March 2018 FRS 102 The Financial Reporting Standard ...

1 Financial Reporting CouncilMarch 2018 frs 102 The Financial Reporting Standardapplicable in the UK and Republic of IrelandAccounting and ReportingStandardFurther copies, ????? (post-free) can be obtained from:FRC PublicationsLexis House30 Farringdon StreetLondonEC4A 4 HHTel: 0330 161 1234 Email: order online at: 102 3/19/2018 12:51 PM Page 1 The FRC's mission is to promote transparency and integrity in business. The FRC sets the UK Corporate Governance and Stewardship Codes and UK standards for accounting and actuarial work; monitors and takes action to promote the quality of corporate Reporting ; and operates independent enforcement arrangements for accountants and actuaries. As the Competent Authority for audit in the UK the FRC sets auditing and ethical standards and monitors and enforces audit FRC does not accept any liability to any party for any loss, damage or costs howsoever arising, whether directly or indirectly, whether in contract, tort or otherwise from any action or decision taken (or not taken) as a result of any person relying on or otherwise using this document or arising from any omission from it.

2 The Financial Reporting Council Limited 2018 The Financial Reporting Council Limited is a company limited by guarantee. Registered in England number 2486368. Registered Office: 8th Floor, 125 London Wall, London, EC2Y Financial Reporting Standard contains material in which the IFRS Foundation holds copyright and which has been reproduced with its permission. The copyright notice is reproduced on page 102 3/19/2018 12:51 PM Page 2 March 2018 frs 102 The Financial Reporting Standardapplicable in the UK and Republicof IrelandFinancial Reporting CouncilFRS 102 The Financial Reporting Standard applicable in the UK and Republic of Irelandisan accounting Standard . It is issued by the Financial Reporting Council, as a prescribedbody, in respect of its application in the United Kingdom and the Republic of 102 The Financial Reporting Standard applicable in the UK andRepublic of Ireland71 Scope81A Small Entities13 Appendix A: Guidance on adapting the balance sheet formats16 Appendix B: Guidance on adapting the profit and loss account formats18 Appendix C: Disclosure requirements for small entities in the UK20 Appendix D: Disclosure requirements for small entities in the Republic of Ireland29 Appendix E: Additional disclosures encouraged for small entities442 Concepts and Pervasive Principles45 Appendix.

3 Fair value measurement543 Financial Statement Presentation564 Statement of Financial Position615 Statement of Comprehensive Income and Income Statement65 Appendix: Example showing presentation of discontinued operations696 Statement of Changes in Equity and Statement of Income and Retained Earnings 707 Statement of Cash Flows728 Notes to the Financial Statements789 Consolidated and Separate Financial Statements8010 Accounting Policies, Estimates and Errors9111 Basic Financial Instruments9612 Other Financial Instruments Issues115 Appendix: Examples of hedge accounting12413 Inventories13514 Investments in Associates13915 Investments in Joint Ventures14316 Investment Property14717 Property, Plant and Equipment15018 Intangible Assets other than Goodwill15619 Business Combinations and Goodwill16420 Leases17121 Provisions and Contingencies178 Appendix: Examples of recognising and measuring provisions183 Financial Reporting Council 122 Liabilities and Equity187 Appendix: Example of the issuer s accounting for convertible debt19223 Revenue195 Appendix.

4 Examples of revenue recognition20224 Government Grants20825 Borrowing Costs21026 Share-based Payment21227 Impairment of Assets21828 Employee Benefits22629 Income Tax23730 Foreign Currency Translation24231 Hyperinflation24732 Events after the End of the Reporting Period25033 Related Party Disclosures25334 Specialised Activities257 Agriculture257 Extractive Activities260 Service Concession Arrangements260 Financial Institutions263 Retirement Benefit Plans: Financial Statements266 Heritage Assets269 Funding Commitments271 Incoming Resources from Non-exchange Transactions272 Public Benefit Entity Combinations273 Public Benefit Entity Concessionary Loans274 Appendix A: Guidance on funding commitments276 Appendix B: Guidance on incoming resources from non-exchangetransactions27735 Transition to this FRS279 AppendicesI Glossary288II Table of equivalence for company law terminology315 III Note on legal requirements316IV Republic of Ireland legal references3292 frs 102 ( March 2018)Approval by the FRC345 Basis for ConclusionsFRS 102 The Financial Reporting Standard applicable in the UK andRepublic of Ireland346 Financial Reporting Council 34 frs 102 ( March 2018)Overview(i) The FRC s overriding objective in setting accounting standards is to enable users ofaccounts to receive high-quality understandable Financial Reporting proportionate to thesize and complexity of the entity and users information needs.

