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Contents
5.2 Small companies – exemptions.
5.2.1 Extract from FRS102: Section 5.1A.
5.3 Presentation of total comprehensive income.
5.3.1 Extract from FRS102: Section 5.2-5.3.
5.3.2.2 Implications of changing between the two layouts.
5.4 Single-statement approach.
5.4.1 Extract from FRS102: Section 5.5-5.6, Section 5.7D and Section 5.9.
5.4.2.2.1 Profit and loss account/income statement.
5.4.2.2.2 Other comprehensive income.
5.4.2.3 Practical application of format 1 showing the single statement approach for group.
5.4.2.3.1 Practical application of single statement approach for an individual entity.
5.5.1 Extract from FRS102: Section 5.7-5.7D and Section 5.9.
5.5.2.2.1 Profit and loss account/income statement formats.
5.5.2.2.2 Other comprehensive income – statement of comprehensive income.
5.5.2.3 Practical application of the two statement approach showing format 1.
5.5.2.3.1 Two statement approach for a Group.
5.5.2.3.2 Two statement approach for an individual entity (i.e. not group accounts).
5.6 Alternative profit and loss format.
5.6.1 Extract from FRS102: Section 5.7B-5.7C.
5.7.1 Extract from FRS102: Section 5.7E-5.7F.
5.7.2.1 Discontinued operation and when it is to be considered to be discontinued.
5.7.2.2 Disclosure requirements for discontinued operations.
5.8 Prior year/period adjustments.
5.8.1 Extract from FRS102: Section 5.8.
5.9 Exceptional items and extraordinary items.
5.9.1 Extract from FRS102: Section 5.9A and Section 5.10-5.10B.
5.9.2.1.1 Exceptional items defined.
5.9.2.1.2 Examples of exceptional items.
5.9.2.1.4 Disclosure requirements of exceptional items in the notes.
5.9.2.1.5 Illustration of disclosure of exceptional items.
5.9.2.1.5.1 Exceptional items shown on face of profit and loss account.
5.9.2.1.5.2 Exceptional items shown in notes and not of the face of profit and loss account.
5.9.2.1.5.3 Exceptional itekm accounting policy disclosure.
5.10.1 Extract from FRS102: Section 5.9B.
5.11.1 Extract from FRS102: Section 5.11.
5.11.2.2 Analysis by function of expense.
5.11.2.2.2 Format 1 Companies Act 2014 – for Republic of Ireland entities.
5.11.2.2.2 Format 1 of Companies Act 2006 – for UK entities.
5.11.2.3 Analysis by nature of expense.
5.11.2.3.1 Format 2 of Companies Act 2006 – for UK entities.
5.11.2.3.2 Format 2 of Companies Act 2014 for Republic of Ireland entities.
5.12.1.2 For UK Parent Company.
5.12.1.3 For Republic of Ireland Parent Company.
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The below extracts and guidance is applicable for periods beginning before 1 January 2019 and are based on the September 2015 version of FRS 102. For periods beginning on or after 1 January 2019, the March 2018 version of FRS 102 applies which incorporates the changes made by the Triennial review of FRS 102. Note the March 2018 version of FRS 102 can be voluntarily applies for periods beginning before 1 January 2019. For the extracts from the March 2018 version of FRS 102 and the related guidance please click on the following link. For details of a summary of the main changes as a result of the triennial review please see the following link.
5.7 Discontinued operations
5.7.1 Extract from FRS102: Section 5.7E-5.7F
5.7E An entity shall also disclose on the face of the income statement (or statement of comprehensive income if presented) an amount comprising the total of:
(a) the post-tax profit or loss of discontinued operations; and
(b) the post-tax gain or loss attributable to the impairment or on the disposal of the assets or disposal group(s) constituting discontinued operations.
A line-by-line analysis shall be presented in the income statement (or statement of comprehensive income if presented), in a column identified as relating to discontinued operations, i.e. separately from continuing operations; a total column shall also be presented.
