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| Old GAAP | FRS 102 | Further Comment On Differences |
| Profit & Loss Account | Income Statement & Statement of Comprehensive Income (S.5) | |
| P&L Account – No specific standard dealing with layout – CA Format. | Can still Referred to as P&L Account – CA Format. Option to use the IFRS format (not allowed in Ireland until the EU Directive 2013/34 is enacted which is expected to occur in early 2016). Small entities can prepare an abridged profit and loss account under Section 1A of FRS 102. (Note this exemption cannot be claimed by Republic of Ireland Companies at this time as the EU Directive 2013/34 has not yet been enacted). | If the Companies Act format is adopted, there will be no differences in the layout of the balance sheet. Option to use ‘Income Statement’ available. If the IFRS option is adopted the layout will differ. See example layout attached (Example 2 – Consolidated Statement of Comprehensive Income). UK companies can claim this small entity exemption at this time. Companies in the Republic of Ireland cannot at the time of publishing this guide. See example layout attached for this abridged profit and loss (Example 2A – Abridged Profit & Loss Account). |
| Statement of Total Recognised Gains and Losses. | Single Statement Option A – Statement of Comprehensive Income. Two Statement Option – Income Statement and a Statement of Comprehensive income. A change from option A to option B and vice a versa is change in accounting policy and requires retrospective adjustment. Single Statement Option B – P&L Statement of Income & Retained Earnings. Can only be used where the only changes in the period arise from: · profit or loss; · payments of dividends; · correction of prior period errors; · changes in accounting policy. Present as P&L under the CA & SOCI. | Given that the statement of recognised gains and losses was shown on a separate page in the financial statements, where the single statement option is chosen this will result in a change in layout of the financial statements. See attached an example showing the single statement of comprehensive income method (Example 3 – Single Statement Approach For A Group and 3A – Consolidated Statement of Comprehensive Income). See attached an example showing the single statement of comprehensive income method (Example 4 – Two Statement Approach For A Group and 4A – Two Statement Approach For An Individual Entity (i.e. not group accounts)). This is new under FRS 102, where the aforementioned conditions are met this layout can be utilised. See an example of this layout (Example 5 – Statement Of Comprehensive Income). |
| Exceptional Items are defined as material items arising from ordinary activities that need to be disclosed separately by virtue of size or incidence if the financial statements are to give a true and fair view: a) profits or losses on the sale or termination of an operation; b) costs of a fundamental reorganisation or restructuring having a material effect on the nature and focus of the reporting entity’s operations; c) profits or losses on the disposal of fixed assets. | Exceptional Items are not defined. However, each material class of items is presented separately, and additional line items are presented where they are relevant to an understanding of financial performance. This may result in more items being presented on the face of the P&L. An entity should disclose in its accounting policies what the entity considers to be an exceptional item. There is no requirement to show the expense below the operating profit line nor does it dictate which items are to be shown on the face of the profit and loss account. | Under old GAAP, FRS 3 was very specific as to what could be included as an exceptional item on the face of the profit and loss. It also required the exceptional items identified across to be disclosed after operating profit. Under FRS 102 material items which are exceptional in nature need to be separately disclosed, however where the exceptional item is in relation to operating activities and operating profit is shown on the face of the profit and loss account, the exceptional cost must be included within the functional expense above the operating profit line. However, the exceptional item can be highlighted on the face of the profit and loss in a box presentation showing the operating profit before exceptional costs and after exceptional costs. This layout differs to the layout under old GAAP. Therefore if an exceptional item was included on the face of the profit and loss account below the operating profit line in the comparative year of the first set of FRS 102 financial statements, the layout of the exceptional item may change by moving the exceptional item above the operating profit line into its expense by function and then including a box presentation to highlight the exceptional item. It may also be possible to identify more exceptional items on the face of the profit and loss under FRS 102. See attached (Example 6 – Exceptional Item On The Profit & Loss) for the layout of an exceptional item on the face of the profit and loss account where the item is considered to be material). |
| Extraordinary Items should not arise. | Extraordinary Items should not arise. | No differences here, therefore no further work required. |
| Disclosure of operating profit required. | Disclosure of operating profit not required. Where it is disclosed all operating expenses need to be included. | It is likely all entities will continue to show operating profit in the profit and loss account so therefore no differences are expected in the layout on transition. |
| Under old GAAP an operation/business could be classified as discontinued if the sale or termination was completed within three months of the balance sheet date. A subsidiary which was acquired exclusively with a view to resale was not included in the definition of a discontinued operation. | Under FRS 102 in order for an operation/business to be disclosed as discontinued, the operation/business must have been disposed of (in relation to a sale) or have been closed (in relation to a termination) by the balance sheet date. FRS 102 also allows a subsidiary which was acquired exclusively with a view to resale to be shown as a discontinued operation. | This difference will not result in a transition adjustment at the date of transition as Section 35.9 (d) makes it clear that if an entity treated a business as being discontinued under old GAAP which would not have been classed as discontinued under FRS 102, no retrospective adjustment should be applied, instead the rules under Section 5 are applied prospectively. However where an entity has classified a business as discontinued since the date of transition i.e. in the comparative year of the first set of FRS 102 financial statements which would not meet the definition of discontinued under FRS 102, the entity will need to change the classification in the prior year comparatives such that it is no longer shown as a discontinued operations i.e. disclosure of the discontinued results in the profit and loss in the prior year would have to be ignored. The provision of closure costs etc. would still be allowed to be provided for under FRS 102. |
| Old GAAP (FRS 3) required that the discontinued operation be shown on a line by line basis to include disclosing the split between turnover and operating profit. It did not require disclosure of items below this line other than for non-operating exceptional items. A disclosure note was also presented under old GAAP. | Where there are discontinued operations, Section 5 requires that an additional column be included so that the results on a line item basis are split between continuing and discontinuing operations with a total column for the year in the income statement. This is also required for the comparative period. | No adjustments are expected on the date of transition. However where an entity has classified a business as discontinued since the date of transition i.e. in the comparative year of the first set of FRS 102 financial statements which would also meet the definition of discontinued operations under FRS 102, the entity will need to change the way in which the discontinued operation is disclosed on the face of the profit and loss. No disclosure note now required. See example attached showing the layout required under FRS 102 (Example 7 – Discontinued Operations). |
| In consolidated accounts, the split of profit and loss and STRGL for the period between minority interest and owners of the parent not required. | In consolidated accounts, the split of profit and loss and total comprehensive income for the period to be allocated between non-controlling interest and owners of the parent. | This is a new requirement under FRS 102 and therefore the financial statements will need to reflect this. See an example of the application of same attached (Example 8 – Non-Controlling Interest). Although FRS 102 requires profit or loss and total comprehensive income to be allocated between non-controlling interest and owners of the parent, Section 35.9(e) states that this should be applied prospectively from the date of transition. |
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