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ACCA SBR > UK GAAP > Flashcards

UK GAAP Flashcards

Learn differences between IFRS and FRS102

1
Q

Where is the guidance about accounting standards that UK companies should apply found?

A

FRS 100 Application of Financial Reporting Requirements

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2
Q

What are the rules that listed UK comps should follow under FRS 100?

A

Listed groups must prepare accounts under IFRS.

However companies within group can take advantage of disclosure exemptions outlined in FRS 101 when preparing individual FS

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3
Q

What should non-listed UK companies follow?

A

FRS 102 - Financial Reporting Standard applicable in the UK and the Rep of Ireland

UNLESS

The voluntarily chose to apply IFRS

They are a micro entity and chose to apply FRS 105 The FRS applicable to Micro entities regime

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4
Q

Difference between Conceptual Framework under IFRS and FRS 102?

A

CF - The framework does not identify these as separate qualitative characteristics

FRS102 - identifies qualitative characteristics of materiality, substance over form and prudence

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5
Q

Difference IAS1 - presentation of FS between IFRS and FRS102

A

IFRS - recommended formats

FRS 102 - prepared in accordance with companies Act 2006 therefore prescribed format (Assets- Liabilities = Equity)

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6
Q

Difference between IAS20 gov grants between ifrs and frs102?

A

IFRS - choice of using deferred income or netting off method

FRS102 - deferred income method only

Repayment
IFRS - Detailed Guidance
FRS102 - Recognise as Liability when meets the definition

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7
Q

Difference IAS 23 Borrowing Costs IFRS and FRS102?

A

IFRS - eligible borrowing costs must be capitalised

FRS102 - there is a choice to capitalise or expense borrowing costs

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8
Q

Diff IAS 12 Income Taxes Deferred Tax between IFRS and FRS102

A

IFRS - Records Deferred tax in SFP

FrS102 - records deferred tax in SPL

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9
Q

Diff IAS34 related party transactions?

A

Key Management Personnel

IFRS - disclosure of key management personnel compensation must be disaggregated e.g. ST benefits, post employment benefits, share based payments

FrS102 - Compensation is disclosed in total only

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10
Q

What is FRS102 EXEMPTION from IAS 24 related parties?

A

transactions between 2 or more members of a group need not be disclosed as long as any sub is wholly owned

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11
Q

Diff IAS 28 investments in associates and joint ventures

GW and Trans Costs

A

Goodwill

IFRS - GW arising on an associate is included within its carrying amount and is not amortised

FrS102 -Implicit GW (Diff between Consideration Paid and Investor’s share of FV of net assets) arising on an associate should be amortised

IFRS - Trans Costs exp to P&L
FRS102 -Transactions costs added onto Associate

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12
Q

IAS 38 intangibles diff IFRS and FRS102?

A

Development Costs

IFRS - when criteria met, dev costs are capitalised
FRS102 - choice to capitalised or expense dev costs

UL of Intangibles
IFRS - intangibles can have an indefinite useful life
FRS102- All intangibles have definite UL, rebuttable presumption that this does not exceed 10 year

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13
Q

IFRS 3 Business Combinations Goodwill - diff IFRS and FRS102?

A

GW

IFRS- GW not amortised / Annual Impairment Review
Gain on bargain purchase is recognised P&L

FRS102- GW amortised over UL
Negative GW is shown as negative on SFP

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14
Q

IFRS 3 Business Combinations Acquisition costs diff ifrs and frs 102

A

IFRS - Expensed to P&L

FRS102 -added to consideration in GW calc

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15
Q

IFRS 3 Business Combinantions - Contingent Consideration Diff ifrs and frs 102

A

IFRS - Include contingent consideration in GW calculations at FV. FV incorporates probability that it’ll be paid.

