a fair value reserve – For derivative financial instruments (e.g. foreign exchange contracts, interest swaps) detail: 1. extent and nature of the instruments including significant terms and conditions that affect amount, 2. timing and certainty of cash flows |
Yes | N/a |
| Disclose any off balance sheet commitments (e.g. operating leases etc.) – Sch 3A(51) CA 2014 | Yes | N/a |
| Include note disclosing the fact the ES PASE was applied if that is the case | ES PASE | N/a |
| Disclose movement on fair value of investments in associates, subsidiaries or joint ventures where held at fair value | ||
| Where assets or liabilities are included within more than one-line item on the face of balance sheet and it is not disclosed elsewhere in the notes then disclosure of same must be included in the notes (S1AD.11 of Appendix D) | Yes | N/A |
| Any other disclosures required in order to allow the financial statements to show a true and fair view – S.289 CA 2014. | Yes | N/a |
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1AD11.2 Accounting policies
1AD11.2.1 Extract from FRS102: Section 1AD.3-1AD.6
1AD.3 A small entity shall ensure that its financial statements include a statement as to whether they have been prepared in accordance with Section 1A of FRS 102 and for any material departure from Section 1A of FRS 102, the effect of the departure and the reasons for it are noted in the financial statements. (Section 291(7) of the Companies Act 2014)
1AD.4 A small entity shall disclose in the notes to its financial statements the accounting policies adopted by the small entity in determining:
(a) the items and amounts to be included in its statement of financial position; and
(b) the items and amounts to be included in its income (Section 321(1) of the Companies Act 2014)
Paragraph 8.5 addresses similar requirements for disclosing significant accounting policies. Including information about the judgements made in applying the small entity’s accounting policies, as set out in paragraph 8.6, may be useful to users of the small entity’s financial statements.
1AD.5 If an amount is included in a small entity’s statement of financial position in respect of development costs, the following information shall be given in a note to the financial statements:
(a) the period over which the amount of those costs originally capitalised is being or is to be written off; and
(b) the reasons for capitalising the costs in question. (Schedule 3A, paragraph 24(2))
Paragraph 18.27(a) addresses similar requirements to paragraph 1AD.5(a).
1AD.6 Where development costs are shown as an asset in the small entity’s financial statements and the amount is not treated as a realised loss because there are special circumstances justifying this, a note to the financial statements shall state the circumstances and that it is not a realised loss. (Section 120(3) of the Companies Act 2014)
Intangible assets include goodwill. Paragraphs 18.27(a) and 19.25(g) address similar requirements.
1AD11.2.2 OmniPro Comment
1A11.2.2.1 Accounting policy disclosure note example (as required by section 1AD.3 to 1AD.5 of Appendix D of Section 321 of Companies Act 2014)
See application of each of these note disclosures required by section 1AD.3 to 1AD.5 of Appendix D of section 1A of FRS 102 at 1AD11.2.2.1.1
1AD11.2.2.1.1 General information
OmniPro Sample Small FRS 102 Company Limited is primarily engaged in the provision of construction services to both the private and commercial sectors. The company’s’ registered office is Construction Place, Builders Lane, Dunblock, Any City. The company is a limited liability company incorporated in the Republic of Ireland and its company registration number is XXX
This is the first set of financial statements prepared by OmniPro Sample Small Company Limited in accordance with accounting standards issued by the Financial Reporting Council, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”). (Delete if not transition year)
The FRC issued amendments to FRS 102 called ‘Amendments to FRS 102-Triennial review 2017 which can be applied for accounting periods beginning on or after 1 January 2019 with early adoption permitted. The company has adopted these amendments in these financial statements
The significant accounting policies adopted by the Company and applied consistently are as follows
1AD11.2.2.1.2 Basis of preparation
The Financial Statements are prepared on the going concern basis ((NOTE CHANGE THIS HERE IF THE BASIS IS NOT GOING CONCERN AND PROVIDE THE BASIS FOR WHY THEY HAVE NOT BEEN PREPARED ON A GOING CONCERN), under the historical cost convention, [as modified by the revaluation of certain tangible fixed assets] and comply with the financial reporting standards of the Financial Reporting Council [and promulgated by Chartered Accountants Ireland ] including FRS 102 .“The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) as adapted by Section 1A of FRS 102 and the Companies Act 2014.
The financial statements are prepared in Euro which is the functional currency of the company OR The company has chosen to present the financial statement in a currency that differs from its functional currency so that it can be easily consolidated into the parent company’s financial statements. The functional currency of the company is XXX.
Basis of preparation (if UK entity)
The below paragraph is not required but encouraged under Appendix D (note is required if not prepared on a going concern)
The Financial Statements are prepared on the going concern basis (NOTE CHANGE THIS HERE IF THE BASIS IS NOT GOING CONCERN AND PROVIDE THE BASIS FOR WHY THEY HAVE NOT BEEN PREPARED ON A GOING CONCERN), under the historical cost convention, [as modified by the revaluation of land and buildings and intangibles] and the measurement of certain assets and liabilities measured at fair value and comply with the financial reporting standards of the Financial Reporting Council [and promulgated by Chartered Accountants in the UK] and the Companies Act 2006.
The financial statements are prepared in CU which is the functional currency of the company. OR The company has chosen to present the financial statement in a currency that differs from its functional currency so that it can be easily consolidated into the parent company’s financial statements. The functional currency of the company is XXX.
1AD11.2.2.1.3 Consolidation exemption
DISCLOSURES REQUIRED WHERE CONSOLIDTED FINANCIAL STATEMENTS ARE NOT PREPARED
NOTE: THE BELOW IS TO BE INCLUDED WHERE THE PARENT COMPANY IS EXEMPT FROM CONSOLIDATION DUE TO ITS IMMEDIATE PARENT COMPANY (WHICH IS IN THE EEA) PREPARING CONSOLIDATED FINANCIAL STATEMENTS. (NOT SPECIFICALLY REQUIRED BUT INCLUDED FOR BEST PRACTICE)
Consolidated accounts
The company has not prepared consolidated accounts for the period as, being a wholly owned subsidiary of the ultimate parent company, XXXXXX Limited, it is exempted from doing so under Section 9 of FRS 102 which is accommodated under Section 299 of the Companies Act 2014.
NOTE: THE BELOW IS TO BE INCLUDED WHERE THE PARENT COMPANY IS EXEMPT FROM CONSOLIDATION DUE TO ITS ULTIMATE PARENT COMPANY (WHICH IS IN OR OUTSIDE THE EEA) PREPARING CONSOLIDATED FINANCIAL STATEMENTS. (NOT SPECIFICALLY REQUIRED BUT INCLUDED FOR BEST PRACTICE)
Consolidated accounts
The company has not prepared consolidated accounts for the period as, being a wholly owned subsidiary of the ultimate parent company, XXXXXX Limited, it is exempted from doing so under Section 9 of FRS 102 which is accommodated under Section 300 of the Companies Act 2014.
NOTE: THE BELOW IS TO BE INCLUDED WHERE THE PARENT COMPANY IS EXEMPT FROM CONSOLIDATION DUE TO THE GROUP BEING APPLICABLE FOR THE SMALL COMPANIES REGIME UNDER COMPANY LAW. (NOT SPECIFICALLY REQUIRED BUT INCLUDED FOR BEST PRACTICE)
Consolidation
The company and its subsidiaries combined meet the size exemption criteria for a group and the company is therefore exempt from the requirement to prepare consolidated financial statements by virtue of meeting the requirements in Section 293(1A) of the Companies Act 2014. Consequently, these financial statements deal with the results of the company as a single entity.
NOTE: BASIS OF CONSOLIDATION DISCLOSURES REQUIRED WHERE CONSOLIDATED FINANCIAL STATEMENTS ARE PREPARED.
1AD11.2.2.1.4 Basis of consolidation – (If Applicable)
The Group financial statements reflect the consolidation of the results, assets and liabilities of the parent undertaking, the Company and all of its subsidiaries, together with the Group’s share of profits/losses of associates and joint ventures. Where a subsidiary, associate or joint venture is acquired or disposed of during the financial year, the Group financial statements include the attributable results from, or to, the effective date when control passes, or, in the case of associates, when significant influence is lost.
1AD11.2.2.1.4.1 Subsidiary undertakings
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred, and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition related costs are capitalised with the cost of the investment. Identifiable assets acquired, and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the acquiree over the fair value of the group’s share of identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised as negative goodwill on the balance sheet and amortised through the profit and loss account in the period in which the non-monetary assets are recovered.
1AD11.2.2.1.4.2 Associates and joint ventures
Associates are those entities in which the Group has significant influence over, but not control of, the financial and operating policies. Joint ventures are those entities over which the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic, financial and operating decisions. Investments in associates and joint ventures are accounted for using the equity method of accounting.
Under the equity method of accounting, the Group’s share of the post-acquisition profits or losses of its associates and joint ventures is recognised in the income statement. The income statement reflects, in profit before tax, the Group’s share of profit after tax of its associates and joint ventures in accordance with Section 14 of FRS102, ‘Investments in Associates’ and Section 15 of FRS 102, ‘Interests in Joint Ventures’. The Group’s interest in their net assets is included as investments in associates and joint ventures in the Group Statement of Financial Position at an amount representing the Group’s share of the fair value of the identifiable net assets at acquisition plus the Group’s share of post acquisition retained income and expenses. The Group’s investment in associates and joint ventures includes goodwill on acquisition. The amounts included in the financial statements in respect of the post acquisition income and expenses of associates and joint ventures are taken from their latest financial statements prepared up to their respective year ends together with management accounts for the intervening periods to the Group’s year end (if applicable). The fair value of any investment retained in a former subsidiary is regarded as a cost on initial recognition of an investment in an associate or joint venture. Where necessary, the accounting policies of associates and joint ventures have been changed to ensure consistency with the policies adopted by the Group.
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1AD11.2.2.1.4.3 Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising from intra- group transactions, are eliminated in preparing the Group financial statements. Unrealised gains and income and expenses arising from transactions with associates and joint ventures are eliminated to the extent of the Group’s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that they do not provide evidence of impairment.
1AD11.2.2.1.5 Business combinations and goodwill
All business combinations are accounted for by applying the purchase method. Goodwill represents amounts arising on acquisition of subsidiaries, associates and joint ventures. In respect of acquisitions that have occurred since XXXXX (INSERT DATE OF TRANSITION WHERE SECTION 35.10(A) EXEMPTION IS CLAIMED), goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired. In respect of acquisitions prior to this date, goodwill is included on the basis of its deemed cost, i.e. original cost less accumulated amortisation from the date of acquisition up to XXXXX, which represents the amount recorded under UK and Irish GAAP. Goodwill is now stated at cost or deemed cost less any accumulated amortisation and impairment losses. In respect of associates and joint ventures, the carrying amount of goodwill is included in the carrying amount of the investment.
1AD11.2.2.1.6 Goodwill
Positive goodwill acquired on each business combination is capitalised, classified as an asset on the balance sheet and amortised on a straight line basis over its useful life of 1X years. Goodwill acquired in a business combination is, from the date of acquisition, allocated to each cash generating unit that is expected to benefit from the synergies of the combination. If an investment is disposed of any unamortised goodwill is subsumed within goodwill in the profit and loss on sale on discontinuance. Useful life is determined by reference to the period over which the values of the underlying businesses are expected to exceed the values of their identifiable net assets.
Goodwill is reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable.
Negative goodwill represents the fair value of net assets on acquisition in excess of the fair value of consideration. Negative goodwill is capitalised and amortised through the profit and loss account in the period in which the non-monetary assets are recovered. In the case of fixed assets acquired, this is the period over which they are depreciated and in the case of stocks it is the period over which they are sold or otherwise realised.
1AD11.2.2.1.7 Impairment
The carrying amounts of the Group’s/Company’s assets, other than inventories (which are carried at the lower of cost and net realisable value), deferred tax assets (which are recognised based on recoverability), investment properties (which are carried at fair value), and those financial instruments, which are carried at fair value, are reviewed to determine whether there is an indication of impairment when an event or transaction indicates that there may be. If any such indication exists, an impairment test is carried out and the asset is written down to its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Value in use is defined as the present value of the future pre-tax and interest cash flows obtainable as a result of the asset’s continued use. The pre-tax and interest cash flows are discounted using a pre- tax discount rate that represents the current market risk free rate and the risks inherent in the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. An impairment loss is recognised in the profit and loss account, unless the asset has been revalued when the amount is recognised in other comprehensive income to the extent of any previously recognised revaluation. Thereafter any excess is recognised in profit or loss.
Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit and then, to reduce the carrying amount of the other assets in the unit on a pro rata basis.
An impairment loss, other than in the case of goodwill, is reversed if there has been a change in the estimates used to determine the recoverable amount. If an impairment loss is subsequently reversed, the carrying amount of the asset (or asset’s cash generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the revised carrying amount does not exceed the carrying amount that would have been determined (net of depreciation) had no impairment loss been recognised in prior periods. A reversal of an impairment loss is recognised in the profit and loss account.
1AD11.2.2.1.8 Intangible assets
Intangible assets acquired as part of a business combination are initially recognised at fair value being their deemed cost as at the date of acquisition. These generally include brand and customer related intangible assets. Computer software that is not an integral part of an item of computer hardware is also classified as an intangible asset. Where intangible assets are separately acquired, they are capitalised at cost. Cost comprises purchase price and other directly attributable costs.
Intangible assets with finite lives are amortised over the period of their expected useful lives in equal annual instalments, as follows;
Brands 5 to 10 years
Customer related 5 to 20 years
Supplier agreements 4 to 10 years
Computer related 3 to 7 years
Subsequent to initial recognition, intangible assets are stated at cost less accumulated amortisation and impairment losses incurred.
1AD11.2.2.1.9 Contingent acquisition consideration
Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with Section 21. Any adjustments to the estimated contingent consideration are accounted for as an adjustment to goodwill as a current period adjustment as it reflects a change in estimate and the adjusted goodwill is amortised from that date. Contingent consideration that is classified as equity is not remeasured and its subsequent settlement is accounted for within equity. To the extent that contingent acquisition consideration is payable after more than one year from the date of acquisition, it is discounted at an appropriate loan interest rate and, accordingly, carried at net present value on the Balance Sheet. An appropriate interest charge, at a constant rate on the carrying amount adjusted to reflect market conditions, is reflected in the Profit and Loss over the earnout period, increasing the carrying amount so that the obligation will reflect its settlement at the time of maturity.
1AD11.2.2.1.10 Financial assets
Financial assets in subsidiaries and other financial fixed assets are stated at cost less provision for any diminution in value.
AND/OR
The company has adopted a policy of measuring investments in financial assets which can be reliably measured at their fair value, with changes in the fair value recognised in the profit and loss.
AND/OR
Financial assets which can be reliably measured are measured at their fair value, with changes in the fair value recognised in other comprehensive income and the revaluation reserve.
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1AD11.2.2.1.11 Turnover
1AD11.2.2.1.11.1 General turnover accounting policy notes
Turnover
Turnover represents net sales to customers and excludes trade discounts and Value Added Tax.
Turnover from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on dispatch of the goods. Turnover from the provision of services is recognised in the accounting period in which the services are rendered and the outcome of the contract can be estimated reliably. The company uses the percentage of completion method based on the actual service performed as a percentage of the total services to be provided.
Revenue in relation to maintenance and support is recognised on a straight-line basis over the term of the contract with any unearned revenue included in deferred revenue.
1AD11.2.2.11.2 Turnover accounting policy for an insurance broker
Turnover – commission income
Turnover represents commissions earned in the period together with overrider and profit commissions receivable. Commission income is recognised in the accounting period in which the policy commences. To the extent that future services need to be provided over the life of the policy which straddles an accounting period, revenue is deferred. Commission income in relation to claims handling is recognised in the accounting period in which the claims are settled. Overrider and profit commissions, if any, are recognised in line with the underlying agreements and amounts confirmed by product providers.
1AD11.2.2.11.3 Turnover accounting policy for a manufacturng company that produces, install and also engage in long term contracts using the stage of completion using the contract activity
Turnover
Turnover, excluding value added tax, represents the income received and receivable from third parties, in the ordinary course of business, for goods and services provided. Any discounts given to customers are deducted from turnover.
Revenue from the sale of products is recognised when the goods are dispatched to the customer. Revenue from the servicing of machines is recognised over the period of the performance of the service. Proceeds received in advance of product dispatch or performance of service are recorded as deferred revenue in the balance sheet.
Revenue from the sale of machines and manufactured steel components is recognised over the period of the design, build and installation contract. Where the outcome of a long-term contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date. This is normally measured by surveys of work performed to date. Variations in contract work are included to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.
When the outcome of a long-term contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred and that it is probable it will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
1AD11.2.2.11.4 Turnover accounting policy note where turnover is derived from investments
Turnover
Turnover represents dividends and other income received on investments held, net of irrecoverable withholding taxes. Dividends are recognised in the period to which the dividends relate.
