Regime January 2022

1 Financial Reporting CouncilJanuary 2022 FRS 105 The Financial Reporting Standardapplicable to the micro -entitiesRegimeAccounting and ReportingStandardFurther copies, (post-free) can be obtained from:FRC PublicationsLexis House30 Farringdon StreetLondonEC4A 4 HHTel: 0845 370 1234 Email: order online at: Financial Reporting Standard is for reference in the UK and Republic of Ireland onlyDue to copyright restrictions, the full text of FRS 105 and the Basis for Conclusions that accompanies the standard is not available outside the UK and Republic of Financial Reporting Standard is available in the UK and Republic of Ireland only and is not to be distributed to or read by any party outside this outside the UK and Republic of Ireland should visit our webpage at: 105 Cover NO 2/17/2022 8:09 AM Page 1 The FRC s purpose is to serve the public interest by setting high standards of corporate governance, reporting and audit and by holding to account those responsible for delivering them.

2 The FRC sets the UK Corporate Governance and Stewardship Codes and UK standards for accounting and actuarial work; monitors and takes action to promotethe 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. The Financial Reporting Council Limited 2022 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 5 ASThis Financial Reporting Standard contains copyright material of the IFRS Foundation (Foundation) in respect of which all rights are and distributed by the FRC with the permission of the Foundation within the UK and the Republic of Ireland only.

3 No rights granted to third parties other than as permitted by the Terms of Use ( ) without the prior written permission of the FRC and the Reporting Exposure Drafts and Financial Reporting Standards are issued by the FRC in respect of their application in the UK and the Republic of Ireland and have not been prepared or endorsed by the International Accounting Standards Financial Reporting Standard is not to be distributed outside of the UK and the Republic of 105 Cover NO 1/28/2022 4:13 AM Page 2 January 2022 FRS 105 The Financial Reporting Standardapplicable to the micro -entitiesRegimeFinancial Reporting CouncilThis Financial Reporting Standard is for reference in the UK and Republic of Ireland onlyDue to copyright restrictions, the full text of FRS 105 and the Basis for Conclusions that accompanies the standard is not available outside the UK and Republic of Financial Reporting Standard is available in the UK and Republic of Ireland only and is not to be distributed to or read by any party outside this outside the UK and Republic of Ireland should visit our webpage at: 105 The Financial Reporting Standard applicable to the micro -entities Regimeis anaccounting standard.

4 It is issued by the Financial Reporting Council, as a prescribed body,in respect of its application in the United Kingdom and the Republic of 105 The Financial Reporting Standard applicable to the micro -entitiesRegime51 Scope62 Concepts and Pervasive Principles83 Financial Statement Presentation144 Statement of Financial Position175 Income Statement196 Notes to the Financial Statements20 Appendix ACompany law disclosure requirements for micro -entities in the UK21 Appendix BCompany law disclosure requirements for micro -entities in theRepublic of Ireland237 Subsidiaries, Associates, Jointly Controlled Entities and IntermediatePayment Arrangements308 Accounting Policies, Estimates and Errors339 Financial Instruments3610 Inventories4411 Investments in Joint Ventures4812 Property, Plant and Equipment and Investment Property5013 Intangible Assets other than Goodwill5514 Business Combinations and Goodwill5815 Leases5916 Provisions and Contingencies64 AppendixExamples of recognising and measuring provisions6817 Liabilities and Equity7218 Revenue75 AppendixExamples of revenue recognition under the principles in Section 188019 Government Grants8620 Borrowing Costs8721 Share-based Payment8822 Impairment of Assets9023 Employee Benefits9424 Income Tax9925 Foreign Currency Translation10126 Events after the End of the Reporting Period102 Financial Reporting Council 127 Specialised Activities10428 Transition to this FRS105 AppendicesI Glossary109II Table of equivalence for company law terminology123 III Note on legal requirements124IV Republic of Ireland legal references126 Approval by the FRC130 Basis for ConclusionsFRS 105 The Financial Reporting Standard applicable to the micro -entitiesRegime1312 FRS

5 105 ( January 2022)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 105 The Financial Reporting Standard applicable to the micro -entitiesRegime(ii) FRS 105 The Financial Reporting Standard applicable to the micro -entities Regimeis anaccounting standard designed to apply to the financial statements of companies, LLPsand qualifying partnerships that qualify for, and choose to apply, the micro -entitiesregime.(iii) FRS 105 is based on FRS 102, but its accounting requirements are adapted to satisfy thelegal requirements applicable to micro -entities and to reflect the simpler nature andsmaller size of micro -entities.(iv) The application of the micro -entities Regime is optional; however, a micro -entity thatchooses to prepare its financial statements in accordance with the micro -entities regimeis required to apply FRS 105.

