Introduction to FRS 102 - Russell Brennan Keane
Introduction to FRS 102 Cathal Melia Wednesday, 10th June 2015
FRS 102 > Introduction and Background > New Terminology > Key Differences > Transitional T iti lA Arrangements t & Pl Planning i P Points i t
Introduction & Background g > Implementing IFRS in Ireland and UK > FRS 100 ; FRS 101;FRS 102 > FRS 102 - 35 Sections circa 300 pages > IImplementation l t ti Date D t – Accounting A ti periods commencing on or after 1 January 2015 > Transition Date 1 January 2014 (comparatives)
New Naming g Conventions OLD IRISH/UK GAAP
FRS102
Profit and Loss Account
Income statement comprehensive income
Balance sheet
Statement of financial position
Cash flow statement
Statement of cash flows
Profit and loss reserves Profit and loss reserves
Retained earnings
Reconciliation of Changes in Shareholders funds
Statement of changes in equity
Minority Interest
Non‐controlling interest
Stock
Inventory
Trade Debtors
Accounts Receivable
Keyy Differences – Investment Property p y OLD IRISH/UK GAAP
FRS102
SSAP 19 Valued at Market Value with No Depreciation
Fair Value however cost can be used if FV cannot be determined without undue expense!
Movements in valuation posted through Revaluation Reserve Revaluation Reserve
Movements in valuation go through P&L
Only provided deferred tax if binding sale Only provided deferred tax if binding sale agreement in place
Full provision for deferred tax provision for deferred tax
Properties used within the group cannot used within the group cannot be treated as investment properties
Includes investment property occupied by Includes investment property occupied by other group companies
Key y Differences – Financial Instruments OLD IRISH/UK GAAP
FRS102
Practice varies depending on whether FRS 226 Financial instruments Recognition and Measurement is Recognition and Measurement is adopted or not
Divides financial instruments into “Basic” and “Other instruments Basic measured at amortised cost Other Basic measured at amortised cost Other mostly at fair value through P&L
Loans carrying zero or below market rate interest included on balance sheet at loan amount less repayments. Interest recognised based on rate applied
Initially Recognised on balance sheet by discounting the expected cash flows using market rate of interest (Coupon is merely a cashflow) Subsequent recognition using amortised cost method
Keyy Differences Listed Investments
OLD IRISH/UK GAAP
FRS102
Can be held in balance sheet at historic cost or valuation
Must be held in balance sheet at fair value (Market Value))
Movements in valuation go g through P&L
Employment Benefits
Short term entitlements Specific requirement to such as unused sick leave or accrue for short term holiday pay generally not employee entitlements accrued d
Keyy Differences OLD IRISH/UK GAAP
FRS102
Operating Leases
Rent free periods recognised equally over period up to first break period up to first break clause
Rent free periods recognised equally over the life of the lease life of the lease
Define Benefit Pension Plans
Exemption from application Group plans must be recognised on the balance of FRS 17 recognition for multi‐employer plans p y p sheet of at least one group g p company
Keyy Differences – Disclosures OLD IRISH/UK GAAP
FRS102
Disclose Directors remuneration
Disclose remuneration of Key Management
Operating lease obligations for Fixed Assets Revaluation as deemed cost > Lease incentive rules need not apply to leases commenced pre transition date > D Dormantt C Companies i retain t i measurementt policies li i until til activity re-commences > P Pre existing i ti b butt previously i l unrecognised i d fifinancial i l assets t and liabilities
FRS 102 – Planning g Points > Do you have preferential or zero coupon loans > Do you have property carried at valuation > Do you have investment properties > Are A your Fi Financial i l and dh holiday lid years end d diff differentt > Do you have quoted investments on your balance sheet > Restate your comparative numbers now
FRS 102 – Planning g Points > Do you have forward contracts or other derivatives > Have you purchases forward > Do you have a defined benefit pension scheme
Thank You
