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FRS 100 title:
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Application of financial reporting requirements.
FRS 101 title:
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Reduced disclosure framework.
A small entity that applies FRS 102 doesn't...
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Doesn't have to show OCI. | Doesn't have to produce SCF. | Is exempt from many of the DISCLOSURE requirements of FRS 102.
FRS 100 content:
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FRS 100: Application of Financial Reporting Requirements.
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Listed groups must prepare their accounts under IFRS. | Other UK companies will apply FRS 102. | A small entity that applies FRS 102 can benefit from simplifications.
However, the companies within the group can take advantage of disclosure exemptions outlined in FRS 101 when preparing their individual FSs.
FRS 101 content:
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It PERMITS exemptions from many of the disclosure requirements found in IFRS standards.
FRS 101 can only be applied in...
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individual FSs of subsidiaries.
FRS 101 results in time-savings for entities without severely impacting the quality of reporting. Moreover full disclosures on a group level can be found in the consolidated FSs, and these are likely to be of greater use for investors and lenders.
Some ... entities, such as ..., cannot take advantage of all of the exemptions outlined in FRS 101.
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public interest entities,| banks
Some public interest entities, such as banks, cannot take advantage of all of the exemptions outlined in FRS 101. These entities must still make disclosures with regards to...
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financial instruments | and FV.
An entity qualifies as a micro-entity if it satisfies TWO of the following 3 requirements:
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Gross assets of not more than £316,000. | Turnover of not more than £632,000. | An average number of employees of 10 or less.
FRS 105 prohibitions examples.
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Deferred tax accounting. | Equity-settled PAYMENTS prior to the issue of the shares accounting. | Capitalisation of borrowing costs.
FRS 105 prohibits REVALUATION model for...
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PPE, | intangibles | and investment properties.
PII
FRS 105 prohibits the capitalisation of ... expenditure as an intangible assets.
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development expenditure
FRS 105 simplifies the rules around classifying ... instruments.
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financial instruments.
FRS 105 removes the distinction between...
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functional and presentation currencies.
FRS 105 title:
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FRS applicable to the Micro-entities Regime.
There are very few disclosure requirements in FRS 105.
FRS 102 says that the objective of FSs is to provide information about an entity’s...
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financial position, performance and CFs, | as well as the results of the stewardship of management.
Qualitative characteristics of information:
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Balance between benefit and cost. | Understandability. | Timeliness. | Comparability. | Relevance. | Completeness. | Reliability.
BUT CRCR MPS
Materiality. | Prudence. | Substance over form.
Relevance:
Qualitative characteristics of information
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information should be capable of influencing the ECONOMIC DECISIONS of users.
Materiality:
Qualitative characteristics of information
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information is material if its OMISSION or MISSTATEMENT could impact the economic decisions of users.
'can influence economic decisions'
Substance over form:
Qualitative characteristics of information
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transactions should be accounted for in accordance with their ECONOMIC SUBSTANCE rather than their LEGAL FORM.
substance = istota
Prudence:
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CAUTION should be exercised | when making JUDGEMENTS
FRS. An element should be recognised in the financial statements if:
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asset, liability, expense, equity, income
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Is PROBABLE that economic benefits will flow to or from the entity. | Its cost or FV can be MEASURED reliably.
Definitions of elements and recognition criteria are based on the 2010 Conceptual Framework. As such, the definitions of assets and liabilities and the recognition criteria outlined in FRS 102 differ from those in the 2018 Conceptual Framework.
FRS 102 says that there are two common measurement bases:
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Historical cost. | FV.
Historical cost by FRS 102:
d e f i n i t i o n
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amount of cash and cash equivalents paid to acquire an asset, or the amount of cash and cash equivalents received in exchange for an obligation.
Fair value by FRS 102 - definition:
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the AMOUNT for which an asset could be exchanged, or a liability settled, | between KNOWLEDGEABLE PARTIES | in an ARM’S LENGTH transaction.
FRS 102 emphasises that FSs, other than SCF, are prepared using the ... basis.
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the accruals basis.
FRS 102 emphasises that FSs, other than (...), are prepared using the accruals basis.
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SCF
Assets and liabilities offsetting in FRS 102:
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An entity SHOULD NOT offset assets and liabilities unless REQUIRED OR PERMITTED by FRS 102.