1AD11.2.2.11.5 Turnover accounting policy for a software company
Turnover
Turnover, which excludes value added tax, represents the invoiced value of goods and services supplied and the value of long term contract work done, as outlined below.
The company usually sells its software as part of an overall solution offered to a customer, in which significant customisation and modification to the company’s software generally is required. As a result, revenue generally is recognised over the course of these long term projects.
Initial license fee for software revenue is recognised as work is performed, under the percentage of completion method of accounting. Subsequent license fee revenue is recognised upon completion of the specified conditions in each contract. Service revenue that involves significant ongoing obligations, including fees for customisation, implementation and modification, is recognised as work is performed, under the percentage of completion method of accounting.
Software revenue that does not require significant customisation and modification, is recognised upon delivery and installation. In managed service contracts, revenue from operation and maintenance of customers’ billing systems is recognised in the period in which the bills are produced. Revenue from ongoing support is recognised as work is performed. Revenue from third–party hardware and software sales is recognised upon delivery and installation, and recorded at gross or net amount according to whether the company acts as a Principal or as an Agent. Maintenance revenue is recognised ratably over the term of the maintenance agreement, which in most cases is one year or less. Losses are recognised on contracts in the period in which the liability is identified.
1AD11.2.2.11.6 Turnover accounting policy for a construction company
Turnover – contracting work
Where the outcome of a construction contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date. This is normally measured by reference to the proportion of costs incurred up to the date of the balance sheet to the estimated total costs. Variations in contract work, claims and incentive payments are included to the extent that it is probable that they will result in revenue and they are capable of being reliably measured.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred and that it is probable it will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
1AD11.2.2.11.7 Accounting policy where agreement exists for construction of real estate where recognised only when risk and reward transfer as opposed to using percentage completion
Revenue recognition
Revenue is recognised to the extent that it is probable the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration receivable. Revenue represents the value of goods and services supplied to customers net of value added tax and trade discounts. The following criteria must also be met before revenue is recognised.
Revenue on housing developments
Revenue on housing developments and the respective profits are recognised when the property is structurally complete and legally transferred to the purchaser.
Stock
Inventories are stated at the lower of cost and net realisable value. Net realisable value in respect of inventory property is assessed with reference to market prices at the reporting date, less estimate costs to complete including overheads and selling costs.
Building land and roads are stated at the lower of cost and net realisable less an appropriate proportion relating to plots sold in the case of estimates of estates in the course of developments.
The company assess at each balance sheet date whether the building land and roads is impaired in accordance with Section 13 and 27 of FRS 102. If an impairment has occurred, then the write down is recognised as an expense in the profit and loss account.
Work in progress – The cost of uncompleted and unsold new properties comprises direct labour and material costs. No profits are taken until houses are conveyed on legal completion to third parties.
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1AD11.2.2.12 Government grants
1AD11.2.2.12.1 Accruals model
Example using an accruals model
Government grants are recognised at their fair value when it is reasonable to expect that the grants will be received and all related conditions will be met.
Grants that relate to specific capital expenditure are treated as deferred income which is then credited to the profit and loss account over the related asset’s useful (i.e. an accruals basis). Revenue grants are credited to the profit and loss account when receivable so as to match them with the expenditure to which they relate. Government grants received are included in ‘other income’ in profit or loss.
1AD11.2.2.12.2 Performance model
Example using the performance model
Government grants are recognised when it is reasonable to expect that the grants will be received, and all related conditions will be met.
Grants that relate to specific capital expenditure are treated as deferred income which is then credited to the profit and loss account once the performance conditions of the grant have been met. Revenue grants are credited to the profit and loss account when the performance conditions for the grant are fulfilled.
1AD11.2.2.13 Dividend income
Dividend income from subsidiaries is recognised when the Company’s right to receive payment has been established.
1AD11.2.2.14 Dividend distribution
Dividend distribution to the company’s shareholders is recognised as a liability in the Company’s financial statements in the period in which the dividends are approved by the company’s shareholders.
1AD11.2.2.15 Currency
(a) Functional and presentation currency
Items included in the financial statements of the company are measured using the currency of the primary economic environment in which the company operates (“the functional currency”). The financial statements are presented in stg/euro, which is the company’s functional and presentation currency and is denoted by the symbol “CU”. OR The company has chosen to present the financial statement in a currency that differs from its functional currency so that it can be easily consolidated into the parent company’s financial statements.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the profit and loss account within ‘finance (expense)/income’. All other foreign exchange gains and losses are presented in the profit and loss account within ‘Other operating (losses)/gains’.
1AD11.2.2.16 Financial instruments
The company has adopted Section 11 and Section 12 of FRS 102 when accounting for financial instruments.
1AD11.2.2.16.1 Trade and other debtors
Trade and other debtors (including amounts owed to group companies if applicable) are recognised initially at transaction price (including transaction costs) unless a financing arrangement in exists in which case they are measured at the present value of future receipts discounted at a market rate. Subsequently these are measured at amortised cost less any provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. All movements in the level of the provision required are recognised in the profit and loss.
1AD11.2.2.16.2 Cash and cash equivalents.
Cash and cash equivalents include cash on hand, demand deposits and other short- term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.
1AD110.2.2.16.3 Other financial assets.
Other financial assets include investment which are not investments in subsidiaries, associates or joint ventures. Investments are initially measured at fair value which usually equates to the transaction price and subsequently at fair value where investments are listed on an active market or where non listed investments can be reliably measured. Movements in fair value is recognised in the profit and loss.
Where fair value cannot be measured reliably or can no longer be measured reliably, investments are measured at cost less impairment.
The entity has taken advantage of the exemption contained in Section 35.10(u) not to comply with the fair value measurement requirements of Section 11-Basic Finance Instruments and Section 12-Other Financial Instruments Issues on the date of transition to FRS 102 of 1 January 2014 or in the comparative financial period presented. Instead the entity has continued to apply the accounting policy requirements for these financial instruments under old UK GAAP. A transition adjustment has been posted to equity on 1 January 2015 so as to comply with the requirements of Section 11 and Section 12 for the current financial year as required by Section 35.10(u). As a result of availing of this exemption, listed investment have been carried at cost less impairment in the comparative financial period presented and any forward exchange contracts are disclosed as required under old UK GAAP accounting rules. (INCLUDE IF APPLICABLE)
1AD11.2.2.16.4 Trade and other creditors.
Trade and other creditors are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors, other creditors and amounts due to group companies are recognised initially at the transaction price net of transaction costs and subsequently measured at amortised cost using the effective interest method. Where a financing arrangement exists they are initially measured at the present value of future payments discounted at a reduced rate.
The entity has elected to adopt the exemption contained in Section 35.10(v) and to apply the rules detailed in Section 11 to debt instruments with related parties where a financing arrangement existed on the 1 January 2015 as opposed to the date of transition on 1 January 2014. As a result, a transition adjustment was posted to recognise the loans due to/from related parties at the present value of the minimum future payments and amortised cost utilising the prevailing market rate on the 1 January 2015 as permitted by Section 35.10(v)(c). For the comparative year presented these balances are carried at the amount recognised under old UK GAAP that being the amounts received/advanced less repayments. (INCLUDE IF APPLICABLE)
As permitted by the amendment made to FRS 102 Section 11 for small entities by the FRC on 8 May 2017 and inserted into Section 1.15A of Section 1 of FRS 102 amounts due from directors and shareholders of the entity who are natural persons are stated initially at the transaction price and subsequently at transaction price less repayments. The amortised cost model is not used instead such loans are stated at the amount of the loan obtained less repayments, plus any interest applied.
1AD11.2.2.16.5 Borrowings.
Borrowings are recognised initially at the transaction price (present value of cash payable to the bank, including transaction costs). Borrowings are subsequently stated at amortised cost.
Interest expense is recognised on the basis of the effective interest method and is included in finance costs. OR
Borrowing costs – capitalisation rate
The company has adopted a policy of capitalising qualifying borrowing costs. The company capitalises general borrowing costs which are directly attributable to the acquisition of the qualifying asset. The capitalisation rate used is a weighted average of the rates applicable to the company’s general borrowings that are outstanding during the period. Given that weighted averages are utilised this results in a level of estimation. In determining the capitalisation rate the company excludes any specific borrowings related to obtaining non-qualifying assets.
Preference shares, which are mandatorily redeemable on a specific date, are classified as borrowings. The dividends on these preference shares are recognised in the profit and loss as a finance cost.
Borrowings are classified as current liabilities unless the Company has a right to defer settlement of the liability for at least 12 months after the reporting date.
1AD11.2.2.16.6 Derecognition.
Financial liabilities are derecognised when the liability is extinguished, that being when the contractual obligation is discharged.
1AD11.2.2.16.7 Offsetting financial instruments.
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.
1AD11.2.2.17 Compound financial instruments.
Compound financial instruments issued by the company comprise of convertible preference shares which can be converted to a set amount of ordinary shares at a future date. The liability component of the compound instrument is initially recognised at the fair value of a similar liability where the conversion to equity option is not available. Subsequently this is measured at amortised cost using the effective interest rate method. The equity component is measured the difference between the fair value of the liability component and the fair value of the instrument as a whole. The equity component is not re-measured. Transaction costs are apportioned to the equity and liability component as a proportion that each type instrument is to the total fair value of the compound instrument.
1AD11.2.2.18 Derivatives
Derivatives are initially recognised at fair value on the date the contract is entered into and subsequently re-measured at their fair value. Changes in the fair value are recognised in the profit and loss within finance costs or finance income as appropriate, unless they are included in a hedging arrangement.
Derivative financial instruments are not basic. Hedge accounting is not applied.
OR WHERE HEDGE ACCOUNTING IS APPLIED
Derivative financial instruments are used to manage the Group’s exposure to foreign currency risk and interest rate risk through the use of forward currency contracts and interest rate swaps. These derivatives are generally designated as cash flow hedges in accordance with Section 12. The Group does not enter into speculative derivative transactions.
1AD11.2.2.19 Hedge accounting
Cash flow hedges
Subject to the satisfaction of certain criteria, relating to the documentation of the risk, objectives and strategy for the hedging transaction and the ongoing measurement of its effectiveness, cash flow hedges are accounted for under hedge accounting rules. In such cases, any unrealised gain or loss arising on the effective portion of the derivative instrument is recognised in the cash flow hedging reserve, a separate component of equity and posted to other comprehensive income. Unrealised gains or losses on any ineffective portion of the derivative are recognised in the income statement. When the hedged transaction occurs the related gains or losses in the hedging reserve are transferred to the Income Statement.
The company engages in hedge accounting for forward contracts in order to manage foreign currency fluctuations as well as interest rate swaps.
Changes in fair values of derivatives designated as cash flow hedges which meet the conditions for hedge accounting are recognised in directly equity through other comprehensive income to the extent that they are effective. Any ineffectiveness is charged to the profit and loss. Any gain or loss recognised in Other Comprehensive Income is transferred from equity to the profit and loss when the hedge relationship ends.
Cash flow hedges are those of highly probable forecasted future income or expenses. In order to qualify for hedge accounting, the Group is required to document the relationship between the item being hedged and the hedging instrument and document the causes of hedge ineffectiveness.
There is no significant difference between the timing of the cash flows and income statement effect of cash flow hedges.
Fair value hedges
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the profit and loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to the profit and loss.
1AD11.2.2.20 Provisions
Provisions are recognised when the company has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount of the obligation can be estimated reliably.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as a finance cost.
The extent a legal or constructive obligation exists, the acquisition costs include the present value of estimated costs of dismantling and removing the asset and restoring the site. A change in estimated expenditures for dismantling, removal and restoration is added to/and or deducted from carrying value of the related asset. To the extent the change results in a negative carrying amount, the difference is recognised in the profit and loss. The change in depreciation is recognised prospectively.
OR WHERE REMEDIATION PROVISIONS ARE REQUIRED INCLUDE THE BELOW:
1AD11.2.2.20.1 Environmental liabilities
Liabilities for environmental costs are recognised when environmental assessments determine clean-ups are probable and the associated costs can be reasonably estimated. Generally the timing of these provisions coincides with the commitment to a formal plan of action or, if earlier, on divestment or on closure of active sites. The amount recognised at the balance sheet date is the latest best estimate of the expenditure required.
Discounted liabilities in respect of environmental liabilities and closures costs have been classified between amounts due within one year and due after one year. Provisions for long term obligations are discounted at a rate of X%.
OR WHERE CLOSURE COSTS INCLUDE THE BELOW
1AD11.2.2.20.2 Closure costs
All costs associated with the decision to cease trading have been recognised in these financial statements. These include a write down of assets, provisions for expected closure costs together with profit and losses expected to be incurred up to date of cessation of trading.
1AD11.2.2.21 Contingencies
Contingent liabilities, arising as a result of past events, are not recognised when (i) it is not probable that there will be an outflow of resources or that the amount cannot be reliably measured at the reporting date or (ii) when the existence will be confirmed by the occurrence or non-occurrence of uncertain future events not wholly within the company’s control. Contingent liabilities are disclosed in the financial statements unless the probability of an outflow of resources is remote.
Contingent assets are not recognised. Contingent assets are disclosed in the financial statements when an inflow of economic benefits is probable.
1AD11.2.2.22 Employee Benefits
The company provides a range of benefits to employees, including annual bonus arrangements, paid holiday arrangements and defined contribution pension plans.
(a) Short term benefits
Short term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in the period in which the service is received.
(b) Annual bonus plans
The company recognises a provision and an expense for bonuses where the company has a legal or constructive obligation as a result of past events and a reliable estimate can be made.
(c) Defined contribution pension plans
The Company operates a defined contribution plan. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate fund. Under defined contribution plans, the company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
For defined contribution plans, the company pays contributions to privately administered pension plans on a contractual or voluntary basis. The company has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
(d) Defined benefit pension plan
Defined benefit pension scheme assets are measured at fair value. Defined benefit pension scheme liabilities are measured on an actuarial basis using the projected unit credit method. The excess of scheme liabilities over scheme assets is presented on the balance sheet as an asset or liability. Deferred tax is shown separately within deferred tax. The defined benefit pension charge to operating profit comprises the current service cost, past service costs, introductions, curtailments and settlements. The net interest cost on the scheme liabilities is presented in the profit and loss account as other finance expense. Actuarial gains and losses arising from changes in actuarial assumptions and from experience surpluses and deficits are recognised in other comprehensive income for the year in which they occur together with the return on plan assets, less amounts included in net interest.
1AD11.2.2.23 Preference share capital
Redeemable preference shares and the cumulative preference dividend reserve have been classified as liabilities in the balance sheet. The preference dividend is charged in arriving at the interest cost in the profit and loss account. (include the following where applicable) However no dividends will be paid on the cumulative preference shares until the company has positive profit and loss reserves.
1AD11.2.2.24 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds.
1AD11.2.2.25 Related party transactions
The company discloses transactions with related parties which are not wholly owned with the same group. It does not disclose transactions with members of the same group that are wholly owned.
1AD11.2.2.26 Interest income
Interest income is recognised using the effective interest method.
1AD11.2.2.27 Taxation
Tax is recognised in the profit and loss account, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case tax is also recognised in other comprehensive income or directly in equity respectively.
(e) Current tax
Current tax is calculated on the profits of the period. Current tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date.
(f) Deferred tax
Deferred tax arises from timing differences that are differences between taxable profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements.
Deferred tax is provided in full on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred tax liability is settled. Deferred tax is recognised in the profit and loss account or other comprehensive income depending on where the revaluation was initially posted.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
Current or deferred taxation assets and liabilities are not discounted.
NOTE: INCLUDE THE BELOW IF CONSOLIDATED FINANCIAL STATEMENTS ARE BEING PREPARED
If a temporary difference arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction does not affect accounting or taxable profit or loss, no deferred tax is recognised. Deferred tax is provided on temporary differences arising on investments in subsidiaries and associates and joint ventures, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
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1AD11.2.2.28 Tangible fixed assets
(g) Cost
Tangible fixed assets are recorded at historical cost or deemed cost (note include valuation here where appropriate), less accumulated depreciation and impairment losses. Cost includes prime cost, overheads and interest incurred in financing the construction of tangible fixed assets. Capitalisation of interest ceases when the asset is brought into use.
Freehold premises are stated at cost (or deemed cost for freehold premises held at valuation at the date of transition to FRS 102 where the optional transition exemption under S.35.10(a) of FRS 102 has been applied) less accumulated depreciation and accumulated impairment losses.
The company previously adopted a policy of revaluing freehold premises and they were stated at their revalued amount less any subsequent depreciation and accumulated impairment losses. The company has adopted the transition exemption under FRS 102 paragraph 35.10(d) and has elected to use the previous revaluation as deemed cost OR The company has adopted the transition exemption under FRS 102 paragraph 35.10(C) and has elected to use the fair value as deemed cost (THIS PARAGRAPH IS ONLY APPLICABLE FOR THE TRANSITION YEAR).