5.7F An entity shall re-present the disclosures in paragraph 5.7D for prior periods presented in the financial statements so that the disclosures relate to all operations that have been discontinued by the end of the reporting period for the latest period presented.
5.7.2 OmniPro comment
5.7.2.1 Discontinued operation and when it is to be considered to be discontinued
Appendix I of FRS 102 provides a definition of a discontinued operation. ‘A discontinued operation is a component of an entity that has been disposed of and which:
- Represents a separate major line of business or geographical area of operations;
- Is part of a single plan to dispose of a separate major line of business or geographical area of operations; or
- Is a subsidiary acquired exclusively with a view to resale.’
A component is defined in FRS 102 as ‘operations and cash flows that can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity’.
In order for it to be classified as discontinued in the profit and loss/ OCI, it must be disposed of (sold or closed) by the balance sheet date as stated in Section 5.7 of FRS 102. It is not enough to just have given notice of the closure to the public, the closure must have occurred.
5.7.2.2 Disclosure requirements for discontinued operations
Section 5.7E of FRS 102 provides the disclosures required where a discontinued operation exists at the period end. It requires that a split be shown for each line item on the face of the statement of comprehensive income between continued and discontinued operations for the current and proceeding period. See example 5 below for an illustration of same.
Example 5: Discontinued operations not ceased
Company A has two businesses. At the year end the Company had informed employees of the intention to close one of these businesses however the business would not close fully until 3 months following the year end. As the business has not ceased by the year end it should not be disclosed as a discontinued operation at the balance sheet. The usual provisions will be recognised in the financial statements however for closure costs.
See example below extracted from the Appendix to Section 5 which illustrates the requirements for discontinued operations in a single statement format:
Statement of comprehensive income for the year ended 31 December 20X1
| 20X1 | 20X0 | |||||
| Continuing operations |
Discontinued operations |
Total | Continuing operations (as restated) |
Discontinued Operations(as restated) |
Total | |
| CU | CU | CU | CU | CU | CU | |
| Turnover | 4,200 | 1,232 | 5,432 | 3,201 | 1,500 | 4,701 |
| Cost of Sales | (2,591) | (1,104) | (3,695) | (2,281) | (1,430) | (3,711) |
| Gross Profit | 1,609 | 128 | 1,737 | 920 | 70 | 990 |
| Administrative Expenses | (452) | (110) | (562) | (418) | (120) | (538) |
| Other operating income | 212 | _ | 212 | 198 | _ | 198 |
| Profit on disposal of operations | _ | 301 | 301 | _ | _ | _ |
| Operating profit | 1,369 | 319 | 1,688 | 700 | (50) | 650 |
| Interest receivable and similar income | 14 | _ | 14 | 16 | _ | 16 |
| Interest payable and similar expenses | (208) | _ | (208) | (208) | _ | (208) |
| Profit before tax | 1,175 | 319 | 1,494 | 508 | (50) | 458 |
| Taxation | (390) | (4) | (394) | (261) | 3 | (258) |
| after taxation and profit for the financial year | 785 | 315 | 1,100 | 247 | (47) | 200 |
| Actuarial losses on defined benefit pension plans | (108) | (68) | ||||
| peferred tax movement relating to actuarial losses | 28 | 18 | ||||
| Total comprehensive income for the year | 1,020 | 150 | ||||
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Example 1: Example of Single statement approach for a Group.
Example 2: Example of Single statement approach for an individual entity (i.e. not group accounts).
Example 3: Two statement approach for a Group.
Example 3(a): Two statement approach for an individual entity (i.e. not group accounts).
Example 4: Consolidated Statement of Comprehensive/Income statement approach – Alternative Approach.
Example 5: Discontinued operations not ceased.
Example 6: Exceptional item disclosure note for an accounting policy.
Example 7: See below the extract from format 1 of the Companies Act 2006 for the UK.
Example 8 See below the extract from format 1 of the Companies Act 2014 for the Republic of Ireland.
Example 9 See below the extract from format 2 of the Companies Act 2014 for the Republic of Ireland.
Example 10: See below the extract from format 2 of the Companies Act 2006 for the UK.
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