Measurement bases differences:
Conceptual Framework for Financial Reporting vs FRS 102
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Historical cost and CV*. || Historical cost and FV.
Current value comprises: Fair value; Value-in-use; Current cost.
To comply with Companies Act, FRS 102 allows:
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a 'true and fair override'.
True and fair override:
3 | c o n c e p t
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If compliance of Companies Act with FRS 102 is inconsistent | with the requirement to give a true and fair view, directors must depart from FRS 102 to the extent necessary to give a true and fair view. | Particulars of any such departure are disclosed.
SFP. Companies Act requirements dictate the format of the SFP. It is set out as follows:
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Assets less Liabilities = Equity
Companies Act
'income statement'
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Statement of financial performance by FRS 102. (as opposed to SPL). Its format is dictated by Companies Act.
If activities are discontinued during the year, FRS 102 requires that...
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a line-by-line analysis is provided | on the face of the income statement | in a column called 'discontinued operations'.
'line-by-line analysis' | 'income statement' | 'discontinued operations'
In contrast IFRS 5 allows a single figure to be presented on the face of the SPL (with more detailed analysis provided in the disclosure notes).
SCF. Small entities, mutual life assurance companies, pension funds and certain investment funds are ... to produce a SCF.
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not required
SCF. small entities, mutual life assurance companies, pension funds and certain investment funds are not required to produce a SCF. This exemption does...
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does not exist in IAS 7 SCF.
FRS 102 provides more guidance than IAS 2 Inventories about what costs should be included in production overheads. For example:
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production overheads should include the costs of any OBLIGATION TO RESTORE a SITE on which an item of PPE is located.
FRS 102 permits the ..., whereas IAS 2 does not.
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reversal of inventory impairments
Changes in accounting policy.
FRS 102 vs IFRS
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FRS 102 states that the change to a cost model when a RELIABLE ESTIMATE of FV is unavailable is not a change in accounting policy. This exemption is not mentioned in IAS 8
Financial instruments in FRS 102.
2+2
FRS 102 adopts a simplified approach to financial instruments:
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Commitments to make or receive a loan are measured at cost less impairment. | More complicated debt instruments are measured at FVtPol.
Investments in shares are FV-PoL ' | and simple debt instruments are AC.
Financial assets impairment differences:
IFRS 9 Financial Instruments vs FRS 102
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Expected loss approach - recognising a loss allowance for all financial assets measured at AC or FVtOCI (except equity instruments) based on the level of credit risk.
Impairment loss is only recognised in respect of financial assets if objective evidence of impairment has occurred (credit customer bankruptcy). For an asset measured at AC, the loss is the difference between its CA and the PV of the expected CFs.
Derecognition
FRS 102 (1) | IFRS (2cz)
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FRS 102 contains simpler rules than IFRS 9 for deciding whether or not to derecognise a financial instrument.
In IFRS derecognition from FSs normally occurs when the entity: loses CONTROL of the assets. | or has no PRESENT OBLIGATION for the liability.
Joint ventures:
2+3
IFRS 11 Joint Arrangements vs FRS 102.
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IFRS classifies them as JOINT OPERATIONS– where the venturers have rights to the assets and obligations for the liabilities of the operation. Or as JOINT VENTURES– where the venturers have rights to the net assets of the arrangement (separate entity).
OAE Jointly controlled operations. | Jointly controlled assets. | Jointly controlled entities.
Each venturer contributes their own assets for use by the joint venture.| Venturers jointly control or jointly own the assets used by the joint venture.| The establishment of a separate entity that is under joint control. Equity method in consolidated FS.
IAS 40 states that a property which is held to earn rental income should be treated as PPE if ....... FRS 102 does not cover this situation.
IAS 40 Investment Property vs FRS 102
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if ANCILLARY SERVICES are provided that are SIGNIFICANT to the arrangement, e.g. the services provided to hotel guests.
FRS 102 requires the use of the FV model unless the FV cannot be determined reliably. In contrast, IAS 40 allows entities to measure investment property using...
IAS 40 Investment Property vs FRS 102
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either the cost model or the FV model.
FRS 102 allows an entity that rents investment property to another company in the same group to account for it as PPE in its separate FSs. If so, it is measured at ... IAS 40 doesn't permit this treatment.
IAS 40 Investment Property vs FRS 102
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at cost less depreciation.