The difference between depreciation based on the deemed cost charged in the profit and loss account and the asset’s original cost is transferred from the non-distributable reserve to retained earnings through equity.
Equipment and fixtures and fittings are stated at cost less accumulated depreciation and accumulated impairment losses.
Where investment property can no longer be reliably measured without undue cost or effort these assets are reclassified to property, plant and equipment at the carrying amount prior to the transfer and depreciated over the useful economic lives.
Spare parts that are acquired as part of an equipment purchase which are only to be used in connection with these specific assets are initially capitalised and amortised as part of the equipment. Spare parts which are expected to be used during more than one period are capitalised as property, plant and equipment.
NOTE: Policy to be included where a policy of revaluation has been chosen:
The company has adopted a policy of revaluing freehold premises. Freehold premises are
included in the balance sheet at their fair value on the basis of a periodic professional valuation less accumulated depreciation. The difference between depreciation based on the revalued amount is charged in the profit and loss account and the asset’s original cost is transferred from revaluation reserve to retained earnings. Annually the carrying values are reviewed for appropriateness by the directors. Any changes in the value of freehold properties are reflected as a movement on the revaluation reserve except where the revaluation is below original cost in which case the balance is recognised in the profit and loss account.
To the extent a legal or constructive obligation exists, the acquisition costs include the present value of estimated costs of dismantling and removing the asset and restoring the site. A change in estimated expenditures for dismantling, removal and restoration is added to/and or deducted from carrying value of the related asset. To the extent the change results in a negative carrying amount, the difference is recognised in the profit and loss. The change in depreciation is recognised prospectively.
(h) Depreciation
Depreciation is provided on tangible fixed assets, on a straight-line basis, so as to write off their cost less residual amounts over their useful lives.
The estimated useful lives assigned to property, plant and equipment are as follows:
Freehold Premises 2% straight line on cost
Motor vehicles 25% straight line on cost Office
equipment, fixtures & fittings 12½% straight line on cost
Computer equipment 25%/33⅓% straight line on cost
Service equipment and spare parts 10% straight line on cost
The company’s policy is to review the remaining useful lives and residual values of property, plant and equipmenton an on-going basis and where indicators exist adjust the depreciation charge to reflect the remaining estimated life and residual value.
Fully depreciated property, plant & equipment are retained in the cost of property, plant & equipment and related accumulated depreciation until they are removed from service. In the case of disposals, assets and related depreciation are removed from the financial statements and the net amount, less proceeds from disposal, is charged or credited to the income statement.
1AD11.2.2.29 Stocks
Stocks comprise consumable items and goods held for resale. Inventories are stated at the lower of cost and net realisable value. Cost is calculated on a first in, first out basis and includes invoice price, import duties and transportation costs. Net realisable value comprises the actual or estimated selling price less all further costs to completion or to be incurred in marketing, selling and distribution.
At the end of each reporting period inventories are assessed for impairment. If an item of stock is impaired, the identified inventory is reduced to its selling price less costs to complete and sell and an impairment charge is recognised in the profit and loss account. Where a reversal of the impairment is recognised the impairment charge is reversed, up to the original impairment loss, and is recognised as a credit in the profit and loss account.
1AD11.2.2.30 Investment properties
The group/company owns a number of freehold office buildings that are held to earn long term rental income and for capital appreciation (ADJUST AS NECCESARY). Investment properties are initially recognised at cost. Investment properties whose fair value can be measured reliably without undue cost or effort are measured at fair value. Changes in fair value are recognised in the profit and loss account.
1AD11.2.2.31 Leases
1AC10.2.2.1.1.31.1 Finance leases
Leases in which substantially all the risks and rewards of ownership are transferred by the lessor are classified as finance leases.
Property, plant and equipmentacquired under finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments and are depreciated over the shorter of the lease term and their useful lives. The capital element of the lease obligation is recorded as a liability and the interest element of the finance lease rentals is charged to the profit and loss account on an annuity basis.
Each lease payment is apportioned between the liability and finance charges using the effective interest method.
1AD11.2.2.31.2 Operating leases
(i) Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss on a straight-line basis over the period of the lease.
1AD11.2.2.31.3 Lease incentives
Incentives received to enter into a finance lease reduce the fair value of the asset and are included in the calculation of present value of future minimum lease payments.
Incentives received to enter into an operating lease are credited to the profit and loss account, to reduce the lease expense, on a straight-line basis over the period of the lease.
1AC10.2.2.1.1.32 Leasing company accounting policy
NOTE: EXTRACT FOR A LEASING COMPANY
Gross earnings
Gross earnings comprises the finance charge element of lease rentals, the profit or loss generated on the termination of lease agreements and administration fees pertaining to lease agreements. Gross earnings are stated net of trade rebates and trade discounts, and exclusive of value added tax.
Finance lease and hire purchase agreements
Finance charges are allocated to periods so as to give a constant rate of return on the net cash investment in the lease. The total net investment included in the balance sheet represents total lease payments receivable, net of finance charges relating to future periods. Bad debts are charged to the profit and loss account in the period in which they occur. Recoveries of bad debts previously charged to the profit and loss account are credited to the profit and loss account upon recovery of the bad debt. The net investment in finance lease and hire purchase agreements is stated net of a bad and doubtful debt provision.
1AD11.2.2.33 Intangible assets
Intangible assets acquired separately from a business are capitalised at cost. Intangible assets acquired as part of an acquisition of a business are capitalised separately from goodwill if the fair value can be measured reliably on initial recognition. Intangibles assets as part of an acquisition are not recognised where they arise from legal or other contractual rights, and where there is no history of exchange transactions. Intangible assets excluding development costs, created within the business are not capitalised and instead expenditure is charged against profit in the year.
Subsequent to initial recognition, intangible assets are stated at cost less accumulated amortisation and impairments.
Intangible assets are amortised on a straight line basis over their estimate useful lives is included within administration expenses in the profit and loss. The useful economic life is determined to be the life over which economic benefits are utilised. The carrying value of intangible assets are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable. The useful economic lives of intangible assets are as follows:
| Development Costs | 5 Years Straight Line |
| Patents | 10 Years Straight Line |
| Customer Lists | 7 Years Straight Line |
The company’s policy is to review the remaining economic lives and residual values of intangible assets on an on-going basis and to adjust the amortisation charge to reflect the remaining estimated life where applicable and residual value where indicators of a change are present.
1AD11.2.2.34 Goodwill
Intangible assets comprises of purchased goodwill which represents the excess of the fair value of consideration paid for the acquisition of a XXXX business, over the fair value of identifiable assets acquired. Goodwill is amortised to the profit and loss account on a straight line basis over its useful economic life. The estimated useful economic lives of goodwill is up to XX years. Useful life is determined by reference to the period over which the values of the underlying business are expected to exceed the value of their identifiable net assets.
Goodwill is reviewed for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable.
1AD11.2.2.35 Exceptional items
Exceptional items are those that the Directors’ view are required to be separately disclosed by virtue of their size or incidence to enable a full understanding of the Company’s’ financial performance. The Company believe that this presentation provides a more informative analysis as it highlights one off items. Such items may include significant restructuring costs. The Group/Company has adopted an income statement format that seeks to highlight significant items within the Group/Company results for the year.
OR THE BELOW CAN BE USED
The Group has adopted an income statement format that seeks to highlight significant items within the Group results for the year. Such items may include restructuring, impairment of assets, profit or loss on disposal or termination of operations, litigation settlements, legislative changes and profit or loss on disposal of investments. Judgement is used by the Group in assessing the particular items, which by virtue of their scale and nature, should be disclosed in the income statement and notes as exceptional items.
1AD11.2.2.36 Share based costs
The company participates in a number of equity-settled, share based compensation plans operated by its parent company, XXXXX Limited. The fair value of the employee services received in exchange for the grant of the options or shares is recognised as an expense. The parent undertaking does not immediately recharge the company for these expenses so they are shown as a capital contribution from the parent undertaking within other reserves. Where any subsequent recharge is not, in the opinion of the directors, clearly linked to the share based payment charge, the amount is treated in a manner similar to a management recharge.
The total amount to be expensed over the vesting period is determined by reference to the fair value of the options, shares or Restricted Stock Units (RSU’s) granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options or shares that are expected to vest. At each balance sheet date, the entity revised its estimates of the number of options of shares that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
Fair value of options is measured using the Black Scholes model.
1AD11.2.2.37 Investment properties
The group owns a number of freehold office buildings that are held to earn long term rental income and for capital appreciation. Investment properties are initially recognised at cost. Investment properties whose fair value can be measured reliably are measured at fair value. Changes in fair value are recognised in the profit and loss account.
For investment properties which cannot be reliably measured without undue cost or effort these are included within property, plant and equipment and depreciated.
1AD11.2.2.38 Biological assets (where fair value is used)
The acquisition of land for forest projects is originally recorded at cost in accordance with Section 17 of FRS 102. Biological assets are stated at fair value, less estimated point of sale costs at each period end. The fair value is determined using the present value of expected net cash flows from the asset, discounted at a current market rate other than for young seedling stands. The fair value of the young seedling stands is the actual reforestation cost of those stands.
The gain or loss in fair value of these biological assets is reported in net profit. The measurement of biological growth in the field is an important element of this valuation. Initially at the start of the plantation cycle the fair value is equal to the standard costs of preparing and maintaining a plantation, including the appropriate cost of capital, assuming efficient operations. Towards the end of the plantation cycle the fair value depends solely on the discounted value of the expected harvest, less estimated point of sale costs. The calculation takes into account the growth potential, environmental restrictions and other reservations of the forests. Felling revenues and maintenance costs are calculated on the basis of actual costs and prices, taking into account the company’s projection of future price development.
Periodic changes resulting from growth, felling, prices, discount rate, costs and other premise changes are included in operating profit in the profit and loss account.
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1AD11.2.2.39 Biological assets – Livestock (where fair value model is adopted)
Livestock are measured at their fair value less costs to sell. The fair value of livestock is determined based on market prices of livestock of similar age, breed, and genetic merit. Changes in the fair value are recognised within cost of sales in the profit and loss.
1AD11.2.2.40 Biological assets – Forestry (where cost model is adopted)
The acquisition of land for forest projects is originally recorded at cost in accordance with Section 17 of FRS 102. Biological assets are measured at the lower of cost and estimated selling price less costs to complete and sell. This represents the costs less any accumulated depletion and any accumulated impairment losses. The company capitalises the cost associates with establishing and maintaining its forest plantations. Direct costs are capitalised on the basis of specific operations carried out. Indirect costs are capitalised by reference to the proportion of the direct costs capitalised for which the individual management team has responsibility.
Depletion represents the costs of forests clearfelled during the year, calculated as the proportion that the area harvested bears to the total area of similar forests. The depletion amount is charged to the profit and loss account and is based on cost which includes establishment costs and allocation of maintenance costs capitalised since that date.
1AD11.2.2.41 Biological assets – Livestock (where cost model is adopted)
Livestock are measured at the lower of cost and net realisable value. The purchase price of livestock bought in is measured at the purchase price plus directly attributable purchase costs. Own reared stock is measured at cost based on the selling price of the livestock less an appropriate margin based on industry norms to bring the value back to the estimated cost price.
1AD11.2.2.1.42 Prior period adjustment – Change in accounting policy
DISCLOSE CHANGE IN ACCOUNTING POLICY IF APPLICABLE.
1AD11.2.2.43 Change in accounting estimate
DISCLOSE AS REQUIRED
1AD11.2.2.44 Exceptional item
Exceptional items are those that the Directors’ view are required to be separately disclosed by virtue of their size or incidence to enable a full understanding of the Company’s’ financial performance. The Company believe that this presentation provides a more informative analysis as it highlights one off items. Such items may include restructuring, impairment of assets, profit or loss on disposal or termination of operations, litigation settlements, legislative changes and profit or loss on disposal of investments. The company has adopted an income statement format that seeks to highlight significant items within the company results for the year.
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1AD.8 Where any change is made in the format adopted in preparing a statement of financial position or income statement of a small entity, the reasons for the change, together with full particulars of the change, shall be given in a note to the financial statements in which the new format is first adopted. (Schedule 3A, paragraph 3(2))
Paragraphs 3.12 and 3.13 address similar requirements.
1AD.9 Where a small entity changes an accounting policy and has disclosed such change in the notes to the financial statements, the notes to those financial statements shall also disclose:
- the reason for the change in accounting policy; and
- to the extent practicable, the impact of the change in accounting policy on the financial statements for the current reporting period and on the financial statements of preceding (Section 321(3) of the Companies Act 2014)
Paragraphs 10.13 and 10.14 address similar requirements.
1AD.10 Where the corresponding amount for the immediately preceding reporting period is not comparable with the amount to be shown for the item in question in respect of the reporting period to which the statement of financial position or income statement relates, the former amount may be adjusted, and particulars of the adjustment and the reasons therefor shall be given in a note to the financial statements. (Schedule 3A, paragraph 5(1))
This is likely to be relevant when there has either been a change in accounting policy or the correction of a material prior period error. Paragraphs 10.13, 10.14 and 10.23 address similar requirements.
AD11.3.2 OmniPro comment
1AD11.3.2.1 Analysis
See application of section 1AD.7 to 1AD.10 of Appendix D of section 1A of FRS 102
Prior year adjustments have been discussed in detail in Section 10 at 10.9.2 and 10.8.2. Refer to section 10 for further details. The example below illustrates the requirements and assumes the statement of income and retained earnings is included as it would be required to show a true and fair view if not shown on the face of the profit and loss account then it must be included in a profit and loss reserves note as required by the Act. Note if this is a prior year adjustment due to a change in accounting policy it would be required to be included in the accounting policy section.
Example 3: Prior period error
During the 31 December 2015 year end, Company A noticed that the prior year financial statements omitted stock of CU100,000 which was material to the financial statements. Stock in the same location was also omitted at year ended 31 December 2013. The inventory in this location at that time was CU95,000. Given the materiality, this error requires a prior year adjustment. Assume a corporation tax rate of 10%. The adjustments required to correct this error are:
In the 31 December 2014 accounts to restate the opening balance
| C | U CU |
| Dr Inventory 9 | 5,000 |
|
Cr Profit and Loss Reserves (CU95,000-CU9,500 of current tax) |
85,500 |
|
Cr Corporation Tax Liability (CU95,000*10%) |
9,500 |
Being journal to reflect adjustment in respect of prior years’ including the additional tax payable
| C | U CU |
| Dr Inventory | 5,000 |
| Cr Cost of Sales | 5,000 |
|
Dr Current Income Tax in P&L (CU5,000*10%) |
500 |
| Cr Corporation Tax Liability | 500 |
Being journal to reflect movement on stock incorrectly excluded from 2013 to 2014 and the related corporation tax payable as a result
See below an example of how this should be disclosed so as to meet the disclosure requirements.
1AD11.3.2.2 Prior year adjustment disclosure
Profit and Loss Account
| 2015 |
2014 Restated |
||
| CU | CU | ||
| Turnover | 1,600,000 | 1,500,000 | |
| Cost of sales | (1,220,000) | (1,100,000) | |
|
Operating profit |
380,000 |
400,000 |
|
| Interest receivable | 5,000 | 5,000 | |
| Interest payable | (1,000) | (10,000) | |
|
Profit before taxation |
384,000 |
395,000 |
|
| Tax on profit | (38,400) | (39,500) | |
|
Profit for the financial year |
345,600 |
355,500 |
| Balance Sheet | 2015 |
2015 Restated |
| CU | CU | |
| Fixed assets | ||
| Tangible assets | 190,000 | 150,000 |
| Current assets | ||
| Inventory | 400,000 | 300,000 |
| Cash at bank and in hand | 360,000 | 150,000 |
| 760,000 | 450,000 | |
|
Creditors – amounts falling due within one year |
(99,700) |
(95,300) |
|
Net current assets |
660,300 |
354,700 |
|
Total assets less current liabilities |
850,300
|
504,700
|
|
Capital and reserves |
||
| Called up share capital presented as equity | 100 | 100 |
| Profit and loss account | 850,200 | 504,600 |
| Shareholders’ funds | 850,300 | 504,700 |
Prior year adjustment
The prior year adjustment is due to the omission of inventory located in an outside warehouse being excluded from the inventory at 31 December 2014 and 31 December 2013. The value of the inventory at 31 December 2014 was CU100,000 and the value of the inventory at 31 December 2013 was CU95,000. The financial statements for 2014 has been restated to correct this error.
The prior year adjustment resulted in an increase to the inventory balance at 31 December 2013 and 2014 of CU95,000 and CU100,000 respectively. This has resulted in the cost of sales for 31 December 2014 year end decreasing by CU5,000 and the profit and loss reserves increasing by CU85,500 being the net of tax adjustment and the tax charge for 2014 increasing by CU500. The effect of the restatement on each financial statement line item affected is shown below.