FRS102 - If probable include estimated amount of contingent consideration payable in GW calc

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16
Q

IFRS 3 Business Combinations NCI diff ifrs and frs

A

IfRS - Choice of FV or proportionate method

FRS102- Proportionate method only

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17
Q

IFRS 5 Discontinued Operations diff IFRS and frs 102

A

IFRS - discontinued operations are shown as 1 line in p&l, further detail in notes to FS

FrS102 - discontinue op shown in separate column in income statment

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18
Q

IFRS 5 aaset held for sale diff ifrs and frs 102

A

Ifrs - when criteria met, held for sale are presented as current assets and stopped depreciation

FrS102 - no held for sale category so assets continue to depreciate until disposal

19
Q

Diff IFRS 9 Financial Instruments IFRS and FRS102

Approach and Impairment

A

Approach

IFRS- Classifies financial assets based on contractual cash flows and business model

FRS102- Adopts simplified approach. Investments in shares are FVPL and simple debt instruments are amortised cost

Impairment

IFRS- adopts expected loss approach

FRS102- Adopts incurred loss approach

20
Q

IFRS 10 When should a Sub be EXCLUDED from the Consolidated FS

A

FRS102- Subs should be excluded from consolidation where severe longterm restrictions apply or where sub is held exclusively for resale

21
Q

IFRS15 Revenue from Contracts with Customers

A

IFRS - Adopts 5 step approach (Identify Contract, Identify Perf Obligations, Determine Trans Price, Allocate Trans Price to Perf Oblig, Recognise Rev)

FRS102- splits revenue accounting into:
sale of goods, (Risk & Rewards tranf to Seller)
provision of services (Stage of Completion)
Construction contracts (Stage of Completion)

22
Q

IFRS 16 Leases Differences between IFRS and FRS102

A

IFRS- Lessees recognise an asset and a liability for all leases unless ST or of minimal value

FRS102- lessees classify leases as finance or operating lease. A Liability and asset is only recognised for Finance lease. Op Lease payments exp to P&L

23
Q

Companies Act - single entity

When is a company exempt from prepare individual FS?

(3)

A

Its a sub itself

Its been dormant throughout year

Parent is established under the law of an EU Economic Area (EEA) State

24
Q

If not subject to small comp regime, a parent must prepare group accounts for the year unless what?

A

If the Parent is a 100% Sub of another company

If all its subs are excluded from consolidation

  • severe LT restrictions hinder right of the P over the assets pr management
  • the information for preparation cant be obtained without huge exp or delay
  • the sub is held only for resale
25
Q

What can small companies that use FRS102 exclude?

A

No OCI
No Statement of Cash Flow
Exempt from many disclosures req of FRS102

26
Q

What is FRS101?

A

Reduced Disclosure Framework - permits exemptions from disclosure requirements.

Only applies to individual FS of P and S that normally apply IFRS.

Cost and time savings without severely affecting quality of Financial Reporting.

Full disclosures on group level found in consolidation - greater use for users.

27
Q

What is FRS105?

A

Financial Reporting Standard for Micro Entities

Qualifies if:

  • Turnover is not more than £632K a year
  • Gross Assets not more than £316K
  • Average number of EEs 10 or less
28
Q

What the amendments of FRS105?

A

Prohibits accounting for:

  • Deferred Tax
  • Eq-Settled Share Payments prior to issue of Shares
  • Revaluation Model for PPE, Intang and Invest Prop
  • Capitalisation of Borrowing Costs
  • Capitalisation of Dev Exp as intangible

Simplifies the rules around Financial Instruments as Debt or Equity

Removed distinction between Functional and Presentational Currency

29
Q

What are the Qualitative Characteristics of Info under FRS102? (HINT: 10)

A 
Relevance
Materiality
Prudence
Substance over Form
Reliability
Cost vs Benefit
Completeness
Comparability
Understandability
Timeliness
30
Q

What are the Measurement, Accruals and Offsetting Rules under FRS102?

A

Measurement Basis:
Historical Cost and Fair Value

Prepared using Accruals Basis

Offsetting not used unless a standard requires it

31
Q

What is a true and fair view OVERRIDE?

