Trim: 187 x 235 mm fm.indd 01/27/2015 09:3:0:PM Page ii Interpretation and Application of UK GAAP for Accounting Periods Commencing on or After January 2015 Trim: 187 x 235 mm fm.indd 01/27/2015 09:3:0:PM Page ii Trim: 187 x 235 mm fm.indd 01/27/2015 09:3:0:PM Page iii Interpretation and Application of UK GAAP for Accounting Periods Commencing on or After January 2015 Steven Collings Trim: 187 x 235 mm fm.indd 01/27/2015 09:3:0:PM Page iv This edition first published 2015 © 2015 Steven Collings Registered office John Wiley & Sons Ltd, The Atrium, Southern Gate, Chichester, West Sussex, PO19 8SQ, United Kingdom For details of our global editorial offices, for customer services and for information about how to apply for permission to reuse the copyright material in this book please visit our website at www.wiley.com The right of the author to be identified as the author of this work has been asserted in accordance with the Copyright, Designs and Patents Act 1988 All rights reserved No 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with any product or vendor mentioned in this book Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose It is sold on the understanding that the publisher is not engaged in rendering professional services and neither the publisher nor the author shall be liable for damages arising herefrom If professional advice or other expert assistance is required, the services of a competent professional should be sought A catalogue record for this book is available from the Library of Congress A catalogue record for this book is available from the British Library ISBN 978-1-118-81927-2 (paperback) ISBN 978-1-118-81926-5 (ebk) ISBN 978-1-118-81925-8 (ebk) ISBN 978-1-119-05294-4 (ebk) Set in 11/12pt TimesLTStd by Laserwords Private Limited, Chennai, India Printed in Great Britain by TJ International Ltd, Padstow, Cornwall, UK Trim: 187 x 235 mm fm.indd 01/27/2015 09:10:46:PM Page v CONTENTS About the Author Foreword Preface Acknowledgements Introduction vii ix xi xiii xv General Requirements of the Companies Act 2006 The Statutory Audit Requirement and Accounting Principles 27 The Primary Financial Statements and Disclosure Notes 43 Financial Reporting for Smaller Companies 65 Summary of the Key Differences between FRS 102 and ‘Old’ UK GAAP 83 Consolidated and Separate Financial Statements 103 Accounting Policies, Estimates and Errors 125 Revenue Recognition 137 Assets Held for Sale and Discontinued Operations 153 10 Employee Benefits 159 11 Income Tax 177 12 Intangible Assets 199 13 Property, Plant and Equipment and Investment Properties 213 14 Borrowing Costs 237 15 Impairment of Assets 241 16 Government Grants 261 17 Financial Instruments 267 18 Inventories and Work-in-Progress 299 19 Share-based Payment 309 20 Leases 321 21 Provisions and Contingencies 341 22 Statement of Cash Flows 351 23 Investments in Associates and Joint Ventures 365 24 Related Parties 379 25 Specialised Activities 395 26 Liabilities and Equity 421 27 Events after the Reporting Period 443 v Trim: 187 x 235 mm fm.indd 01/27/2015 09:10:46:PM Page vi Contents 28 Foreign Currency Translation 457 29 Small Company Abbreviated Financial Statements 467 30 Reduced Disclosure Framework 485 31 First-Time Adoption of FRS 102 491 Index 505 vi Trim: 187 x 235 mm fm.indd 01/16/2015 06:22:48:PM Page vii ABOUT THE AUTHOR Steve Collings FMAAT FCCA is the audit and technical partner at Leavitt Walmsley Associates Ltd, a firm of Chartered Certified Accountants based in Sale, Cheshire, in the United Kingdom, where Steve trained and qualified Steve was admitted as a member of the Association of Accounting Technicians (AAT) in 2001 and went on to qualify as a Chartered Certified Accountant (ACCA) in 2005 He was admitted as a Fellow Member of the AAT in 2006 and became a Fellow Member of ACCA in 2010 Steve also holds ACCA’s Diploma in International Financial Reporting Standards, Diploma in International Financial Reporting Standards for Small–Medium Entities as well as ACCA’s Certificates in IFRS and International Auditing Standards and holds Senior Statutory Auditor status in the UK Steve is the author of several books on the subjects of accounting and auditing, including Interpretation and Application of International Standards on Auditing (Wiley, March 2011), IFRS For Dummies (Wiley, March 2012), Frequently Asked Questions in IFRS (Wiley, April 2013), Financial Accounting for Dummies (Wiley, April 2013) and Corporate Finance for Dummies (Wiley, October 2013) He has had many articles published in the professional accounting media, most notably AccountingWEB.co.uk and much of Steve’s work can be seen on his website at www.stevecollings.co.uk Steve lectures professionally qualified accountants on the areas of accounting, auditing and Solicitors Accounts Rules and was named Accounting Technician of the Year at the British Accountancy Awards in 2011 He was also awarded Outstanding Contribution to the Accountancy Profession by the Association of International Accountants in 2013 In 2014 he was shortlisted for Practitioner of the Year at the 2014 British Accountancy Awards vii ... Financial Reporting Standard applicable in the UK and Republic of Ireland was part of a significant overhaul of UK GAAP At the time of going to print, the UK and Republic of Ireland were about to... New UK GAAP xv Structure of the New UK GAAP xix Smaller Companies and the Financial Reporting Standard for Smaller Entities xxii xvi xvii INTRODUCTION Interpretation and Application of UK GAAP. .. focus of this book is to provide preparers of financial statements in the UK and Republic of Ireland with concise and transparent information that will allow a clear understanding of how the UK GAAP