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| 1AD11.3.2.2.1 | 2014 |
| CU | |
| Cost of sales for year ended 31 December 2014 | |
| Cost of sales as previously stated | 1,005,000 |
| Adjustment for inventory previously excluded | (5,000) |
| Cost of sales as restated | 1,100,000 |
| Inventory for year ended 31 December 2014 | |
| Inventory at 31 December 2014 as previously stated | 200,000 |
| Adjustment for inventory previously excluded | 100,000 |
| Inventory as restated | 300,000 |
| Income tax expense for year ended 31 December 2014 | |
| Income tax expense as previously stated | 39,000 |
| Tax effect on adjustment for inventory previously excluded | 500 |
| Income tax expense as restated | (39,500) |
| Income tax payable | |
| Income tax payable at 31 December 2014 as previously stated | (39,000) |
| Tax effect on adjustment for inventory previously excluded | (9,500) |
| Tax effect on adjustment for inventory previously excluded | (500) |
| Income tax payable as restated | (49,000) |
| Profit and loss reserves at 31 December 2014 | |
| Profit and loss reserves at 31 December 2014 as previously stated | 414,600 |
| Adjustment for inventory previously excluded net of tax at 31 December 2013. | 85,500 |
| Adjustment for movement of inventory previously excluded net of tax in the 31 December 2014 year | 4,500 |
| Profit and loss reserves at 31 December 2014 as restated | 504,600 |
| Profit and loss reserves at 1 January 2014 | |
| Profit and loss reserves at 1 January 2014 as previously stated | 63,600 |
| Adjustment for inventory previously excluded net of tax | 85,500 |
| Profit and loss reserves at 1 January 2014 as restated | 149,100 |
| Profit for the year after taxation for year ended 31 December 2014 | |
| Profit after tax for year ended 31 December 2014 as previously stated | 351,000 |
| Movement on inventory previously excluded net of tax | 4,500 |
| Profit after tax for year ended 31 December 2014 as restated | 355,500 |
| Profit for the year after taxation for year ended 31 December 2013 | |
| Profit after tax for year ended 31 December 2013 as previously stated | 63,600 |
| Inventory previously excluded net of tax | 85,500 |
| Profit after tax for year ended 31 December 2013 as restated | 149,100 |
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1AD11.3.2.2.2 Option 2 – Analysis of prior year adjustments
The other option here is to show the prior year P&L and balance sheet with the adjustment & then the restated version as per below – you would still need the narrative in the section above.
Profit and Loss Account
|
2014 As previously stated |
Adjustments |
2014 Restated |
|
| CU | CU | CU | |
| Turnover | 1,500,000 | – | 1,500,000 |
| Cost of sales |
(1,105,000)
|
5,000
|
(1,100,000)
|
| Operating profit | 395,000 | 5,000 | 400,000 |
| Interest receivable | 5,000 | – | 5,000 |
| Interest payable |
(10,000)
|
–
|
(10,000)
|
| Profit before taxation | 390,000 | 5,000 | 395,000 |
| Tax on profit |
(39,000)
|
(500)
|
(39,500)
|
| Profit for the financial year | 351,000 | 4,500 | 355,500 |
Balance Sheet
|
2014 As previously stated |
Adjustments |
2015 Restated |
|
| CU | CU | CU | |
| Fixed assets | |||
| Tangible assets |
150,000
|
– |
150,000
|
| Current assets | |||
| Inventory | 200,000 | 100,000 | 300,000 |
| Cash at bank and in hand |
150,000
|
–
|
150,000
|
|
450,000
|
100,000
|
450,000
|
|
| Creditors – amounts falling due within one year |
(85,300)
|
(10,000)
|
(95,300)
|
| Net current assets |
354,700
|
90,000
|
354,700
|
| Total assets less current liabilities | 504,700 | 90,000 | 504,700 |
| Capital and reserves | |||
| Called up share capital presented as equity | 100 | – | 100 |
| Profit and loss account |
504,600
|
90,000
|
504,600
|
| Shareholders’ funds | 504,700 | 90,000 | 504,700 |
1AD11.3.2.2.3 Movement in profit and loss reserves note or statement of changes in equity
See below the disclosure requirements as detailed in Section 1AD.35 of Appendix D of FRS 102
|
Called up Share Capital |
Profit and loss Account |
Total Equity |
|
| CU | CU | CU | |
| Balance at 1 January 2014 as previously reported | 100 | 63,600 | 63,600 |
|
Prior year adjustment – change in accounting policy (see note X) Prior year adjustment – correct material error (see note X) |
–
|
– 85,500 |
– 85,500 |
| Balance at 1 January 2014 as restated | 100 | 149,100 | 149,100 |
| Profit for the year as previously reported | 351,000 | 351,000 | |
|
Prior year adjustment – change in accounting policy (see note X) Prior year adjustment – correction of material error (see note X) |
–
|
– 4,500 |
– 4,500 |
| Profit for the year as restated (see note X) |
–
|
355,500 | 351,000 |
| Balance at 31 December 2014 | 100 | 504,600 | 504,700 |
| Balance at 1 January 2015 | 100 | 504,600 | 504,700 |
| Profit for the year | 345,600 | 345,600 | |
| Balance at 31 December 2015 | 100 | 850,200 | 850,300 |
Note the inventory comparative figures would also be update and the word ‘Restated’ would be included under the comparative year as was done for the profit and loss and balance sheet above. (Note the above shows a statement of changes in equity, company law only requires the movement in profit and loss reserves either way the same disclosure would be required whether it be shown in the notes or in a statement of changes in equity.
1AD11.3.2.4 Example extract of a change in accounting policy disclosure
See below the disclosure requirements in section 1AD.9 of Appendix D of FRS 102 for a change in accounting policy – note this would be included in the accounting policy section of the financial statements.
Previously the company applied FRS 102 as its accounting framework but did not apply the Statement of Recommended Practice “Accounting and Reporting by Charities” effective 1 January 2015. As a result of adopting the Charities SORP (FRS 102) in the current period a change in accounting policy was required so as to ensure compliance with the Charities SORP FRS 102.
Under FRS 102 the company adopted an accounting policy to recognise all grants on an accruals basis as opposed to on a performance basis. However, under the FRS 102 Charities SORP all grants including capital grants should be recognised as income in the SOFA on a performance basis (i.e. when the charity has entitlement to the funds, any performance conditions attached to the grants have been met, it is probable that the income will be received, and the amount can be measured reliably). Given that the Charities SORP (FRS 102) represents best practice for all charities as it seeks to provide information relevant to the understanding of the directors and the performance and financial position of the Charity the directors believe the change in accounting policy is required.
As a result of the change in accounting policy from the accruals basis to the performance basis it has resulted in:
- the amount previously recognised as deferred income on the balance sheet at 31 December 2014 and 2013 of €719,000 and €769,000 respectively being released to a restricted fund within charity’s funds where the grant was given for a specific purpose OR to a general fund where the grants were not required to be applied for a specific The reason for this is that this
- €719,000 and €769,000 respectively would previously have been recognised in the SOFA had the performance model been applied from inception. If the performance basis had of being applied from inception this income would have been released to the SOFA in the years 201X, (€XXX) and 201X (€XXX) respectively.
- the amortisation credited/recognised in income OR in expenses in the year ended 31 December 2014 of €50,000 on capital grants accounted for under the accruals model being
- the depreciation of €XXXX on the element of the fixed asset cost covered by the grant being allocated to restricted funds in the SOFA from the unrestricted
- the recognition of additional income in the SOFA of €XXX with regard to grants received for capital purposes where the conditions of the grant were complied with which was recognised as deferred income on the balance sheet under the accruals model previously (for illustrative purposes).
The impact of applying the performance model as opposed to the accruals model for the current year is that:
- additional income of €100,000 has been recognised in the SOFA with regard to capital grants received where the performance conditions have been met which previously would have been deferred and included in deferred income under the accruals model; and
- the amount recognised in expenditure on charitable activities would have been €55,000 lower for the amortisation that would have been released on the capital grants under the accruals
- there would be no requirement to show the depreciation on the element of the fixed asset cost covered by the grant being allocated to restricted funds in the SOFA.
Below is the analysis of the adjustments to the SOFA and the balance sheet in the comparative year:
|
BALANCE SHEET |
As previously stated |
Prior year Adjustment |
As Restated | |
| 2014 | 2014 | |||
| €’000 | €’000 | €’000 | ||
| Fixed assets | ||||
| Tangible assets | 1,500 | – | 1,500 | |
| Current assets | 2,496 | – | 2,496 | |
| Stocks | – | – | – | |
| Debtors | 1,300 | – | 1,300 | |
| Cash at bank and in hand | 500 | 500 | ||
| 1,800 | – | 1,800 | ||
| Creditors: amounts falling due within one year |
(577) |
– |
(577) |
|
| Net current assets | 1,223 | 1,223 | ||
| Total assets less current liabilities | 3,719 | – | 3,719 | |
| Capital grants | (719) | 719 | – | |
| Provision for liabilities | – | – | – | |
| Total net assets | 3,000 | 719 | 3,719 | |
| The funds of the charity: | ||||
| Restricted funds | – | 719 | 719 | |
| Unrestricted funds | 3,000 | – | 3,000 | |
| Total charity funds | 3,000 | 719 | 3,719 | |
| The funds of the charity: | ||||
| Restricted funds | – | 719 | 719 | |
| Unrestricted funds | 3,000 | – | 3,000 | |
| Total charity funds | 3,000 | 719 | 3,719 | |
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STATEMENT OF FINANCIAL ACTIVITIES
|
As previously stated |
Prior year Adjustment | As Restated | |
| 2014 | 2014 | ||
| €’000 | €’000 | €’000 | |
| Income from: | |||
| Donations and legacies | 2,400 | – | 2,400 |
| Charitable activities | 1,500 | – | 1,500 |
| Other trading activities | 105 | – | 105 |
| Investments | 2 | – | 2 |
| Other income | – | – | – |
| Total income | 4,007 | – | 4,007 |
| Expenditure on: | |||
| Raising funds | 1,636 | – | 1,636 |
| Charitable activities | 1,225 | 50 | 1,275 |
| Total expenditure | 2,860 | 50 | 2,910 |
| Net gain on investments | 3 | – | 3 |
| Net income for financial year | 1,150 | 50 | 1,100 |
| Transfer between funds | – | – | – |
| Net movement in funds | 1,150 | 50 | 1,100 |
| Reconciliation of funds: | |||
| Total funds brought forward | 1,850 | 769 | 2,669 |
| Total funds carried forward | 3,000 | – | 3,719 |
1AD11.3.2.5 Change in classification from prior period
The guidance detailed at 1AD11.3.2.1 and 1AD11.3.2.3.2 should be used when providing the disclosure with regard to section 1AD.10 of Appendix D of FRS 102. The reclassification will be required where the reclassification is material as detailed at 3.8.2.1
1AD11.4 True and fair view override
1AD11.4.1 Extracts from FRS 102: Section 1AD.11
1AD.11 If it appears to the small entity that there are special reasons for departing from any of the principles set out in company law in preparing the small entity’s financial statements in respect of any reporting period, it may do so, in which case particulars of the departure, the reasons for it, and its effects on the statement of financial position and income statement shall be given in the notes to the financial statements. (Section 291(6) of the Companies Act 2014 and Schedule 3A, paragraph 19)
This is only expected to occur in special circumstances. Paragraphs 3.4 and 3.5 address similar requirements.
1AD11.4.2 OmniPro comment
1AD11.4.2.1 Analysis
Section 1AD.10 of Appendix D of section 1A of FRS 102 requires disclosures of the impact where a true and fair view over side is involved. See below for a true and fair override example. An entity is required to give details of the override, how it is accounted for, the financial effect of what the accounts would have been shown at had the override not been invoked.
True and fair view override example (note merely for illustration purposes – this would not be applicable in practice)
(viii) Basis of preparation
The Financial Statements are prepared on the going concern basis, under the historical cost convention, [as modified by the revaluation of certain tangible fixed assets] and comply with the financial reporting standards of the Financial Reporting Council [and promulgated by Chartered Accountants Ireland] as modified by the Statement of Recommended Practice “Accounting and Reporting by Charities” effective 1 January 2015 and the Companies Act 2014 except for the entity invoking the true and fair view override with regard to the profit and loss and balance sheet formats in Schedule 3 of the Companies Act 2014 as permitted in Section X of FRS 102 and Section XXX of the Companies Act 2014.
In order for the financial statements to show a true and fair view the directors have determined the profit and loss formats as required by Schedule 3 of Companies Act 2014 be adapted to present results in accordance with the formats provided by Charities SORP (FRS 102) which details the income and expenditure by nature. Given that the company is a company limited by guarantee, the capital and reserves section of the balance sheet has been adapted accordingly to reflect this fact. The directors consider that the layout adopted more correctly reflects the nature of the entity given that the entity is a not-for-profit organisation which is limited by guarantee. To use the formats set out in Schedule 3 of Companies Act 2014 and Section 4 and 5 of FRS 102 would not result in the financial statements showing information that would provide information relevant to the understanding of the directors and the performance and financial position of the Charity.
1AD11.5 Notes to the statement of financial position – fixed assets
1AD11.5.1 Extract from FRS 102: Section 1AD.13 – 1AD.18
Fixed assets
1AD.13 In respect of each item which is shown under the general item ‘fixed assets’ in the small entity’s statement of financial position the following information shall be given:
(a) the aggregate amounts (on the basis of cost or revaluation, or under the fair value accounting rules) in respect of that item as at the date of the beginning of the reporting period and as at the reporting date respectively;
(b) the effect on any amount shown in the statement of financial position in respect of that item of:
(i) any revision of the amount in respect of any assets included under that item made during the reporting period as a result of revaluation or under the fair value accounting rules;
(ii) acquisitions during the reporting period of any assets; (iii) disposals during the reporting period of any assets; and
(iii) any transfers of assets of the small entity to and from that item during the reporting period. (Schedule 3A, paragraphs 45(1) and 45(2))
1AD.14 In respect of each item within paragraph 1AD.13 there shall also be stated:
(a) the cumulative amount of value adjustments for depreciation and impairment of assets included under that item as at the date of the beginning of the reporting period and as at the reporting date respectively;
(b) the amount of any such value adjustments made in respect of the reporting period;
(c) the amount of any adjustments made in respect of any such value adjustments during the reporting period in consequence of the disposal of any assets; and
(d) the amount of any other adjustments made in respect of any such value adjustments during the reporting period. (Schedule 3A, paragraph 45(3))
Comparatives are not required for the movements in fixed assets during the reporting period noted in paragraphs 1AD.13 and 1AD.14 above. (Schedule 3A, paragraph 5(2))
These two paragraphs apply to all fixed assets, including investment property, property, plant and equipment, intangible assets (including goodwill), fixed asset investments, biological assets and heritage assets recognised in the statement of financial position.
Each item refers to a class of fixed assets shown separately either in the statement of financial position, or in the notes to the financial statements.
Paragraph 16.10(e) addresses similar requirements for investment property. Paragraphs 17.31(d) and (e) address similar requirements for property, plant and equipment. Paragraphs 18.27(c) and (e) address similar requirements for intangible assets other than goodwill. Paragraph 19.26 addresses similar requirements for goodwill. Paragraphs 34.7(c) and 34.10(e) address similar requirements for biological assets. Paragraphs 34.55(e) and (f) address similar requirements for heritage assets recognised in the statement of financial position.
Fixed assets measured at revalued amounts
1AD.15 Where fixed assets are measured at revalued amounts, the items affected and the basis of valuation adopted in determining the amounts of the assets in question in the case of each such item shall be disclosed in the note on accounting policies. (Schedule 3A, paragraph 35(2))
These requirements apply when:
- Investments in subsidiaries, associates and joint ventures are measured at fair value with changes in fair value recognised in other comprehensive income. Paragraph 9.27(b) addresses a similar disclosure
- Property, plant and equipment are revalued using the revaluation model set out in paragraphs 17.15B to 17.15F. Paragraph 17.31(a) addresses a similar disclosure requirement.
- Intangible assets other than goodwill are revalued using the revaluation model set out in paragraphs 18.18B to 18.18H. Paragraph 18.29A(c) addresses a similar disclosure requirement.
These requirements do not apply to investment property and biological assets measured at fair value through profit or loss.
1AD.16 In the case of each item in the statement of financial position measured at a revalued amount, the comparable amounts determined according to the historical cost accounting rules shall be shown separately in the statement of financial position or in a note to the financial statements. (Schedule 3A, paragraph 35(3))
The comparable amounts refers to the aggregate amount of cost and the aggregate of accumulated depreciation and accumulated impairment losses that would have been required according to the historical cost accounting rules. (Schedule 3A, paragraph 35(4))
Paragraphs 17.32A(d) and 18.29A(d) address similar requirements.
These requirements apply in the same circumstances as those set out in paragraph 1AD.15.
1AD.17 Where any amount is transferred to or from any revaluation reserves and the revaluation reserves are shown as separate items in the small entity’s statement of financial position, the following information shall be set out in tabular form:
(a) the amount of the reserves as at the date of the beginning of the reporting period and as at the reporting date respectively;
(b) any amount transferred to or from the reserves during that period; and
(c) the source and application respectively of any amounts so transferred. (Schedule 3A, paragraph 49)
Paragraph 6.3A addresses similar requirements.