A

To comply with Companies Act, FRS102 allows a true and fair view override. If FRS102 does not provide this, directors must depart from the FRS102 standard to be able to give a true and fair view.

32
Q

Differences in Inventories between FRS102 and IFRS?

A

FRS102 - more guidance on what is included in Production OHs (includes site restoration costs if PPE on this site is used to make inventory)

FRS102- reversal of inventory impairments. IFRS does not!

33
Q

Financial Instruments - Impairments - Differences between FRS102 and IFRS 9?

A

Impairments
FRS102 - Uses Incurred Loss model, Only recognised if there is evidence that it actually occurred!

IFRS - “Expected loss” - Recognises a loss for Amortised or FVOCI based on level of credit risk!
Significant Risk - Lifetime Expected Losses
Not Significant - 12m Expected Losses
Recognised in SPL

34
Q

Joint Ventures under IFRS and FRS102?

A

IFRS - 2 types of joint control
Joint Operation - Join the assets and liabs together (Normally joint control of asset)
Joint Venture - Recognised under Eq Acctg (Normally control of a company)

FRS102 - 3 Types of Joint Venture
Jointly Controlled Operations - Each venturer contributes OWN assets for use by joint venture
Jointly Controlled Assets - When venturers jointly control or own the assets.
Jointly Controlled Entities - Establish separate entity under joint control (Equity Accounting)

35
Q

PPE - Estimate reviews of UL and residual values

A

FRS - Only review if evidence exists they have changed

IFRS - review annually

36
Q

Provisions (Restructuring Costs) - Differences between IFRS and FRS102

A

FRS 102 - A Provision should be recognised when a legal or constructive obligation.

IAS 37 - Prov, Cont Asset and Liabs - detailed guidance on provisions.

37
Q

Share-Based Payment - Differences between IFRS and FRS 102

A

FRS102 - When measuring FV of Equity Instruments there are 3 Tiers:
Observable Market Prices
Entity Specific Market Data
Valuation using Market Data where poss

Recognition - Rules to determine whether wholly cash or wholly equity - not split between debt and equity

38
Q

Employee Benefits - Differences between IFRS and FRS102 - Termination Benefits (Restructuring Costs)

A

IFRS - Recognise at earlier of:
Date when entity no longer withdraw the offer
Date when costs are measured under IAS 37 Provisions

FRS102 - Only accounts for termination costs when it has a detailed formal plan and no change of withdrawal.

39
Q

Foreign Currency Translation - Differences

A

FRS102 does not have separate translation reserve for FOREX on translation of a sub

FOREX not reclassified to P&L from OCI on disposal of Sub

40
Q

IAS 41 Agriculture Difference IFRS and FRS102

A

FRS102 can measure biological assets at FV or cost model (cost less acc depn and acc impairment)

IAS 41 - only at FV - C2S. Remeasured to FV-C2S at each rep date. Gains and Losses to P&L

41
Q

Differences in Control for FRS102 and IFRS 10 Consolidate FS?

A

FRS102 - Control is power to govern financial and operating policies of entity to obtain benefits from it’s activities.

IFRS - Control is:
Power over the investee
Exposure to Variable Returns
Can affect the returns through the power over the investee

42
Q

Control in Stages - Step Acquisition Differences between FRS102 and IFRS

A

IFRS - The residual interest is remeasured to FV

FRS102 - Residual Interest is not remeasured

43
Q

Income Tax IAS 21 - Differs significantly in FRS102 and IFRS - HOW?!

A

FRS102 - Deferred Tax shown in SPL
Timing Diffs are differences between taxable profits and total comp income that arise from inclusion of income and expenses in tax assessments in periods diff that those in FS.

Defer Tax also recognised on diff between tax value ad FV of Ass and Liabs in a business combination.

IFRS - SFP
Diffs between amount recognised in entity’s assets and liabilities and recognition of them by tax authorities

FRS102 uses concept of PERMANENT DIFFERENCES - Certain income and exp are non-taxable.

IAS12 uses Temporary Differences

ACCA SBR (2 decks)

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