UK GAAP vs IFRS

Conceptual Framework - no of qualitative characteristics

IFRS - six qualitative characteristics

FRS 102 - ten qualitative characteristics, does not differentiate between fundamental and enhancing

Conceptual framework - qualitative characteristics

IFRS - conceptual framework does not identify materiality, substance over form, prudence, balance between benefit and cost as separate qualitative characteristics, although they are implied

FRS 102 - explicitly identifies these characteristics

Conceptual framework - what qualitative characteristics does IFRS not explicitly mention whereas FRS 102 does?

Materiality

Substance over form

Prudence

Balance between benefit and cost

Conceptual framework - asset definition

IFRS - An asset has the potential to produce economic benefits

FRS 102 - expected economic benefits are expected to flow to the entity

IFRS Asset definition

Asset has the potential to produce economic benefits

UK GAAP asset definition

expected economic benefits are expected to flow to the entity

Presentation of FS - Formats

IFRS 1 Presentation of FS provides recommended formats

FRS 102 prepared in accordance with CA 2006, prescribed format

IAS 1 Presentation of FS - statement options

IAS 1 - cannot replace SOCI and SOCE with statement of income and RE

FRS 102 - allows this option in certain circumstances

What does FRS 102 allow to replace SOCI and SOCE, that IFRS does not?

Statement of income and RE

IAS 1 - fair presentation override

IFRS - allows an entity to depart from the fair presentation requirement = fair presentation override

FRS 102 - permits true and fair override

IAS 1 - True and fair view, fair presentstion

IFRS - requires fair presentation, consistent with CA 2006 true and fair view

FRS 102 - uses CA 2006 true and fair view, allows synonymous terms fair presentation, presents fairly, true and fair

IAS 2 Inventories

IFRS - NRV based on FV achieved in open market, industry view of expected SP

FRA 102 - doesn’t refer to NRV, instead refers to estimated SP less costs to complete and sell, SP is estimated by specific entity

IFRS 5 NCA held for sale and discontinued operations - Discontinued operations

IFRS 5 - disc ops shown as one line on SPL, with details in notes

FRS 102 - in keeping with CA 2006, disc ops shown in a separate column in income statement

IFRS 5 NCA held for sale and discontinued operations - Discontinued operations FRS 101 exemption

follows IFRS presentation, exempt from disclosing CF from disc ops

IFRS 5 NCA held for sale and discontinued operations - assets held for sale

IFRS - when criteria met, NCA HFS are categorised as current, no longer depreciated

FRS 102 - no NCA HFS category, continue depreciating until disposal

IFRS 15 Rev from contracts with customers

IFRS - 5 stage rev approach

FRS 102 - no 5 stage approach, but results similar to IFRS 15

IAS 23 Borrowing costs

IFRS - eligible borrowing costs must be capitalised

FRS 102 - option to capitalise or expense borrowing costs

IAS 38 Intangible assets - development costs

IFRS - must be capitalised when criteria met

FRS 102 - option to capitalise or expense

IAS 38 Intangible assets - UEL of intangibles

IFRS - indefinite UEL

FRS 102 - finite UEL, presumed not to exceed 10 years unless rebutted

IAS 38 Intangible assets - FRE 101 exemptions

Exemption from reconciliation disclosure when presenting comparative info

IAS 20 accounting for govt grants and disc of govt assistance - capital grants

IFRS - either deferred income or netting off method

FRS 102 - only deferred income method

IFRS 9 financial instruments - initial recognition of FI

IFRS - initial measurement at FV

FRS 102 - initial measurement at transaction price

IFRS 3 business combinations - GW

IFRS - not amortised, tested annually for impairment

FRS 102 - amortised over UEL, 10 year rebuttable presumption

IFRS 3 business combinations - GW impairment

IFRS - impairment reversal not permitted

FRS 102 - allows impairment reversal

IFRS 3 business combinations - FRS 101 exemptions

Exempt from disclosing factors making up GW if included in consolidated accounts

IFRS 3 business combinations - gain on bargain purchase

IFRS - recognised through SPL

FRS 102 - called negative GW, shown as deduction from positive GW in CSFP

IFRS 3 business combinations - acq costs

IFRS - expensed to SPL

FRS 103 - added to consideration

IFRS 3 business combinations - NCI

IFRS - FV or proportionate method

FRS 102 - only proportionate method

IFRS 10 consolidated FS - exclusions

IFRS - no exclusions allowed from consol

FRS 102 - sub excluded if severe long term restrictions apply or is held exclusively for resale purposes

IAS 28 Inv in A and JV

IFRS - no separate GW recognised, within investment in JV

FRS 102 - implicit GW recognised on acq of sub and amortised

IAS 28 Inv in A and JV - disclosure

IFRS 12 - specifies disc req for interests in JV

FRS 102 - less detailed info req about the investee and associated risks

IAS 8 acc policies, changes in acc estimates and errors

IFRS - does not specify if change to cost model due to unreliable FV measurement should be treated as a change of acc policy

FRS 102 - change to cost model when FV measurement is unreliable is not treated as a change of acc policy

IAS 24 RP disc

IFRS - req full disc of RP transactions

FRS 102 - no disc needed for transactions between two members of group when sub is wholly owned by other party

IFRS 7 financial instruments: disclosures/ IFRS 13 FV measurement -FRS exemption

Disc exemption if equivalent disc is in consol accounts

IFRS 16 leases

IFRS - leases over 12 months are capitalised as ROU assets, leases under 12 months charged straight line to SPL

FRS - differentiates between finance and operating leases. Finance leases transfer risks/rewards to party using the asset and are capitalised like ROU assets. Operating leases are all other leases, charged straight line to SPL

IAS 16 PPE

IFRS - proceeds from sale of items generated during process of bringing PPE to intended location and condition recognised in SPL in period earned

FRS - these proceeds are deducted from CA of PPE item rather than recognised in SPL