These requirements apply in the same circumstances as those set out in paragraph 1AD.15.
1AD.18 The treatment for taxation purposes of amounts credited or debited to the revaluation reserve shall be disclosed in a note to the financial statements. (Schedule 3A, paragraph 36(6))
Paragraph 29.27(a) addresses similar requirements.
These requirements apply in the same circumstances as those set out in paragraph 1AD.15.
Capitalisation of borrowing costs
Here you can create the content that will be used within the module.
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1AD11.5.2 OmniPro comment
1AD11.5.2.0 Overview
The below illustrates the requirement of Section 1AD.13 to 1AD.19 of Appendix D of Section 1A of FRS 102 as it applies to property plant and equipment.
1AD11.5.2.1 Extract of notes to the Balance Sheet for fixed assets to comply with the requirements of Section 1A for ROI entities
1AD11.5.2.1.1 Extract from the notes to the financial statements – property, plant and equipment note
Tangible Fixed Assets
| Freehold Premises | Motor Vehicles | Plant and machinery | Computer Equipment | Total | |
| CU | CU | CU | CU | CU | |
| Costs | |||||
| At beginning of year | 207,473 | 150,038 | 488,979 | 144,523 | 891,013 |
| Additions in year | 1,295,000 | 165,000 | 91,733 | 34,704 | 1,586,437 |
| Revaluation | 500,000 | – | – | – | 500,000 |
| Transfer from investment property | 100,000 | – | – | – | 100,000 |
| Disposals in year | – | (93,359) | – | – | (93,359) |
| At end of year | 1,502,473 | 221,679 | 580,712 | 179,227 | 2,984,091 |
|
Depreciation |
|||||
| At beginning of year | 187,723 | 111,836 | 270,802 | 134,767 | 705,128 |
| Charge for Year | 37,543 | 26,799 | 29,015 | 56,642 | 149,999 |
| Revaluation | (125,000) | – | – | – | (125,000) |
| On disposals | – | (42,060) | – | – | (42,060) |
| Impairment | – | – | 100,000 | – | 100,000 |
| At end of year | 100,266 | 96,575 | 399,817 | 191,409 | 788,067 |
| Net book value | |||||
| At 31 December 2015 | 1,752,207 | 125,104 | 80,895 | (12,182) | 2,196,024 |
| At 31 December 2014 | 19,750 | 38,202 | 18,177 | 9,756 | 85,885 |
NOTE NO COMPARATIVE YEAR MOVEMENT IS REQUIRED.
(a) The land and buildings were revalued by [state name], [state qualification] to an open market value basis reflecting existing use [or state alternate basis if appropriate if this Is higher] on [state date] 20XX. The valuation was carried out in accordance with the SCS Appraisal and Valuation
These valuations have been incorporated into the financial statements and the resulting revaluation adjustments have been taken to the revaluation reserve. The revaluations during the year ended 31 December 2015 resulted in a revaluation surplus of CU375,000 with deferred tax of CU XXX recognised on the uplift.
(b) The historical cost of the freehold premises is as follows:
| 2015 | 2014 | ||
| CU | CU | ||
| Original cost | XXX | XXX | |
| Accumulated depreciation | (XXX) | (XXX) | |
| Net book amount | XXX | XXX |
The freehold property has been pledged as security on loans taken out by the company.
1AD11.5.2.1.2 Borrowing costs
Include the below if the option to capitalise borrowing costs is chosen (section 1AD.19 of Appendix D of FRS102)
The company capitalised CUXXX (2014: CUXXXX) in borrowing costs during the year. The capitalisation rate used was X% (2014: X%).
1AD11.5.2.1.3 Intangible assets
The below illustrates the requirements of section 1AD.12 to 1A.19 of appendix D of section 1A of FRS 102 for intangible fixed assets
Extract from notes to the financial statements (assuming revaluation upwards of CU375,000 and there was an active market available to value the asset) – Intangible assets
|
Customer lists |
Development expenditure | Patents | Goodwill | Total | |
| CU | CU | CU | CU | CU | |
| Costs | |||||
| At beginning of year | 207,473 | 150,038 | 488,979 | 144,523 | 891,013 |
| Additions in year | 1,295,000 | 165,000 | 91,733 | 34,704 | 1,586,437 |
| Revaluation | 500,000 | – | – | – | 500,000 |
| Acquisition of subsidiary undertaking |
– |
– |
– |
100,000 |
100,000 |
| Disposals in year | – | (93,359) | – | – | (93,359) |
| At end of year | 1,402,473 | 221,679 | 580,712 | 279,227 | 2,984,091 |
| Depreciation | |||||
| At beginning of year | 187,723 | 111,836 | 270,802 | 134,767 | 705,128 |
| Charge for Year | 37,543 | 26,799 | 29,015 | 56,642 | 149,999 |
| Revaluation | (125,000) | – | – | – | (125,000) |
| On disposals | – | (42,060) | – | – | (42,060) |
| Impairment | – | – | 100,000 | – | 100,000 |
| At end of year | 100,266 | 96,575 | 399,817 | 191,409 | 788,067 |
| Net book value | |||||
|
At 31 December 2015 |
1,652,207
|
125,104 | 80,895 | 87,818 | 2,196,024 |
|
At 31 December 2014 |
19,750
|
38,202 | 18,177 | 9,756 | 85,885 |
The patents have been pledged as security on loans taken out by the company. There were no capital commitments at the year end.
The customer lists are valued based on market value at 31 December 2015 as determined from an active market in which they are traded. The remaining useful life on the customer list is 3 years.
The historical cost of the customer list is as follows:
CU
At 31 December 2015 20,020
At 31 December 2014 24,165
As a result of falling profits and in accordance with Section 27 of FRS 102, the carrying values of the patent assets have been compared to their recoverable amounts. As a result of this exercise an impairment charge of CU100,000 was recognised in the financial statements.
1AD11.5.2.1.4 Financial assets, joint venture, subsidiary or associate fair value through OCI with others stated at cost
The below illustrates the requirements of section 1AD.13 to 1AD.19 of Appendix D of section 1A of FRS 102 for financial asset investments in joint ventures, subsidiary or associate. See further disclosures at 1AD11.5.2.2.1.7
Extract from the notes to the financial statements – note where a joint venture, subsidiary or associate is fair valued through OCI and the others are stated at cost
| Financial assets | |||||
|
Un |
Subsidiary dertakings | Joint Venture and associates | Other investments |
Total |
|
| CU | CU | CU | CU | ||
| Cost | |||||
| At 1 January 2015, | XXX | XXX | XXX | XXX | |
| Additions | XXX | XXX | XXX | XXX | |
| Fair value adjustments | XXX | – | XXX | ||
| Disposals | – | (XXX) | – | (XXX) | |
| At 31 December 2015 | XXX | XXX | XXX | XXX | |
| Amounts provided: | |||||
| At 1 January 2015, | XXX | – | XXX | XXX | |
| Additional provision | XXX | – | – | XX | |
| At 31 December 2015 | XXX | XXX | XXX | XXX | |
| Carrying amount | |||||
| At 31 December 2015 | XXXX | XXXX | XXXX | XXXX | |
|
At 31 December 2014 |
XXXX |
XXXX |
XXXX |
XXXX |
(i) Investment in Subsidiary undertakings are stated at cost less impairment. Other investments are held at cost less impairment. Investments in joint ventures are measured at fair value based on valuation models which make the most of external market data such that the fair value represents the estimated value that could be obtained in an arm’s length transaction under normal business conditions. The discounted cash flows use a discount rate of 10%. The valuation used a multiple of earnings which is consistent with industry norms
OR
Investment in Subsidiary undertakings are stated at cost less impairment. Other investments are measured at fair value based on the quoted share prices. Other investments are held at cost less impairment. The fair value of the associate interest cannot be determined as there is no published price quotations.
1AD11.5.2.1.5 Example disclosure for a revaluation reserve
The below illustrates the disclosure requirements of section 1AD.17 (a) of Appendix D of FRS 102. These are also required under schedule 3A para 49 of Companies Act 2014. This can be included in the notes in the statement or the statement of changes in equity, if presented.
Revaluation Reserve
1AD11.5.2.1.6 Investment properties
See illustration of the disclosure requirements in section 1AD.13 to 1AD.14 and 1AD.22 of Appendix D of FRS 102
EXTRACT FROM THE INVESTMENT PROPERTIES NOTE INVESTMENT PROPERTIES
| 2015 | 2014 | |
| CU | CU | |
| Investment property at fair value at 1 January | 3,490,201 | 3,390,201 |
| Additions | – | – |
| Uplift in fair value recognised in the profit and loss (see note (i) below) | 150,000 | 100,000 |
| Transfer to property, plant and equipment (*for illustrative purposes) | – | – |
| Transfer from property, plant and equipment (*for illustrative purposes) | – | – |
| Transfer from inventories (*for illustrative purposes only) | – | – |
| Disposal | (2,539,476) | – |
| Investment property at fair value at 31 December | 1,100,725 | 3,490,201 |
(i) The land and buildings of the company were valued by [state name], [state qualification] to open market value reflecting existing use [or state alternate basis if appropriate] on [state date] 20XX. The valuation was carried out in accordance with the SCS Appraisal and Valuation Manual. {If the valuer is an officer or employee of the company or a group company this fact must be stated}. The critical assumptions made relating to the valuations are set out below:
| 2015 | 2014 | |
| Yields | 4% | 4% |
| Inflation rate | 2% | 2% |
1AD11.5.2.1.7 Financial assets note
See illustration of the disclosure requirements in section 1AD.13 to 1AD.14 and 1AD.20 to 1AD.21 of Appendix D of section 1A of FRS 102 below:
EXTRACT FROM THE FINANCIAL ASSETS NOTE
| 2015 | 2014 | ||
| € | € | ||
|
Cost Shares in subsidiary undertakings |
254 | 254 | |
| Other investments | 185,386 | 208,946 | |
| 185,640 | 209,200 | ||
| Impairments | |||
| At beginning of period | XX | XX | |
| Additions/reversals | XX | XX | |
| At end of period | XX | XX | |
| Carrying amount | 185,640 | 209,200 |
In the opinion of the directors the shares in the company’s subsidiary are worth at least the amounts at which they are stated in the balance sheet.
Other Investments
| 2015 | 2014 | ||
| Cost | € | € | |
| At the beginning of the year | 208,946 | 208,946 | |
| Purchased during the year | 150,000 | – | |
| Disposed of during the year | (173,560) | – | |
| At the end of the year | 185,386 | 208,946 |
The company purchased €150,000 of government bonds during the year. This represents the fair value at 31 December 2015 (2014: €nil). These mature on 1 January 2020.
The other investment relates to an investment made by the company in an unlisted entity where less than a significant influence is held. The fair value of this investment cannot be reliably measured in line with the hierarchy in Section 11 of FRS 102, as a result it is held at cost. The cost of the investment at the year ended 31 December 2015 was €185,336 (2014:€208,946).
The directors are satisfied that no impairment is required.
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1AD11.6 Impairments of assets
1AD11.6.1 Extracts from FRS 102: Section 1AD.20 – 1AD.21
1AD.20 Value adjustments for impairment of fixed assets (including fixed asset investments) shall be disclosed (either separately or in aggregate) in a note to the financial statements if not shown separately in the income statement. (Schedule 3A, paragraphs 23(1) and (2))
Paragraph 27.32(a) addresses similar requirements.
1AD.21 Any value adjustments for impairment of fixed assets that are reversed because the reasons for which they were made have ceased to apply shall be disclosed (either separately or in aggregate) in a note to the financial statements if not shown separately in the income statement. (Schedule 3A, paragraph 23(3))
Paragraph 27.32(b) addresses similar requirements.
1AD11.6.2 OmniPro comment
See below illustration of the requirements of section 1AD.20 to 1AD.21 of Appendix D of FRS 102
OPERATING PROFIT
| Operating profit is stated after charging: | 2017 | 2016 | |
| € | € | ||
| Impairment/reversal of impairment on financial assets | XXX | XXXX | |
| Impairment/reversal of impairment on tangible fixed assets/intangibles assets | XXX | XXXX | |
| Movement on fair value of derivatives | XXX | XXX | |
| Movement in fair value of listed investments/investments where less than significant influence is held | XXX | XXX | |
| Movement in fair value of investment properties/biological assets | |||
| Movement in fair value of investment in associate/JV | XXX | XXX | |
| Impairment/reversal of impairmentn tangible fixed assets/intangibles assets | XXX | XXXX |
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1AD11.7 Borrowing/creditors details
1AD11.7.1 Extracts from FRS 102: Sction 1AD.26 – 1AD.28
1AD.26 In respect of each item shown under ‘creditors’ in the small entity’s statement of financial position there shall be stated the aggregate amount of any debts included under ‘creditors’ which fall due for payment or repayment after the end of the period of five years beginning with the day next following the reporting date. (Schedule 3A, paragraph 50(1))
1AD.27 In respect of each item shown under ‘creditors’ in the small entity’s statement of financial position there shall be stated:
(a) the aggregate amount of any debts included under that item in respect of which any security has been given; and
(b) an indication of the nature of the securities so given. (Schedule 3A, paragraph 50(2))
Paragraphs 11.46, 13.22(e), 16.10(c), 17.32(a) and 18.28(c) address similar requirements.
1AD.28 Particulars shall be given of any charge on the assets of the small entity to secure the liabilities of any other person, including, where practicable, the amount secured. (Schedule 3A, paragraph 51(1))
1AD11.7.2 OmniPro Comment
See illustration of the disclosure requirements of section 1AD.26 to 1AD.28 of Appendix D of FRS 102 in relation to indebtness and guarantees.
DETAILS OF BORROWINGS WITH SECURITIES HELD
| 2015 | 2014 | |
| CU | CU | |
| Repayable other than by installments after 5 years from period end whether security is held or not | ||
| Bank Overdrafts etc etc. | – | – |
| 8% Redeemable Shares presented as a liability | XX | XX |
| Repayable by instalments where security is held | ||
| Term Loan | – | – |
| Finance leases | – | – |
The bank facilities are secured by a debenture incorporating fixed and floating charges over the assets of the company and personal guarantees from the Directors.
The finance leases are secured on the property to which the lease relate.
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1AD11.8 Appropriation of profit or loss/profit and loss reserve movements
1AD11.8.1 Extract from FRS 102: Section 1AD.35
1AD.35 The income statement, statement of financial position or notes to the financial statements of a small entity for a reporting period shall show:
(a) the aggregate amount of dividends paid in the reporting period (other than dividends for which a liability existed at the immediately preceding reporting date);
(b) the aggregate amount of dividends the small entity is liable to pay at the reporting date (other than dividends for which a liability existed at the immediately preceding reporting date);
(c) separately, any transfer between retained earnings and other reserves;
(d) any other increase or reduction in the balance on retained earnings since
the immediately preceding reporting date;
(e) the profit or loss brought forward at the beginning of the reporting period; and
(f) the profit or loss carried forward at the end of the reporting period. (Schedule 3A, paragraph 48)
Paragraph 6.3(c) addresses similar requirements.
1AD11.8.2 OmniPro comment
Section 1A.35 of Appendix D of FRS 102 specifically requires full movement on the profit and loss reserves note for the current and previous period.
EXTRACT OF MOVEMENT ON PROFIT AND LOSS RESERVES NOTE
MUST BE INCLUDED IN NOTES IF NOT ON FACE OF PROFIT AND LOSS. NOTE REQUIRED IN ABRIDGED ACCOUNTS IN ANY EVENT. IF THERE WAS A REVALUATION RESERVE OR A FAIR VALUE RESERVE IN EXISTENECE THEN THE MOVEMENT ON THESE RESERVES WOULD ALSO HAVE TO BE SHOWN. SEE 1AD11.5.2.1.5 and 1AD11.9.2.2.4. THIS COULD ALL BE DEALT WITH IN THE STATEMENT OF CHANGES IN EQUITY WHICH COULD BE PRESENTED AS A SEPARATE PRIMARY STATEMENT OR IN THE NOTES.
|
2017 CU |
2016 CU |
|||
| Profit and loss reserves brought forward at 1 January | XXXX | XXXXX | ||
| Profit for the financial year | XXXX | XXXX | ||
| Dividend declared and paid (€XX per ordinary share) (for illustrative purposes) | (x) | (x) | ||
| Dividends on ordinary shares declared but unpaid in year (€XX per ordinary share) | (x) | (x) | ||
| Transfer (to)/from other reserves (for illustrative purposes) | – | – | ||
| Purchase/redemption of own shares (if applicable) | – | – | ||
| Profit and loss reserve at 31 December | XXXXX | XXXXX |
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1AD11.9 Fair value measurement
1AD11.9.1 Extract from FRS 102; Section 1AD.22 to 1AD.25
1AD.22 Where financial instruments or assets other than financial instruments have been measured in accordance with the fair value accounting rules there shall be stated:
(a) the significant assumptions underlying the valuation models and techniques where fair values have been determined otherwise than by reference to market price in an active market;
(b) for each category of financial instruments or assets other than financial instruments, the fair value of the financial instruments or assets other than financial instruments in that category and the change in value:
(i) included in the income statement; or
(ii) credited or debited to the fair value reserve,
in respect of those financial instruments or assets other than financial instruments. (Schedule 3A, paragraphs 46(2)(a) and (b)) This does not apply where financial instruments or assets other than financial instruments are measured at fair value only on initial recognition. This applies where financial instruments, investment property and biological assets are subsequently measured at fair value through profit or loss, which is permitted or required by paragraphs 9.26(c), 11.14(b), 11.14(d)(i), 12.8, 14.4(d), 15.9(d), 16.7 and 34.4. Paragraphs 11.41, 11.43, 11.48(a)(i), 11.48(a)(ii), 12.28, 12.29(c), and 12.29(e) address similar disclosure requirements for financial instruments. Paragraphs 16.10(a) and 16.10(e)(ii) address similar disclosure requirements for investment property. Paragraphs 34.7(b) and 34.7(c)(i) address similar disclosure requirements for biological assets.