Intangible asset - Development. FRS 102 says that the capitalisation of development expenditure is...
Intangible assets
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optional.
Intangible asset - Development. FRS 102 says that the capitalisation of development expenditure is optional. In contrast IAS 38 requires that development expenditure is...
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is capitalised if certain criteria are met.
Grants. FRS 102 specifies that an intangible asset acquired by way of a grant shall be recognised at ... on the date that...
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at FV | on the date that the grant is received or receivable.
Intangible assets. FRS 102 specifies that intangible assets should be considered to have ... life.
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definite useful economic life.
FRS 102 says that if the useful life of an intangible asset cannot be measured reliably then it must be estimated. The estimate used should not exceed 10 years.
IAS 38 allows entities to regard an intangible asset as having an indefinite useful economic life if it cannot foresee an end to the period over which the asset will generate economic benefits.
Held for sale FRS 102 does not contain the concept of ‘held for sale’. As such, assets are...
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depreciated or amortised up to the date of disposal.
However, FRS 102 identifies the decision to sell an asset as a potential indicator of impairment, meaning that an impairment review should be performed.
Held for sale FRS 102 does not contain the concept of held for sale. However, FRS 102 identifies the decision to sell an asset as...
*As such, assets are depreciated or amortised up to the date of disposal.
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a potential indicator of impairment, meaning that an impairment review should be performed.
Borrowing costs
1+2 | IAS 23 vs FRS 102
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IAS 23 Borrowing Costs REQUIRES that borrowing costs attributable to a qualifying asset are capitalised. | Under FRS 102, an entity MAY adopt a policy of capitalising borrowing costs. FRS 102 is more specific about the CAPITALSATION RATE to be used.
Estimate reviews.
IAS 16 & IAS 38 vs FRS 102
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IAS 16 PPE and IAS 38 IA require that an entity reviews residual values and useful lives ANNUALLY. | FRS only requires entities to review the useful economic life of assets if EVIDENCE EXISTS that they have changed.
Leases differences:
3+ 3 | IFRS 16 Leases vs FRS 102
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IFRS 16 requires lessees to recognise a lease LIABILITY | and RIGHT-OF-USE ASSET | in respect of all leases, unless short-term or of low value.
FRS 102 requires lessees to classify leases as operating leases or finance leases and account for them as follows:
Finance lease– asset and liability is recognised at the lower of FV and PV of the minimum lease payments. | Depreciation on an asset and interest on the liability is charged to PoL.| Operating lease– payments are expensed to PoL on a straight line basis.
Restructuring provisions differences:
IAS 37 vs FRS 102
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IAS 37 provides detailed guidance on restructuring provisions – such as when a constructive obligation arises or amount. | FRS 102 simply states that a provision for restructuring costs should be recognised when a legal or constructive obligation exists.
Provisions. Financial guarantee contracts differences:
IFRS vs FRS 102
*such as when one company guarantees the overdraft or loan of another company
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Accounting for using IFRS 9 Financial Instruments. | They may be classified as provisions or contingent liabilities (depending on the probability of payment).
Revenue differences:
IFRS 15 vs FRS 102
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Five step model for revenue recognition. | FRS 102 splits revenue accounting into 3 main areas:
revenue from GOODS– recognised when the risks and rewards of ownership transfer from the buyer to the seller.| from SERVICES– recognised according to the stage of completion.| from CONSTRUCTION CONTRACTS – according to the stage of completion.
Government grants differences:
IAS 20 vs FRS 102
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IAS 20 adopts an Accruals model for grant recognition*. | Under FRS 102 recognises the Performance model and the Accruals model.
*whereas IFRS for SMEs allows ONLY the performance model.
The performance model:
2cz | FRS 102 - method of recognising government grants
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If no conditions are attached to the grant, it is recognised as income immediately. | If conditions are attached, it is only recognised as income when all conditions have been met.
permitted ONLY by FRS 102.
Grants. The accruals model:
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Grants are recognised as income on a systematic basis, either as costs are incurred (revenue grants)| or over the asset's useful life (capital grants).
Repayment of government grants differences:
IAS 20 vs FRS 102
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A government grant may need to be repaid if its conditions are not complied with. IAS 20 provides detailed guidance on how to deal with it.| FRS 102 simply says that a liability should be recognised when the repayment meets the definition of a liability.