6 A company that qualifies for this Regime , but chooses not toapply it, is required to apply another accounting standard. The possible options are setout in FRS 100 Application of Financial Reporting of FRS 105(v) FRS 105 is organised by topic with each topic presented in a separate numbered section.(vi) Terms defined in the glossary are inbold typethe first time they appear in each section.(vii) This edition of FRS 105 issued in January 2022 updates the edition of FRS 105 issued inMarch 2018 for the following:(a)Amendments to FRS 102 The Financial Reporting Standard applicable in the UKand Republic of Ireland and FRS 105 The Financial Reporting Standard applicableto the micro -entities Regime COVID-19-related rent concessionsissued inOctober 2020;(b)Amendments to UK and Republic of Ireland accounting standards UK exit fromthe European Unionissued in December 2020;(c)Amendments to FRS 102 The Financial Reporting Standard applicable in the UKand Republic of Ireland and FRS 105 The Financial Reporting Standard applicableto the micro -entities Regime COVID-19-related rent concessions beyond30 June 2021issued in June 2021;(d) editorial amendments to paragraph to reflect changes in legislation since theprevious edition of FRS 105.

7 (e) amendments to the footnotes to paragraph and the definition of amicro-entity, Appendix B to Section 6 Notes to the Financial StatementsandAppendix IVRepublic of Ireland legal references, to reflect changes introduced bytheEuropean Union (Qualifying Partnerships: Accounting and Auditing)Regulations 2019applicable to Irish qualifying partnerships applying themicro-entities Regime for accounting periods beginning on or after1 January 2020; and(f) some minor typographical or presentational Reporting Council 34 FRS 105 ( January 2022)FRS 105 The Financial Reporting Standard applicable to the micro -entitiesRegimeFinancial Reporting Council 5 Section 1 ScopeScope of this Financial Reporting This FRS applies to thefinancial statementsof amicro-entity. The financialstatements of a micro -entity prepared in accordance with this FRS that include themicro-entity minimum accounting itemsare presumed in law to show a true and fairview of the micro -entity sfinancial positionandprofit or lossin accordance with themicro-entities References to a micro -entity in this FRS are to a micro -entity that chooses to apply themicro-entities This FRS permits, but does not require, a micro -entity to include information additionalto the micro -entity minimum accounting items in its financial statements.

8 If amicro-entity includes additional information it shall have regard to any requirement ofSection 1 ASmall EntitiesofFRS 102that relates to that from which A micro -entity applying the micro -entities Regime in the UK shall apply this FRS foraccounting periods beginning on or after 1 January 2016. Early application A micro -entity applying the micro -entities Regime in the Republic of Ireland shall applythis FRS for accounting periods beginning on or after 1 January 2017. Early applicationis permitted provided theCompanies (Accounting) Act 2017is applied from the Liability Partnerships and Qualifying In May 2016 amendments were made to this FRS to extend its scope to includelimitedliability partnerships (LLPs)andqualifying partnershipsfollowing a change in UKlegislation. An LLP or a qualifying partnership which qualifies as a micro -entity in theUK and is applying the micro -entities Regime shall apply this FRS for accountingperiods beginning on or after 1 January 2016.

9 Early application by a micro -entity that isan LLP or a qualifying partnership is:(a) permitted for accounting periods beginning on or after 1 January 2015 providedthatThe Limited Liability Partnerships, Partnerships and Groups (Accounts andAudit) Regulations 2016(SI 2016/575) are applied from the same date; and(b) required if the LLP or qualifying partnership appliesThe Limited LiabilityPartnerships, Partnerships and Groups (Accounts and Audit) Regulations 2016(SI 2016/575) to an accounting period beginning before 1 January review In December 2017 amendments were made to this FRS as a result of the triennialreview 2017.(a) A micro -entity in the UK shall apply the amendments to this FRS as set out in theTriennial review 2017 amendmentsfor accounting periods beginning on or after1 January 2019, except for the amendments to paragraph and Section 6 Notes to the Financial Statements(including its appendices) which shall apply foraccounting periods beginning on or after 1 January reflect legal requirements that are applicable in the UK for accounting periods beginning on or after 1 January FRS 105 ( January 2022)Early application is permitted provided that all the amendments to this FRS areapplied at the same time.

10 (b) A micro -entity in the Republic of Ireland shall apply the amendments to this FRSthat incorporate the micro -entities Regime in the Republic of Ireland inaccordance with paragraph , and shall apply the other amendments setout in theTriennial review 2017 amendmentsfor accounting periods beginningon or after 1 January application of the other amendments is permitted provided that all of theseother amendments are applied at the same rent In October 2020 amendments were made to this FRS to insert paragraphs , and These amendments are effective for accounting periods beginningon or after 1 January 2020. Early application is exit from the European In December 2020 amendments were made to this FRS as a consequence of changesmade to FRS 102 to reflect changes in UK company law following the UK exit from theEuropean Union. These amendments are effective for accounting periods beginning onor after 1 January rent concessions beyond 30 June In June 2021 an amendment was made to paragraph of this FRS.