1AD.23 Where financial instruments or assets other than financial instruments have been measured in accordance with the fair value accounting rules there shall be stated for each class of derivatives, the extent and nature of the instruments, including significant terms and conditions that may affect the amount, timing and certainty of future cash flows. (Schedule 3A, paragraph 46(2)(c))
1AD.24 Where financial instruments or assets other than financial instruments have been measured in accordance with the fair value accounting rules there shall be stated in tabular form, the movements in the fair value reserve during the reporting period. (Schedule 3A, paragraph 46(2)(d)) Paragraphs 6.3A, 12.29(c) and 12.29(d) address similar requirements.
Financial instruments measured at fair value
1AD.25 Financial instruments that under international financial reporting standards (IFRS) may be accounted for in financial statements at fair value, may be so accounted for in financial statements to which the provisions of Schedule 3A apply, provided that the disclosures required by IFRS are made. (Schedule 3A, paragraph 38(1)) This applies to all financial instruments measured in accordance with the fair value accounting rules. The disclosures required by Section 11 that relate to financial assets and financial liabilities measured at fair value, including paragraph 11.48A, shall be given.
1AD11.9.2.1 Analysis – fair value disclosure requirements
See illustration of the disclosure requirements detailed in section 1AD.22 to 1AD.25 of Appendix D of FRS 102 for investment properties, subsidiary, associate, joint venture and listed shares or shares which do not give a significant influence which are measured at fair value through the profit and loss account below.
1AD11.9.2.2 Extract from the notes to the financial statements
1AD11.9.2.2.1 Investment property
See below illustration of the requirements in section 1AD.22 and 1AD.25 of appendix D of S1A of FRS 102 with regard to investments properties
| Investment properties | 2015 | 2014 | |
| CU | CU | ||
| Investment property at fair value at 1 January | 1,000,000 | 1,000,000 | |
| Additions (see note (i) below) | 200,000 | – | |
| Additions as a result of acquisitions | 50,000 | – | |
| (Decrease)/uplift in fair value (see note (ii) below) | (100,000) | 200,000 | |
| Transfer to property, plant and equipment (see note (iii) below) | (50,000) | – | |
| Transfer from property, plant and equipment (see note (iv) below) | 50,000 | – | |
| Disposal | (50,000) | – | |
| Investment property at fair value at 31 December | 1,100,000 | 1,200,000 |
(i) During the year the company completed the construction of a number of units which are now rented to third As a result these units were transferred at cost from work in progress to investment properties.
(ii) The land and buildings of the company were valued by [state name], [state qualification] to open market value reflecting existing use [or state alternate basis if appropriate] on [state date] 20XX. The valuation was carried out in accordance with the SCS Appraisal and Valuation Manual. {If the valuer is an officer or employee of the company or a group company this fact must be stated}. The critical assumptions made relating to the valuations are set out below:
| 2015 | 2014 | |
| Yields | X% | X% |
| Inflation rate | X% | X% |
OR WHERE APPLICABLE WHERE NO VALUATION WAS COMPLETED AT THE YEAR END The land and buildings of the company were valued by [state name], [state qualification] to fair value reflecting existing use [or state alternate basis if appropriate] on [state date] 20XX. The valuation was carried out in accordance with the SCS Appraisal and Valuation Manual. {If the valuer is an officer or employee of the company or a group company this fact must be stated}. An updated valuation was not performed by the company as the directors believe the valuation performed in XXX is not materially different from the carrying valye at 31 December 2015.
(iii) At 31 December 2015, the company could no longer reliably estimate the fair value of the investment property held at XXX due to market conditions in that location. As a result, in accordance with Section 16 of FRS 102, the property has been transferred from investment property and reclassified to property, plant and equipment at the carrying amount of CU50,000 and is depreciated from that date.
OR At 31 December 2015, the company could no longer estimate the fair value of the investment property without undue cost and effort, therefore, the property has been transferred from investment property and reclassified to property, plant and equipment at the carrying amount of CU50,000 and is depreciated from that date.
(iv) At 31 December 2015, a property which met the definition of investment property but which could not be classified as investment property due the inability to reliably measure its fair value due to market conditions can now be reliably measured. As a result, in accordance with Section 16 of FRS 102, the property has been transferred from property, plant and equipment and reclassified to investment property at its fair value at that date with the uplift recognised in the profit and loss.
(v) All investment property has been pledged as security on loans taken out by the company.
1AD11.9.2.2.2 Financial assets notes – investment in joint venture, subsidiary or associate measured at fair value through profit and loss.
See illustration of the disclosure requirements in section 1AD.22 of Appendix D of section 1A of FRS
| Financial assets | |||||
| Subsidary Undertakings | |||||
| CU | Joint Venture and associates | Other investments | Total | ||
| CU | CU | CU | |||
| Cost | XXX | ||||
| At 1 January 2015, | XXX | XXX | XXX | XXX | |
| Additions | XXX | XXX | XXX | XXX | |
| Fair value adjustments | – | – | XXX | ||
| Disposals | XXX | (XXX) | – | (XXX) | |
| At 31 December 2015 | XXX | XXX | XXX | ||
| Amounts provided: | XXX | ||||
| At 1 January 2015, | XXX | – | XXX | XXX | |
| Additional provision | XXX | – | – | XX | |
| At 31 December 2015 | XXX | XXX | XXX | ||
| Carrying amount | XXXX | ||||
| At 31 December 2015 | XXXX | XXXX | XXXX | XXXX | |
| At 31 December 2014 | XXXX | XXXX | XXXX |
(a) Investment in Subsidiary undertakings are stated at cost less impairment. Other investments are held at cost less
Investments in joint ventures are measured at fair value based on valuation models which make the most of external market data such that the fair value represents the estimated value that could be obtained in an arm’s length transaction under normal business conditions. The discounted cash flows use a discount rate of 10%. The valuation used a multiple of earnings which is consistent with industry norms.Extract of notes to the financial statements – Financial instruments note disclosures
1AD11.9.2.2.3 Financial instrument note disclosures
See illustration of the disclosure requirements in section 1AD.22, 1AD.25 of Appendix D of section 1A of FRS 102.
| Financial assets at fair value through profit or loss | CU | CU |
| Listed investments | 2,000 | 3,000 |
| Financial liabilities at fair value through profit and loss | ||
| Derivative financial instruments – Forward foreign contracts (see note 1) | 3,000 | 2,000 |
| X% preference shares (see note 3) XXX XXX. | ||
Note 1: The company takes out foreign currency contracts to hedge against the risk of foreign exchange movements. At 31 December 2015, the company had forward contracts to purchase FC100,000 at a rate of CU1=FC.80p. These contracts expire within 6 months of the year end. The fair value of these instruments at 31 December 2015 was CU10,000 (2014: CU2,000). This has been recognised in the profit and loss. The forward contracts are measured at fair value by utilising observable market date, more specifically quoted prices. OR WHERE HEDGING IS APPLIED Derivatives – forward foreign exchange contracts Forward foreign exchange contracts are marked to market using quoted forward exchange rates at the reporting date. The absolute principal amount of the outstanding forward foreign exchange contracts at 31 December 2015 was CUXXXX (2014: CUXXXXXXX). The hedged highly probable forecast transactions denominated in foreign currency are expected to occur at various dates during the next 12 months. Gains and losses recognised in the hedging reserve in equity (note XX) on forward foreign exchange contracts as of 31 December 2015 are recognised in the profit and loss in the period or periods during which the hedged transaction affects the income statement. This is generally within 12 months of the end of the reporting period. Derivatives – Interest Rate Swaps The fair value of interest rate swaps is calculated as the present value of the expected future cash flows based on observable yield curves. The notional principal amounts of the outstanding interest rate swap contracts at 31 December 2015 were CUxxxxx (2014: CUxxxxxx). At 31 December 2015, the average fixed interest rate on the swap portfolio was X% (2014: X%). The main floating rates are EURIBOR and LIBOR. Gains and losses recognised in the hedging reserve in equity (note XX) on interest rate swap contracts as of December 2015 will be continually released to the income statement within finance cost until the maturity of the relevant interest rate swap. Note 2: At the year end the fair value of certain equity investments could not be determined. As a result the carrying value prior to this date has now been deemed to be the cost of the investments. Note 3: These preference shares are classified as a non-basic financial instrument under Section 12 of FRS 102. The fair value of this financial liability is determined by assessing the present value of future cash flows at a market rate of interest at each period end date and utilising the discounted cash flow valuation technique. The market rate of interest used to present value the cash flows at the period end date was x% (2016: 0%). There was no movement on the fair value of this instrument between the date of initial recognition and the period end date. As the fair value has remained the same there was no fair value movement in relation to credit risk. The future cash flows utilised in the valuation model are cash flows which are unavoidable. OR Movement of €XXX was recognised in the profit and loss account for the fair value movement on this liability in the year. €XXX of this movement related to the change in credit risk for the company during the year. The future cash flows utilised in the valuation model are cash flows which are unavoidable. 1AD11.9.2.2.4 Fair value reserve disclosures See illustration of Section 1AD.22(b), 1AD.23 to 1AD.24 of Appendix D of FRS 102
| Cash flow hedge Reserve | ||||
| CU | ||||
| Balance at 1 January 2014 | 1,000 | |||
| Cash flow hedges: – fair value of cash flow hedges transferred to income statement | XX | |||
| – effective portion of changes in fair value to cash flow hedges | XX | |||
| Deferred tax on movement on cash flow hedge reserve movement | (XX) | |||
| Balance at 31 December 201X | XXXXX | |||
| Balance at 1 January 2015 | 1,000 | |||
| Cash flow hedges: – fair value of cash flow hedges transferred to income statement | XX | |||
| – effective portion of changes in fair value to cash flow hedges | XX | |||
| Deferred tax on movement on cash flow hedge reserve movement | (XX) | |||
| Balance at 31 December 201X | XXXX | |||
Statement of Comprehensive Income
| Profit for the financial year | 1,000,000 | 500,000 |
| Exchange differences on retranslation of foreign operations | XXX | XXX |
| Cash flow hedges | ||
| – effective portion of changes in fair value to cash flow hedges | 9 XXX | XXX |
| – fair value of cash flow hedges transferred to income statement | 10 XXX | XXX |
| Actuarial loss in respect of the defined pension scheme | 11 (XXX) | (XXX) |
| Deferred tax on cash flow hedge reserve movement | ||
| Gain/(loss) on revaluation of intangible assets | 12 XXX | (XXX) |
| Gain/(loss) on revaluation of property, plant and equipment | 13 XXX | (XXX) |
| Gain/(loss) on revaluation of subsidiaries, associates, etc. | 14 XXX | (XXX) |
| Deferred tax on components of other comprehensive income | 15 XXX | XXX |
| Total other comprehensive income for the year net of tax | 200,000 | (100,000) |
| Total comprehensive income for the year | 1,200,000 | 400,000 |
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1AD11.10 Notes to the income statements/profit and loss account
1AD11.10.1 Extract from FRS 102: Sections 1AD.36 to 1AD .37
Notes supporting the income statement
1AD.36 The income statement or the notes to the financial statements shall disclose information on the nature, amount and effect of individual items of income and expenditure that are exceptional by virtue of size or incidence. (Schedule 3A, paragraph 53)
Paragraph 5.9A addresses a similar requirement in relation to material items.
Information about employee numbers
1AD.37 The notes to a small entity’s financial statements shall disclose the average number of persons employed by the small entity in the reporting period. (Sections 317(1)(a) and 317(7A) of the Companies Act 2014)
1AD11.10.2 OmniPro comment
1AD11.10.2.1 Overview
Detailed below are the illustrations of the disclosure/material requirements in section 1AD.36 to 1AD.37 of Appendix D of FRS 102 and other disclosures required by the act with regard to the profit and loss account.
1AD11.10.2.2 Extract to show required profit and loss disclosures
1AD11.10.2.2.1 Exceptional item defined and the disclosure requirements
See 5.9.2.1.1 for a definition of exceptional items
1AD11.10.2.2.1.1 Exceptional item disclosure
See below illustration of the disclosure required under section 1AD.36 of Appendix D of section 1A of FRS 102 which deals with exceptional/material items.
EXTRACT AND EXAMPLE OF AN EXCEPTIONAL ITEM DISCLOSURE
| Profit and Loss Account | ||||
| For the Year Ended 31 December 2015 | ||||
| Notes | 2015 | 2014 | ||
| CU | CU | |||
| Turnover | XXXXX | XXXXX | ||
| Cost of sales | (XXXX) | (XXXX) | ||
|
Gross profit |
XXXX |
XXXX |
||
| Selling and distribution costs | (XXX) | (XXX) | ||
| Administrative expenses | (XXX) | (XXX) | ||
| Other operating income expenses | 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 |
XXX |
XXX |
||
| Income from shares in other financial assets | XXX | XXX | ||
| Income from shares in participating interests | 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 | (XXX) | (XXX) | ||
|
Profit after taxation |
1,000,000 |
500,000 |
||
Extract from notes to the financial statements
Exceptional item – impairment charge
| 2015 | 2014 | |
| CU | CU | |
| Restructuring costs (see (i) below) | 8,000 | – |
| Impairment of tangible fixed assets | 8,000 | – |
| Amortisation of deferred grants arising on impairment of related assets | (500) | – |
| 7,500 | – |
(i) During the year the company announced a formal plan to restructure the operations and as a result announced a plan to let employees go. This amount represents the expected cost of redundancy as a result of this
(ii) The directors have reviewed the carrying value of tangible fixed assets, net of associated deferred grants, at the year end in accordance with Section 27 “Impairment of Assets”. As a result, a net impairment loss of CU8,000 (2014: CUNil) has been charged to the profit and loss account for the year. The impairment of CU8,000 represents an impairment of tangible fixed assets net of a release of related deferred grants of CU500. The impairment losses have been allocated to fixed assets categories on a pro-rata basis relative to their pre-impairment carrying values. The impairment loss arose as a result of the material change in the market in which the company Deferred tax has been recognised as a result of this adjustment.
The company’s activities were considered, due to their nature, to form one income-generating unit for the purposes of the impairment review. A pre-tax discount rate of X%, representing the estimated market rate of return on an investment with equal risk, was applied to the expected future cash flows in the value in use calculation. Value in use was considered to exceed estimated net realisable value. Cash flows have been projected over five years based on management forecasts and budgets. After that a steady growth rate of X% has been assumed.
NOTE: WHERE EXCEPTIONAL ITEM NOT SHOWN ON THE FACE OF THE PROFIT AND LOSS BUT IN THE NOTES
| Exceptional item | 2015 | 2014 | |
| CU | CU | ||
| Administrative expenses in the profit and loss account includes the following exceptional charges: | |||
| Provision against investment in subsidiary/joint venture/associate | XX | XX | |
| XX | XX |
Exceptional item
The exceptional item arose as a result of a settlement reached in respect of litigation initiated against the company upon termination of a licence agreement prior to the year end. This amount which includes provision for all legal and other costs relating to the matter which will be borne by the company is also included within accruals and other liabilities in note XX of the financial statements.
Or
| Exceptional items | 2015 | 2014 | |
| CU | CU | ||
| (i) Movement in provision for operating costs to date of closure | XX | XXX | |
| (ii) Gain on settlement of pension scheme (see (a) below) | XX | (XXX) | |
| Total | XXX | XXX |
a) Following the closure of the company, the defined benefit pension scheme was wound up with effect from 31 December XXX. On wind-up, the pension scheme had sufficient assets to meet the liabilities of the scheme. The gain arose on closure of the scheme.