Share-based payment - Valuation:
FRS 102
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When measuring the FV of equity instruments granted, FRS requires the use of a 3 tier hierarchy:
OEW market
1 - OBSERVABLE market prices. | 2 - The use of ENTITY SPECIFIC market data, such as recent transactions in the instrument. | 3 - A valuation method that uses, WHEREVER POSSIBLE, market data.
Impairment of assets diffrences:
IAS 36 Impairment of Assets vs FRS 102
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Some assets are subject to annual impairment review (such as goodwill acquired in a business combination). | RECOVERABLE AMOUNT need NOT be determined unless there are indicators of impairment. FRS is much less detailed than IAS 36.
Termination of Employee benefits differences:
IAS 19 vs FRS 102
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TERMINATION BENEFITS are recognised at the earlier of: the date when the entity can no longer withdraw the offer, and the date when costs associated with a restructuring are recognised under IAS 37.
IAS 37 Provisions, Contingent Liabilities and Contingent Assets.
Under FRS an entity only accounts for termination benefits when it has a detailed formal plan for the restructuring and has no realistic possibility of withdrawal.
Income tax: key differences:
IAS 12 Income Taxes vs FRS 102
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IAS 12 conceptualises deferred tax through SFP. It should be accounted for based on differences between the amounts recognised for entity’s assets and liabilities in the and the recognition of those by the tax authorities.
FRS 102 conceptualises deferred tax through the PoL. | Timing differences are defined as differences between taxable profits and TCI in periods different from those in which they are recognised in FSs. There is one exception.
FRS 102 conceptualises deferred tax through the PoL, however there is one exception:
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Deferred tax should also be recognised based on the differences between the TAX VALUE and FV of assets and liabilities ACQUIRED IN A BUSINESS COMBINATION.
Income taxes - Permanent differences:
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IAS 12 Income Taxes vs FRS 102
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IAS 12 does not use the terminology 'permanent difference'. Instead, it says that deferred tax assets and liabilities are recognised for 'TEMPORARY DIFFERENCES'.
FRS uses the concept of permanent differences They arise because certain types of income and expenses are NON-TAXABLE OR DISALLOWABLE. Deferred tax is not recognised on permanent differences.
Foreign currency translation differences:
2 | IAS 21 vs FRS 102
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Only IAS 21 does require the presentation of a separate TRANSLATION RESERVE for exchange differences arising on the translation of a subsidiary. | Under FRS exchange differences are NOT reclassified from OCI to PoL on the DISPOSAL of OVERSEAS subsidiary.*
*whereas they are reclassified under IAS 21.
Events after the reporting period treatment:
2 | IAS 10 Events after the Reporting Period & FRS 102
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Under both FRS and IAS 10, no liability is recognised for dividends declared after the reporting date. | However, FRS says that dividends can be presented as a separate component of RE.
RE = retained earnings
Related parties differences:
IAS 24 Related Party Disclosures vs FRS 102
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IAS 24 requires that disclosure of key management personnel compensation is BROKEN DOWN into 5 categories.* | FRS only requires disclosure of key management personnel compensation IN TOTAL.
SPOTS [+ another exclusion]
*Short-term benefits, | Post-employment benefits, | Other long-term benefits, | Termination benefits, | Share-based payments.
Related party disclosures exclusion in FRS.
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Disclosures need NOT be given of transactions entered into between two or more members of a group, provided that all subsidiaries are WHOLLY owned by such a member.
Agriculture differences:
IAS 41 Agriculture vs FRS 102
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Biological assets are measured using a FV model, so they are initially recorded at FV less costs to sell. They are then remeasured to FV less costs to sell at each reporting date with gains and losses recorded in PoL.
FRS says that, for each class of biological assets, an entity can CHOOSE to use the cost model or the FV model. | Under the cost model, the asset is measured at cost less accumulated depreciation and impairment. FV model is with IAS 41.
CONTROL definition by FRS:
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IFRS 10 Consolidated FSs vs FRS 102
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The power to govern the FINANCIAL and OPERATING policies of an entity | and to obtaining BENEFITS. | Control is presumed to exist if an entity owns MORE THAN HALF of the voting rights, but this can be rebutted in exceptional circumstances.
for IFRS 10:
Power over the investee. | Rights or exposure to variable returns. | Returns through its power over the investee.