5 (ii) This FRS is a single Financial Reporting Standard that applies to the Financial statements ofentities that are not applying EU-adopted IFRS, FRS 101 Reduced Disclosure Frameworkor FRS 105 The Financial Reporting Standard applicable to the Micro-entities 102 The Financial Reporting Standard applicable in the UK and Republic ofIreland(iii) This FRS aims to provide entities with succinct Financial Reporting requirements. Therequirements in this FRS are based on the International Accounting Standards Board s(IASB) International Financial Reporting Standard for Small and Medium-sized Entities(IFRS for SMEs) first issued in 2009. The IFRS for SMEs is intended to apply to thegeneral purpose Financial statements of, and other Financial Reporting by, entities that inmany countries are referred to by a variety of terms including small and medium-sized , private and non-publicly accountable.

6 (iv) The FRC has modified the IFRS for SMEs substantially, both in terms of the scope ofentities eligible to apply it and in terms of the accounting treatments provided. To reflectthis wider scope the proposed name of the Standard was revised to frs 102 TheFinancial Reporting Standard applicable in the UK and Republic of Ireland.(v) frs 102 is designed to apply to the general purpose Financial statements and financialreporting of entities including those that are not constituted as companies and those thatare not profit-oriented. General purpose Financial statements are intended to focus on thecommon information needs of a wide range of users: shareholders, lenders, othercreditors, employees and members of the public, for of frs 102 (vi) frs 102 is organised by topic with each topic presented in a separate numbered section.

7 (vii) Terms defined in the Glossary are inbold typethe first time they appear in each section,and sub-section within Section 34.(viii) This edition of frs 102 issued in March 2018 updates the edition of frs 102 issued inSeptember 2015 for the following:(a)Amendments to frs 102 The Financial Reporting Standard applicable in the UK andRepublic of Ireland Fair value hierarchy disclosuresissued in March 2016;(b)Amendments to FRS 101 Reduced Disclosure Framework and frs 102 TheFinancial Reporting Standard applicable in the UK and Republic of Ireland Notification of shareholdersissued in December 2016;(c)Amendments to frs 102 The Financial Reporting Standard applicable in the UK andRepublic of Ireland Directors loans optional interim relief for small entitiesissuedin May 2017.

8 1 This FRS does not, however, apply to the preparation of Companies Act Financial statements of certain entities under companylaw in the Republic of Ireland. Please refer to Appendix IV for further Reporting Council 5(d)Amendments to frs 102 The Financial Reporting Standard applicable in the UK andRepublic of Ireland Triennial review 2017 Incremental improvements andclarificationsissued in December 2017; and(e) some minor typographical or presentational frs 102 ( March 2018) frs 102 The Financial Reporting Standard applicable in the UK and Republicof IrelandFinancial Reporting Council 7 Section 1 ScopeScope of this Financial Reporting This FRS applies tofinancial statementsthat are intended to give a true and fair viewof a Reporting entity sfinancial positionandprofit or loss(orincome andexpenditure) for a The requirements of this FRS are applicable topublic benefit entitiesand otherentities, not just to companies.

9 However, those paragraph numbers prefixed with PBE shall only be applied by public benefit entities, and shall not be applied directly, or byanalogy, by entities that are not public benefit entities, other than, when specificallydirected, entities within apublic benefit entity group. A public benefit entity shallapply all paragraphs prefixed with PBE to the extent that they are relevant and, forthose public benefit entities within the scope of aStatement of RecommendedPractice (SORP),their use is permitted by the applicable An entity applying this FRS must ensure it complies with any relevant legalrequirements applicable to it. This FRS does not necessarily contain all legaldisclosure requirements. In relation to small companies (see Section 1 ASmallEntities) most legal disclosure requirements are included, but, for example, thoseonly relevant when the Financial statements have been audited are not of preparation of Financial As stated inFRS 100, an entity that is required by theIAS Regulation(or otherlegislation or regulation) to prepareconsolidated Financial statementsin accordancewithEU-adopted IFRS must do so.

10 Theindividual Financial statementsof such anentity, or the individual Financial statements or consolidated Financial statements of anyother entity within the scope of FRS 100, must be prepared in accordance with thefollowing requirements:(a) If the Financial statements are the individual Financial statements of an entity that iseligible to applyFRS 1052, they may be prepared in accordance with thatstandard.(b) If the Financial statements are those of an entity that is not eligible to applyFRS 105, or of an entity that is eligible to apply FRS 105 but chooses not to do so,they must3be prepared in accordance with this FRS, EU-adopted IFRS orFRS An entity whoseordinary sharesorpotential ordinary sharesarepublicly traded,or that files, or is in the process of filing, its Financial statements with a securitiescommission or other regulatory organisation for the purpose of issuing ordinary sharesin a public market, or an entity that chooses to disclose earnings per share, shall applyIAS 33 Earnings per Share(as adopted in the EU).