1AD11.10.2.2.2 Employee note disclosure
See the below illustration of disclosure requirements under section 1AD.37 of Appendix D of Section 1A of FRS 102
EMPLOYEES
The average monthly number of employees for the year was 14 (2014: 14)
1AD11.10.2.2.3 other profit and loss disclosures
See below illustration of the other profit and loss disclosures required by other sections of Appendix D of FRS 102. In addition, Schedule 3A formats require disclosures of interest income and expenses on group loans. See illustration below.
OPERATING PROFIT
| Operating profit is stated after charging: | 2015 | 2014 | ||||
| € | € | |||||
| Depreciation | 149,999 | 170,037 | ||||
| Impairment/reversal of impairment on financial assets | XXX | XXXX | ||||
| Impairment/reversal of impairment on tangible fixed assets/intangibles assets | XXX | XXXX | ||||
| Movement on fair value of derivatives | XXX | XXX | ||||
| Movement in fair value of listed investments/investments where less than significant influence is held |
XXX |
XXX |
||||
| Movement in fair value of investment properties/biological assets | ||||||
| Movement in fair value of investment in associate/JV | XXX | XXX | ||||
| Interest charge on group loans | XXX | XXX | ||||
| Interest charged on group loans | 5,400 | 500 | ||||
| Preference share dividend | 8,000 | – | ||||
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1AD11.11 Related party disclosures – director’s remuneration
1AD11.11.1 Extract from FRS 102: sections 1AD.38 to 1AD.40
Directors’ remuneration (Sections 305 and 306 of the Companies Act 2014)
1AD.38 The notes to the financial statements of a small entity shall disclose both for the current and the preceding reporting period the following amounts in relation to persons who at any time during the financial year were directors of the small entity:
(a) the aggregate amount of emoluments paid to or receivable by directors in respect of qualifying services;
(b) the aggregate amount of the gains by the directors on the exercise of share options during the reporting period;
(c) the aggregate amount of the money or value of other assets, including shares but excluding share options, paid to or receivable by the directors under long term incentive schemes in respect of qualifying services;
(d) the aggregate amount of any contributions paid, treated as paid, or payable during the reporting period to a retirement benefit scheme in respect of qualifying services of directors, identifying separately the amounts relating to:
(i) defined contribution schemes; and
(ii) defined benefit schemes;
and in each case showing the number of directors, if any, to whom retirement benefits are accruing under such schemes in respect of qualifying services,
(e) the aggregate amount of any compensation paid or payable to directors in respect of loss of office or other termination payments in the reporting period, distinguished between:
(i) amounts in respect of the office of director of the small entity; and
(ii) amounts in respect of other offices. (Sections 305(1) and 305(12)(b) of the Companies Act 2014)
The aggregate amounts in sub-paragraph (e) above should also be distinguished between amounts paid by or receivable from:
(i) the small entity;
(ii) the small entity’s subsidiaries;
(iii) any parent of the small entity; and
(iv) any other person. (Section 305(13)(b) of the Companies Act 2014)
1AD.39 The notes to the financial statements of a small entity shall disclose both for the current and the preceding reporting period the following amounts in relation to the one or more persons who are past directors of it or past directors of its parent:
(a) the aggregate amount paid or payable for such directors’ retirement benefits analysed between:
(i) retirement benefits for services as director of the small entity; and
(ii) other retirement benefits; (Sections 305(2) and 305(10) of the Companies Act 2014)
(b) the aggregate amount of any compensation paid or payable to such directors in respect of loss of office or other termination benefits distinguished between:
(i) amounts in respect of the office of director of the small entity; and
(ii) amounts in respect of other offices. (Sections 305(2) and 305(12)(b) of the Companies Act 2014)
The aggregate amounts in sub-paragraph (b) above should also be distinguished between amounts paid by or receivable from:
(i) the small entity;
(ii) the small entity’s subsidiaries;
(iii) any parent of the small entity;
(iv) and any other persons. (Section 305(13)(b) of the Companies Act 2014)
The disclosures in paragraphs 1AD.38 and 1AD.39 shall include all amounts paid or payable to a person connected with a director (Section 306(1)) and shall include all relevant sums paid by or receivable from the small entity, its subsidiaries, any parent of the small entity, and any other person (Section 305(13)(a) of the Companies Act 2014).
1AD.40 The notes to the financial statements of a small entity shall disclose, both for the current and the preceding reporting period, the aggregate amount of any consideration paid to, or receivable by, third parties for making available the services of any person:
(a) as a director of the small entity;
(b) as director of any of its subsidiaries; or
(c) otherwise in connection with the management of the small entity’s affairs or any of its subsidiaries.
This disclosure shall include all relevant sums paid by or receivable from , and shall distinguish between the sums respectively paid by, or receivable from, the small entity, its subsidiaries, any parent of the small entity and any other persons. (Section 305A(1) and 305A(2) of the Companies Act 2014)
The Nature of any consideration paid to, or receivable by, the third parties identified above, shall also be disclosed. (Section 305A(4)(a)(ii) of the Companies Act 2014)
1AD11.11.2 OmniPro comment
1AD11.11.2.1 Related parties defined
Related parties for the purposes of section 1A of FRS 102 as detailed in 1AD.51 of Appendix D of section 1A of FRS 102 are defined as;
- owners holding a participating interest in (or more) the small entity (i.e. significant influence = 20% or more of the voting power)
- entities in which the small entity itself has a participating interest
- the small entity’s director including connected persons of the director.
1AD11.11.2.1.1 Connected person defined
Section 220 of Companies Act 2014 defines connected persons as:
- a spouse or civil partner
- brother, sister
- child
- Parents
- A person acting in a capacity as trustee where the beneficial interest is held by the director, his spouce/civil partner or children
- A partner in a partnership
- A company where 50% or more of the voting rights or control is held by the director and his connected persons.
1AD11.11.2.2 Directors remuneration disclosure
1AD11.11.2.2.1 Make up of director’s remuneration
Section 1A.38 of Appendix D of FRS 102 requires the director’s remuneration to be split by emoluments, gains on exercise of share options, any benefit in kind element (e.g. V.H.I, provision of company car etc.) the pension contributions detailing the type, and any compensation paid for loss of office as director or as any other office (split to be shown). Note Section 1AD.40 of S1A require similar disclosures for payment to third parties for their services as directors. If there is payment to connected persons, there is a choice to disclose these in total or separate these out. Disclosures are required for the current and prior period.
1AD11.2.2.2 Director remuneration paid/payable by other group entities
Where directors remuneration is paid for by another group entity the amount paid must be disclosed even if it is not recharged to the entity that the director provides the service to.
The disclosures required under section 1AD.38 to 1AD.40 of Appendix D of section 1A of FRS 102 are illustrated below:
| 2015 | 2014 | ||
| CU | CU | ||
| Remuneration | |||
| Salary | 182,000 | 185,600 | |
| Retirement Benefits – defined contribution scheme | 30,000 | 30,000 | |
|
Social security costs Other compensations |
XXX | XXX | |
| – Benefit in kind | XXX | XXX | |
| – Gain on share options | XXX | XXX | |
| – Termination payment – loss of office as director (see note 1) | XXX | XXX | |
| – Termination payment – loss of office for other duties | XXX | XXX | |
| XXX | XXX |
Note 1: The termination was paid by XYZ Limited a subsidiary of this company
1AD11.12 Related part disclosures – loans, quasi – loans and credit transactions entered into for the benefit of directors.
1AD11.12.1 Extracts from FRS 102: 1AD.41 to 1AD.47
1AD.41 The financial statements of a small entity shall disclose, both for the current and the preceding reporting period, in the notes to the financial statements the particulars of the following arrangements (see paragraphs 1AD.42 to 1AD.45).
1AD.42 The particulars required in respect of loans, quasi-loans and credit transactions entered into by the small entity with or for persons who at any time during the reporting period, were directors of the company or of its parent or persons connected with such directors, separately for each director or other person, are:
(a) the name of the person for whom the arrangements were made and where that person is or was connected with a director of the small entity or its parent, the name of the director;
(b) the value of the arrangements at the beginning and end of the reporting period;
(c) advances made under the arrangements during the reporting period; (d) amounts repaid under the arrangements during the reporting period;
(e) the amounts of any allowance made during the reporting period in respect of any failure or anticipated failure by the borrower to repay the whole or part of the outstanding amount;
(f) amounts outstanding under the arrangements waived during the reporting period;
(g) an indication of the interest rate; and
(h) the arrangements’ other main (Section 307(3) of the Companies Act 2014)
Additionally, a separate total of the amounts stated for the purposes of each of paragraphs (b) to (f) above, and the amounts stated for the purposes of paragraph (b) expressed as a percentage of the net assets of the small entity at the beginning and end of the reporting period shall be disclosed. (Section 307(8)(a) and (c) of the Companies Act 2014) These additional requirements are extended to persons who are officers (but not directors) of the small entity or its parent, and separate disclosure in respect of these officers is required on an aggregate basis, as well as the number of officers for whom such arrangements were made. (Section 307(9) of the Companies Act 2014)
1AD.43 The particulars required in respect of an agreement to enter into loans, quasi-loans or credit transactions by the small entity with or for persons who at any time during the reporting period, were directors of the small entity or directors of its parent or persons connected with such directors, are those of subparagraphs (a), (g) and (h) of paragraph 1AD.42, and additionally the value of the arrangements agreed to. (Section 307(4) of the Companies Act 2014)
The disclosures shall be made separately for each director or other person.
1AD.44 The particulars required for guarantees entered into and security provided by the small entity on behalf of persons who at any time during the reporting period were directors of the small entity or of its parent or persons connected with such directors in connection with a loan, quasi-loan or credit transaction entered into with or for those directors or other persons, separately for each director or other person, are:
(a) the name of the person for whom the arrangements were made and where that person is or was connected with a director of the small entity or its parent, the name of the director;
(b) the amount of the maximum liability that may be incurred by the small entity;
(c) any amount paid and any liability incurred by the small entity for the purpose of fulfilling the guarantee or on foot of the provision of security (including any loss incurred by reason of enforcement of the guarantee or loss of the security); and
(d) the arrangements’ main terms. (Section 307(5) of the Companies Act 2014)
Additionally, a separate total of the amounts stated for the purposes of each of paragraphs (b) and (c) above is required. (Section 307(8)(b) of the Companies Act 2014) This requirement is extended to persons who are officers (but not directors) of the small entity or its parent and separate disclosure in respect of these officers is required on an aggregate basis, as well as the number of officers for whom such arrangements were made. (Section 307(9) of the Companies Act 2014)
1AD.45 The particulars required in respect of agreements by the small entity to enter into guarantees or provide security on behalf of persons who at any time during the reporting period were directors of the small entity or of its parent or persons connected with such directors in connection with a loan, quasi-loan or credit transaction entered into with or for those directors or other persons, are those of subparagraphs (a), (b) and (d) of paragraph 1AD.44. (Section 307(6) of the Companies Act 2014)
The disclosures shall be made separately for each director or other person.
Additional requirements
1AD.46 Where at any time during the reporting period the aggregate of the amounts of:
(a) the amount outstanding under arrangements waived comprising loans, quasi-loans and credit transactions; and
(b) the amount of the maximum liability that may be incurred by the small entity in respect of arrangements comprising guarantees entered into or security provided in connection with a loan, quasi-loan or credit transaction amount to more than 10 per cent of the net assets of the small entity, the aggregate amount shall be stated and the percentage of net assets that the total represents. (Section 307(10) of the Companies Act 2014)
1AD.47 In the event that the small entity is a parent and is taking an exemption from the requirement to prepare group financial statements, it shall provide the information required by paragraphs 1AD.41 to 1AD.46 in its financial statements in relation to both the small entity and its subsidiaries. (Section 308(4) of the Companies Act 2014)
A small entity that is not a company shall provide the disclosures required by paragraphs 1AD.42 to 1AD.47 in relation to members of its governing body.
1AD11.12.2 OmniPro Comment
1AD11.12.2.1 Analysis
Sections 1AD.41 to 1AD.47 of Appendix D of S1A of FRS 102 provides the disclosure requirement in relation to loans, quasi-loans, credit transactions entered into for the benefit of directors and connected persons. Section 1AD.41 to 1AD.43, and 1AD.46 to 1AD.47 of Appendix D of S1A of FRS 102 refers.
1AD11.12.2.1.1 Application to non-companies
As per section 1AD.47 of Appendix D of S1A FRS 102, if the entity is not a company then the remuneration, transactions etc should be disclosed as before as if the word ‘director’ was replaced with members of its governing bodies.
1AD11.12.2.1.2 Get out from disclosure if below a specified value.
Section 1AD.42 of Appendix D of S1A of FRS 102 permits non-disclosure here the aggregate value of the arrangements when taken together did not at any time exceed €7,500 for that director and connected persons.
1AD11.12.2.2 Disclosures of loans and guarantees for the benefit of directors.
See illustration of the disclosures in Sections 1AD.41 to 1AD.47 of Appendix D of S1A of FRS 102
| Directors’ Loans | Directors A | Director B | |
| Opening Balance | 4,332 | 100,000 | |
| Repayments by directors | (1,000) | – | |
| Advances to directors | 9,301 | – | |
| Closing balance | 12,633 | 100,000 | |
| % of net assets | X% | X% |
The loan is interest free and is repayable on demand . The amount written off/waived during the year was €XXX (2014: €xxx) . A provision of €XX (2014: €XX) was provided against this loan at year end.
During the year the company entered into an arrangement to guarantee a loan taken out personally by the directors, Mr. X. The guaranteed amount is to a maximum of CU XX. The company received no consideration for providing such a guarantee and no liability has been incurred in relation to this guarantees at the period end.
During the year the company paid €XXX (€XXX) for rental of the director’s premises .
During the year company paid CUXX in dividends to its director, Mr. X.
During the year the company provided construction services to a company called Related Company Limited. Ms B Director who is a director of the company is also a director and 100% shareholder of Related Company Limited. The cost of the services was €XXXX (2014: €XXX).
1AD11.13 Related party transactions material transactions with directors
1AD11.13.1 Extracts from FRS 102: Secton 1AD.48
1AD.48 The financial statements of a small entity shall disclose, both for the current and the preceding reporting period, in the notes to the financial statements the following particulars of any other arrangement or transaction not dealt with in paragraphs 1AD.38 to 1AD.47, entered into by the small entity in which a person, who at any time during the reporting period was a director, a director of its parent or a person connected with such a director, had, directly or indirectly, a material interest:
(a) particulars of the principal terms of the arrangement or transaction;
(b) the name of the director or other person with the material interest; and
(c) the nature of the interest. (Section 309 of the Companies Act 2014)
Disclosure is not required in relation to transactions or arrangements with a small entity in which a director of the small entity or of its parent, or a person connected with such a director, had directly or indirectly, a material interest if:
(a) they are excluded by virtue of section 309(5) of the Companies Act 2014; or
(b) (i) the value of each transaction or arrangement in which that director, or otherperson, had directly or indirectly a material interest and which was made after the commencement of the financial year with the small entity; and
(ii) the value of each such transaction or arrangement which was made before the commencement of the reporting period, less the amount, if any, by which the liabilities of the person for whom the transaction or arrangement was made have been reduced (that is, the value outstanding), did not at any time in the reporting period exceed in aggregate e5,000 or, if more, did not exceed the lesser of e15,000 and 1% of the value of the small entity’s net assets. (Section 309(6) of the Companies Act 2014)
In the event that the small entity is a parent and is taking an exemption from the requirement to prepare group financial statements, it shall provide the information required by this paragraph in its financial statements in relation to both the small entity and its subsidiaries. (Section 309(7) of the Companies Act 2014)
Other related party disclosures
1AD11.13.2 OmniPro comment
1AD11.13.2.1 Analysis
Section 1AD.48 of Appendix D of FRS 102 requires disclosure of all transactions which are material with directors (which do not relate to directors remuneration (see 1AD11.11.2) or loans, quasi-loans, credit transactions for the benefit of directors (see 1AD11.12.2). Note where these are transactions with wholly owned subsidiaries then no disclosure is required. Note section 1A.48 of Appendix D. This would cover loans given by a director to an entity.
1AD11.13.2.2 Is there exemptions from the disclosure?
Section 1AD.48(c) makes it clear where the value of the transaction in which the directors had an interest in did not exceed the higher of €5,000 or if more, did not exceed 1%of the value of the net assets of the entity,
1AD11.13.2.3 Disclosure
An entity must disclose the following in relation to these transactions:
– The terms
– The name of the director or other connected person with interest, and
– The nature of the interest
See illustration at 1AD11.12.2.2
1AD11.14 Other related party transactions (other than transactions with director)
1AD11.14.1 Extracts from FRS 102: Section 1AD.51
1AD.51 Particulars shall be given in the notes to the financial statements of transactions which have been entered into with related parties by the small entity if such transactions are material and have not been concluded under normal market conditions. The particulars shall include the amount of such transactions, the nature of the related party relationship and other information about the transactions which is necessary for an understanding of the financial position of the small entity.
The provision of particulars and other information about individual transactions may be aggregated according to their nature, except where separate information is necessary for an understanding of the effects of related party transactions on the financial position of the small entity.
