Differences between UK GAAP and IFRS

Question 1

For capitalisable borrowing costs, what is the UK vs IFRS difference?

Answer 1

Under FRS 102, an entity can choose whether or not to capitalise borrowing costs, IAS 23 gives no such choice, you must capitalise them

Question 2

What is the difference between UK GAAP and IFRS for leases?

Answer 2

UK GAAP makes a distinction between finance leases (where risk and reward of ownership IS transferred to the lessee) and operating leases (where no risk/reward is transferred). IFRS does not allow this distinction.

FRS102 requires recognition of the asset itself, IFRS requires a right of use asset and a lease liability

Accounting for leases with payments in advance is different. IFRS16 requires the initial payment and any deposit to be added to the ROUA rather than deducted.

IFRS16 calculate the lease liability as the present value of the future lease payments rather than the present value of the minimum lease payments as does FRS 102

Question 3

What is the difference between IFRS vs UK GAAP re calc and subsequent treatment of goodwill arising on consolidation

Answer 3

UK GAAP requires goodwill to be amortised over its useful life with rebuttable presumption that this should not exceed 10 years

With IFRS goodwill is subject to annual impairment review with amortisation prohibited

With UK GAAP NCI must be measured using the proportionate method

With IFRS can use the proportionate method or the fair value method