Individual FSs of a parent differences:
1+2
IAS 27 Separate FSs vs FRS 102
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If a parent applies IAS 27 and is required to produce individual FSs, the parent must measure its investments in subsidiaries using one of the FOUR methods.* | FRS does NOT allow equity method. There is one extra exclusion**.
*Cost less impairment, | FVtPoL, | FVtOCI, | Equity method.
**FRS says that a subsidiary is excluded from consolidation if severe long-term restrictions hamper the ability of the parent to exercise control. This exemption does not exist in full IFRS Standards
Business Combinations. Consideration treatment by FRS:
2cz
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Estimated amount of CONTINGENT consideration is only included in the calculation of goodwill if it is PROBABLE that it will be incurred. | LEGAL AND PROFESSIONAL FEES attributable to the acquisition are also included in goodwill.
Under IFRS 3 contingent consideration is measured at FV. This incorporates the PROBABILITY that the payment will be made. | Any transaction costs related to the acquisition are EXPENSED to PoL.
Business Combinations. Control in stages differences:
IFRS 3 vs FRS 102
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If control in a subsidiary is achieved by step acquisition, the IFRS 3 requires earlier investments to be remeasured to FV at the date control is achieved. | In contrast FRS says that the earlier share purchases are not remeasured.
Business Combinations. Net assets of acquiree differences:
IFRS 3 vs FRS 102
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Intangible assets other than goodwill arising from a business combination are recognised at FV if they are separable OR if they arise from legal rights. | FRS requires recognition of the if they are separable AND arise from legal rights.*
*However this rule doesn't apply in case of ADDITIONAL intangibles.
Associates treatment differences:
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Transactions costs are expensed to PoL. | They are added onto the initial CA of an associate.
Also, FRS specifies that any difference between the consideration paid to acquire an associate and the investor’s share of the FV of the associate’s net assets is implicit goodwill.
Negative goodwill by FRS:
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Negative goodwill* is recognised in SFP immediately below goodwill.
*where the FV of the net assets acquired exceeds the consideration* | It is presented as a negative asset.
The subsequent treatment of negative goodwill by FRS 102
2cz
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Any amount up to the FV of non-monetary assets acquired is recognised in PoL in the periods in which the non-monetary assets are RECOVERED. | Any amount exceeding that must be recognised in PoL in the periods expected to be BENEFITED.
IFRS 3 refers negative goodwill as... This is recognised immediately in...
2cz | IFRS 3 Business Combinations
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‘gain on bargain purchase'. | in PoL.
Amortisation in business combinations treatment differences:
IFRS vs FRS 102
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Goodwill is subject to an annual IMPAIRMENT REVIEW. | Goodwill IS amortised over its useful economic life. If this cannot be reliably measured then the useful life should not exceed 10 years.
Subsidiaries held exclusively with view to resale differences in consolidated FSs:
2+1
IFRS 5 Assets Held for Sale and Discontinued Operations vs FRS 102
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Subsidiary acquired for resale is classified as ‘held for sale’. | This means that all of its assets will be amalgamated into one line in the SFP, and all of its liabilities will be amalgamated into another line.
FRS 102 requires that an ELECTION is made to measure such investments at either: Cost less impairment, or FVOCI, or FVPoL.
FRS 102: If the subsidiary is held as part of an investment portfolio, then it must be measured at...
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at FVfPoL.
Groups of Companies Act requirements:
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A company is exempt from the requirement to prepare INDIVIDUAL ACCOUNTS for a financial year if SDE. | A company subject to the small companies regime MAY prepare group accounts for the year.
ISME
If not subject to the small companies regime, a parent company MUST prepare group accounts for the year unless SA405. | Exclusion of a subsidiary from consolidation - REI + if its inclusion isn't material for the purpose of giving a true and fair view.
Companies Act. A subsidiary undertaking may be excluded from consolidation if...
2cz | + REI
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if its inclusion is not material for the purpose of giving a true and fair view (but two or more undertakings may be excluded only if they are not material taken together).
Share-based payment - Recognition differences:
FRS 102
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FRS provides simpler recognition rules. Example: schemes which offer a choice of settlement aren't split into an equity and a liability. Instead, rules determine if to account for them as a wholly cash-settled or a wholly equity-settled transaction.

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