Particulars need not be given of transactions which are entered into between two or more members of a group if any subsidiary which is party to the transaction is wholly owned by such a member.
These requirements apply only to related parties that are:
(a) the holders of participating interests in the small entity;
(b) entities in which the small entity holds a participating interest; and
(c) directors of the small entity or of a parent of the small entity. (Schedule 3A, paragraph 55)
Although disclosure is only required of material transactions with the specified related parties that have not been concluded under normal market conditions, small entities disclosing all transactions with such related parties would still be compliant with company law.
Transactions with directors, or members of a small entity’s governing body, include dividends paid to directors.
Paragraphs 33.9 and 33.14 address similar requirements for all related parties.
1AD11.14.2 OmniPro comment
Section 1AD.51 of Appendix D of FRS 102 requires disclosures with related parties which are not concluded under normal market conditions to be disclosed. Note director’s remuneration and transactions as detailed at section 1AD.38 to 1AD.48 of Appendix D of FRS 102 must be disclosed whether these are at market rates or not. See below illustration of the requirements in sections 1AD.51 of Appendix D of FRS 102.
OTHER RELATED PARTY TRANSACTIONS
The company regards OmniPro plc, a company incorporated in Ireland, as the ultimate parent company.
The following transactions were carried out with related parties (AS THIS IS DISCLOSED HERE WE ARE ASSUMING IT IS MATERIAL AND NOT CONCLUDED AT MARKET TERMS AND IT IS NOT WITH A 100% GROUP COMPANY AS THESE ARE THE DISCLOSURES THAT ARE ONLY REQUIRED):
| 2015 | 2014 | |
| CU | CU | |
| Other related parties | ||
| Sales of goods and services | ||
| OmniPro plc | XXX | 119,632 |
| Other related parties | ||
| Purchase of goods and services | ||
| OmniPro plc | XXX | 15,987 |
| Year end balances arising from sale/purchase of goods/services | ||
| Receivable from related parties | ||
| OmniPro plc | 1,571,862 | 191,852 |
During the year the company provided construction services to a company called Related Company Limited. Ms B Director who is a director of the company is also a director of Related Company Limited. The cost of the services was €185,000 and was provided at arms’ length prices.
Related Company Limited has a balance due to the company of €30,500 at the year-end and is included in trade debtors. AS THIS IS DISCLOSED HERE WE ARE ASSUMING IT IS MATERIAL AND NOT CONCLUDED AT MARKET TERMS
During the year the company paid expenses in the amount of CUXXXX (2014: CUXXXX) on behalf of an associate, Associate Limited. An amount of CUXXXX (2014: CUXXXX) remained outstanding from this company at the year end. A provision of CUXXXXX (2014: CUXXX) was provided against this balance at the 31 December 2015. Associate is related by virtue of common directors. AS THIS IS DISCLOSED HERE WE ARE ASSUMING IT IS MATERIAL AND NOT CONCLUDED AT MARKET TERMS
The company has not provided or benefited from any guarantees for any related party receivables or payables.
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1AD11.15 Ultimate controlling party
1AD11.15.1 Extract from FRS 102: Section 1A.50
1AD.50 Where a small entity is a parent and a subsidiary, the following information shall be stated with respect to the parent of the smallest group for which consolidated financial statements are drawn up and of which the small entity is a member:
(a) the name of the parent; and
(b) if the parent is incorporated, the address of the parent’s registered office whether in or outside of the Republic of Ireland; or
(c) if the parent is unincorporated, the address of its principal place of business(Schedule 3A, paragraphs 57 and 58)
Paragraph 33.5 addresses a similar requirement to paragraph (a).
1AD11.15.2 OmniPro comment
Section 1AD.50 of Appendix D of FRS 102 provides the disclosure requirements for subsidiary entities. See illustration of the requirement below.
ULTIMATE CONTROLLING PARTY
The company is a wholly owned subsidiary of OmniPro Holdings Limited a company incorporated in Ireland with a registered office address at XXX The consolidated financial statements to which these financial statements are prepared by XXX limited.
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1AD11.16 Post balance sheet events
1AD11.16.1 Extracts from FRS 102: Sections 1A.54
1AD.54 The particulars and financial impact of material events that have occurred after the end of the reporting period shall be given in the notes to the financial statements. (Schedule 3A, paragraph 56)
Paragraphs 32.10 and 32.11 address similar requirements.
1AD11.16.2 OmniPro comment
Section 1AD.54 of Appendix D of S1A of FRS 102 requires disclosure of post balance sheet events. Where an entity has taken a decision to wind up, disclosure must be made (see possible disclosures at 3.6.2.3). See illustration of the requirement below.
POST BALANCE SHEET EVENTS
There have been no significant events affecting the company since the year-end.
Or
Subsequent to year end the company announced a plan to restructure the companys operation. As a result a number of staff are due to be made redundant at a cost of €XXX.
On 31 January 2016 the company declared a final dividend of €xxx for the year ended 31 December 201X.
1AD.11.17 Guarantees, financial commitments and contingencies
1AD.11.17.1 Extract from FRS 102: Sections 1AD.28 to 1AD.34
1AD.28 Particulars shall be given of any charge on the assets of the small entity to secure the liabilities of any other person, including, where practicable, the amount secured. (Schedule 3A, paragraph 51(1))
1AD.29 Particulars and the total amount or estimated total amount shall be given with respect to any other financial commitment, guarantee or contingency not provided for in the statement of financial position. (Schedule 3A, paragraph 51(2)) The aggregate amount of any such commitments, guarantees or contingencies which are undertaken on behalf of or for the benefit of:
(a) any parent or fellow subsidiary of the small entity;
(b) any subsidiary of the small entity; or
(c) any undertaking in which the small entity has a participating interest, shall be separately stated and those within each of clause (a), (b) and (c) shall also be stated separately from those within any other of those clauses. (Schedule 3A, paragraph 51(7))
1AD.30 An indication of the nature and form of any valuable security given by the small entity in respect of commitments, guarantees and contingencies not provided for in the statement of financial position shall be given. (Schedule 3A, paragraph 51(3))
Paragraphs 11.46, 13.22(e), 16.10(c), 17.32(a) and 18.28(c) address similar requirements.
1AD.31 The total amount of any commitments not provided for in the statement of financial position concerning retirement benefits shall be disclosed separately. (Schedule 3A, paragraph 51(4))
1AD.32 Particulars, including details of significant assumptions underlying the valuation models shall be given of retirement benefit commitments which are included in the statement of financial position. (Schedule 3A, paragraph 51(5))
1AD.33 Where any commitment referred to in paragraph 1AD.31 or 1AD.32 relates wholly or partly to retirement benefits payable to past directors of the company, separate particulars shall be given of that commitment. (Schedule 3A, paragraph 51(6))
Such commitments as referred to in 1AD.29 to 1AD.33 can arise in a variety of situations, including in relation to group entities, investments, property, plant and equipment, leases and retirement benefit obligations. Paragraphs 15.19(d), 16.10(d), 17.32(b), 18.28(d), 20.16, 21.15, 28.40A(a), 28.40A(b), 28.41A(d), 33.9(b)(ii) and 34.62 address similar requirements.
Paragraph 28.41(k) addresses similar requirements for the assumptions underlying retirement benefit commitments recognised in the statement of financial position.
1AD.34 The nature and business purpose of any arrangements of a small entity that are not included in its statement of financial position shall be provided in the notes to the financial statements if the risks or benefits arising from such arrangements are material and in so far as the disclosure of such risks or benefits is necessary for assessing the financial position of the small entity. (Sections 323(1) and 323(1A) of the Companies Act 2014)
Examples of off-balance sheet arrangements include risk and benefit-sharing arrangements or obligations arising from a contract such as debt factoring, combined sale and repurchase arrangements, consignment stock arrangements, take or pay arrangements, securitisation arranged through separate entities, pledged assets, operating lease arrangements, outsourcing and the like. In many cases the disclosures about financial commitments and contingencies required by paragraphs 1AD.28 to 1AD.33 will also address such arrangements.
Paragraphs 11.46, 13.22(e), 16.10(c), 17.32(a) and 18.28(c) address similar requirements.
1AD11.17.2 OmniPro comment
1AD11.17.2.1 Analysis
Section 1AD.28 to 1AD.34 of Appendix D of FRS 102 deals with the disclosure requirements of commitments, contingencies, guarantees and other off-balance sheets items. See illustration of these requirements below.
1AD11.17.2.2 Contingencies (1AD.31 and 1AD.34 of Appendix D of FRS 102)
A legal action is pending against the company for alleged unfair dismissal. The directors under advisement from their legal team expect that the claim will be successfully defended. Should the company be unsuccessful in the action the maximum estimated settlement is not expected to exceed €10,000.
It is not anticipated that any material liabilities will arise from the contingent liabilities other than those provided for.
The company has entered into a guarantee for the benefit of its subsidiary/holding company/sister company/joint venture/associate. The total amount of this guarantee was €XX .
1AD11.17.2.3 Commitments
i) At 31 December 2017, the company had commitments under non-cancellable operating leases of €XXX (2016: €XXX).
ii)An amount of €XX (2016:€XX) was included in accruals with regard to pension contributions payable to the pension scheme. A further €XX was included in accruals for future payments required to fund a deficit which the company has committed to .
iii) An amount of €XX (2016:€XX) was included in accruals with regard to pension contributions payable to the pension scheme for past directors of the company .
iii)The company has entered into a guarantee for the benefit of its subsidiary/holding company/sister company. The total amount of this guarantee was €XX .
iv) An amount of €XX (2016:€XX) was included in creditors with regard to finance leases where security is held by the provider of those leases. CUXXX of this liability is included within creditors: amounts falling due within one year and CUXX included within creditors: amounts falling due after more than one year
CAPITAL COMMITMENTS
There were no capital commitments at the year ended 31 December 2017.
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1AD11.18 Holding of own shares
1AD11.18.1 Extract form FRS 102; Section 1AD.49
1AD.49 Where a small entity, or a nominee of the small entity or a person acting in that person’s own name but on behalf of the small entity, holds shares in the small entity or an interest in such shares, the notes to the financial statements shall give separately:
(a) the number and aggregate nominal value of those shares and, where shares of more than one class have been acquired, the number and aggregate nominal value of each class of such shares, at the beginning and end of the reporting period together with the consideration paid for such shares;
(b) a reconciliation of the number and nominal value of each class of such shares from the beginning of the reporting period to the end of the reporting period showing all changes during the reporting period, including further acquisitions, disposals and cancellations, in each case showing the value of the consideration paid or received, if any;
(c) the reasons for any acquisitions made during the reporting period;
(d) the proportion of called-up share capital held at the beginning and end of the reporting period; and
(e) particulars of any restriction on profits available for distribution by virtue of the application of Section 320. (Section 320 of the Companies Act 2014
1AD11.18.2 OmniPro Comment
Section 1AD.49 of Appendix D of FRS 102 requires disclosure where an entity holds its own shares or a subsidiary holds shares in its parent company. See illustration of the disclosure requirements below.
HOLDING OF OWN SHARES/HOLDING COMPANY SHARES
The company holds the following class of its own shares :
2017 2017 2016 2016
A Ordinary shares of €1 each € Number Number €
At 1 January (consideration paid of €XXX) XX XXX XXXX XX
Cancellations (XX) (XX) (XXXXX) (XX)
Redemptions from members XX XXXXX XXXXX XX
Closing balance XXX XXXXX XXXXX XXX
% of own shares held X% X%
The amount of profits available for distribution which are restricted as a result is €XXX (2016:€XX).
The reason for the acquisition/redemption of shares in the year was due to the buyback of shares from its former shareholder and director in order to allow him to retire etc. etc.
The company holds the following class of its parent company shares.
The amount of profits available for distribution which are restricted as a result is €XXX (2016:€XX).
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1AD11.19.1 Extract from FRS 102; Sections 1AD.52 – 1AD.53 and 1AD.55
1AD.52 The financial statements shall state the following:
(a) the name and legal form of the small entity;
(b) the place of registration of the small entity and the number under which it is registered;
(c) the address of its registered office;
(d) if relevant, the fact that the small entity is being wound up, and where appropriate, whether a receiver or a provisional liquidator has been appointed and the former name as well as the existing name of the small entity if the winding up of the small entity commences within one year after the date on which it has changed its name. (Section 291(3A) of the Companies Act 2014)
Paragraph 3.24(a) addresses similar requirements to (a), (b) and (c).
1AD.53 Where items to which Arabic numbers are given in any of the formats have been combined, unless they are not material, the individual amounts of any items which have been combined shall be disclosed in a note to the financial statements. (Schedule 3A, paragraph 4(5))
1AD.54 The particulars and financial impact of material events that have occurred after the end of the reporting period shall be given in the notes to the financial statements. (Schedule 3A, paragraph 56)
Paragraphs 32.10 and 32.11 address similar requirements.
1AD.55 Amounts in respect of items representing assets or income may be set off against amounts in respect of items representing liabilities or expenditure or vice versa in accordance with applicable accounting standards, provided that the gross amounts are disclosed in a note to the financial statements. (Schedule 3A, paragraph 7)
1AD11.19.2 OmniPro comment
1AD11.19.2.1 Disclosing legal form, registered office, basis of preparation
Section 1AD.52 of Appendix D of FRS 102 requires disclosures of the legal form, registered office, name, basis of preparation if prepared on a basis other than a going concern. Where an entity has taken a decision to wind up disclosure must be made (see possible disclosure at 3.6.2.3). See illustration of the requirements below.
The company’s’ registered office is Construction Place, Builders Lane, Dunblock, Any City. The company is a limited liability company incorporated in the Republic of Ireland and its company registration number is XXX[2]. XX Limited is a public benefit entity. During the year the company made a decision to cease trading and arrangements are in place to wind up the company etc. etc.
1AD11.19.2.2 Disclosure of items included in the balance sheet in more than on line item and not split out in the financial statements or notes
Section 1AD.53 of Appendix D of FRS 102 requires disclosure of an item not disclosed separately within the notes where the same items are included in two line items in the balance sheet to be disclosed in the notes. See application of same below:
(a) The following items were included in a number of categories within the balance sheet as detailed below:
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1AD11.20 Other items required by the formats under Companies Act
1AD.11.20.1 OmniPro comment
1AD.11.20.1.1 Analysis
The below disclosure illustrates additional requirements under the formats in Companies Act 2014 as well as additional items required under Companies Act 2014 which are applicable for companies applying section 1A.
1AD11.20.2 Stocks note
| 2017 | 2016 | ||
| € | € | ||
| Raw material | 33,724 | 42,108 | |
| Work in progress | 71,769 | 84,968 | |
| Finished goods | 594,216 | 265,090 | |
| 699,709 | 392,166 |
1AD11.20.3 Debtors note
| 2017 | 2016 | ||
| € | € | ||
| Trade debtors | 432,789 | 1,077,815 | |
| Other debtors | 279,008 | 57,864 | |
| Amounts due from group companies | 1,571,862 | 191,852 | |
| Prepayments | 29,795 | 12,710 | |
| Accrued income | – | – | |
| Directors Loans (see note X) | 112,633 | 104,332 | |
| 2,456,177 | 1,458,187 |
1AD11.20.4 Creditors: amounts falling due within one-year note
| 2017 | 2016 | ||
| € | € | ||
| Trade creditors | 969,675 | 887,073 | |
| Corporation tax due | 410,031 | 64,812 | |
| Other taxation and social security | 25,665 | 26,245 | |
| Other creditors and accruals | 267,051 | 284,139 | |
| Amounts owed to credit institutions (see note X) | 1,066,950 | 2,064,128 | |
| Finance Lease | 85,198 | 39,933 | |
| 2,824,570 | 3,366,330 |
1AD11.20.5 Creditors: Amounts falling due after more than one-year note
| 2017 | 2016 | ||
| € | € | ||
| Amounts owed to credit institutions (see note 14) | 1,903,810 | 2,129,125 | |
| Finance Lease | 147,400 | – | |
| 8% Redeemable Shares presented as a liability | 100,000 | – | |
| Amounts due from parent company (see (i) below) | – | – | |
| 2,166,210 | 2,129,125 | ||
1AD11.20.6 provision for liabilities
| 2017 2016 | |||||
| € € | |||||
| Deferred taxation | 116,706 | 65,212 | |||
| Retirement benefit obligations | – | – | |||
| Other provisions for liabilities | 97,500 | – | |||
| 214,206 | 65,212 | ||||
1AD11.20.7 Dividends payable
Dividends
| 2015 | 2014 | |
| CU | CU | |
| Final dividend of CU0.01 (2014: CUNil) declared on XXX ordinary shares of CU1 each but not paid at year end – included in accruals |
2,250 |
– |
| Interim dividend of CU0.01 (2014: CUNil) paid on XXX ordinary shares of CU1 each |
2,250 |
– |
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Examples
Example 2: Statement of compliance with FRS 102
Example 3: Transition note adjustment
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