Cathal Melia Russell Brennan Keane Tel: (01) 644 0100 / (090) 6480600 Email: [email protected] cmelia@rbk ie
FRS 102 > Introduction and Background > New Terminology > Key Differences > Transitional T iti lA Arrangements t & Pl Planning i P Points i t
Introduction & Background g > Implementing IFRS in Ireland and UK > FRS 100 ; FRS 101;FRS 102 > FRS 102 - 35 Sections circa 300 pages > IImplementation l t ti Date D t – Accounting A ti periods commencing on or after 1 January 2015 > Transition Date 1 January 2014 (comparatives)
New Naming g Conventions OLD IRISH/UK GAAP
FRS102
Profit and Loss Account
Income statement comprehensive income
Balance sheet
Statement of financial position
Cash flow statement
Statement of cash flows
Profit and loss reserves Profit and loss reserves
Retained earnings
Reconciliation of Changes in Shareholders funds
Statement of changes in equity
Minority Interest
Non‐controlling interest
Stock
Inventory
Trade Debtors
Accounts Receivable
Keyy Differences – Investment Property p y OLD IRISH/UK GAAP
FRS102
SSAP 19 Valued at Market Value with No Depreciation
Fair Value however cost can be used if FV cannot be determined without undue expense!
Movements in valuation posted through Revaluation Reserve Revaluation Reserve
Movements in valuation go through P&L
Only provided deferred tax if binding sale Only provided deferred tax if binding sale agreement in place
Full provision for deferred tax provision for deferred tax
Properties used within the group cannot used within the group cannot be treated as investment properties
Includes investment property occupied by Includes investment property occupied by other group companies
Key y Differences – Financial Instruments OLD IRISH/UK GAAP
FRS102
Practice varies depending on whether FRS 226 Financial instruments Recognition and Measurement is Recognition and Measurement is adopted or not
Divides financial instruments into “Basic” and “Other instruments Basic measured at amortised cost Other Basic measured at amortised cost Other mostly at fair value through P&L
Loans carrying zero or below market rate interest included on balance sheet at loan amount less repayments. Interest recognised based on rate applied
Initially Recognised on balance sheet by discounting the expected cash flows using market rate of interest (Coupon is merely a cashflow) Subsequent recognition using amortised cost method
Keyy Differences Listed Investments
OLD IRISH/UK GAAP
FRS102
Can be held in balance sheet at historic cost or valuation
Must be held in balance sheet at fair value (Market Value))
Movements in valuation go g through P&L
Employment Benefits
Short term entitlements Specific requirement to such as unused sick leave or accrue for short term holiday pay generally not employee entitlements accrued d
Keyy Differences OLD IRISH/UK GAAP
FRS102
Operating Leases
Rent free periods recognised equally over period up to first break period up to first break clause
Rent free periods recognised equally over the life of the lease life of the lease
Define Benefit Pension Plans
Exemption from application Group plans must be recognised on the balance of FRS 17 recognition for multi‐employer plans p y p sheet of at least one group g p company
Keyy Differences – Disclosures OLD IRISH/UK GAAP
FRS102
Disclose Directors remuneration
Disclose remuneration of Key Management
Operating lease obligations for Fixed Assets Revaluation as deemed cost > Lease incentive rules need not apply to leases commenced pre transition date > D Dormantt C Companies i retain t i measurementt policies li i until til activity re-commences > P Pre existing i ti b butt previously i l unrecognised i d fifinancial i l assets t and liabilities
FRS 102 – Planning g Points > Do you have preferential or zero coupon loans > Do you have property carried at valuation > Do you have investment properties > Are A your Fi Financial i l and dh holiday lid years end d diff differentt > Do you have quoted investments on your balance sheet > Restate your comparative numbers now
FRS 102 – Planning g Points > Do you have forward contracts or other derivatives > Have you purchases forward > Do you have a defined benefit pension scheme
Thank You
Cathal Melia Russell Brennan Keane Tel: (01) 644 0100 / (090) 6480600 Email: [email protected] cmelia@rbk ie
