UK GAAP vs IFRS

What are the UK GAAP differences around the conceptual framework

IFRS

Six qualitative characteristics included

Conceptual framework does not identify materially,substance over form, prudence balance between benefit and cost as separate qualitative characteristics although they are mentioned or implied.

Conceptual framework states an asset has potential to produce economic benefits.

Uk GAAP

Ten qualative characteristics included. Does not differentiate between fundamental and enhancing qualitative characteristics.

FRS 102 identifies a wide range of charactics given exploit reference like materiality and prudence

FRS 102 asset definition is expected economic benefits are expected to flow to the the entity

Inventories UK GAAP vs IFRS diff

IFRS

IAS inventories - Net realisable Value is based on fair value achieved in an open market.

FRS - instead of referring to net realisable value, FRS 102 refers to the estimated selling price less costs to complete and sell.

Selling price is estimated by the specific entity (entity specific approach)

IAS 38 intangible assets - IFRS vs UK GAAP

IFRS

IAS38 intangible assets

development costs - when the criteria are met developlemnt costs must be capitalised

Useful lives - intangibles can have indefinite useful life

Uk GAAP

Exemption from reconciliation disclosure when presenting comparative information

There is a choice to capitalise or expense development costs

All intangibles have a finite useful life with a rebuttable presumption that this does not exceed 10 years

IAS 20 Accounting for Government Grants UK GAAP vs IFRS

IFRS - choice is using either the deferred income or netting off method.

FrS 102 prescribes the deferred income method only

IFRS9 Financial instruments

Initial recognition of financial instruments

IFRS 9 financial instruments

Initial measurement at fair value

FRS102

Initial measurement at transaction price

IFRS 5 NON CURRENT ASSETS HELD FOR SALE and Discontinued operations

IFRS

discontinued operations are shown as one line on the SPL, with further detail provided in the notes to the accounts.

assets held for sale - when criteria are met, NCA HFS is categorised as current and no longer depreciated.

FRS102

in keeping with companies act 2006, discontinued operations are shown in a separate column in the income statement.

Follow IfRS presentation and exemption from disclosing cash flows from discontinued operations.

FRS102 - NO NCA HFS category exists. So assets continue to be depreciated up until disposal

Uk GAAP vs IFRS Revemue

IFRS - adopts 5 stage approach

UK GAAP does not have a 5 stage approach although gives similar outcomes to IFRS 15

IAS23 Borrowing costs

IFRS -IAS 23 borrowing costs

Eligible borrowing costs must be capitalised.

UK GAAP - there is a choice to capitalise or expense borrowing costs.

IFRS10 consolidated financial statements

IFRS - no exclusions allowed from consolidation

UK GAAP does not- subsidiary should be excluded from consolidation where severe long term restrictions apply or where subsidiary is held exclusively for resale purposes

UK GAAP VS IFRS - IAS 28 investments in associates and joint ventures

Goodwill - no separate goodwill recognised

Uk GAAP - implicit goodwill should be recognised and amortised

IAS 8 ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES AND ERRROS

IFRS - Does not comment on whether a change to the cost model when fair value can no longer be determined reliability is a change of accounting policy or not.

UK GAAP - change to cost model ( when reliable measure of fair value no longer available). Not to be treated as a change of accounting policy.

Ifrs 3 business combinations IFRS VS UK GAAP

IFRS3 business combinations UKGAAP- exemption from disclosure of factors making up goodwill, provided these are given in the consolidated accounts to which the company belongs

Goodwill -IFRS VS UK GAAP

IFRS goodwill is not amortised but tested annual for impairment.

Impairment reversal not allowed for goodwill

Gain on bargain purchase is recognised through the SPL.

UK GAAP

Goodwill amortised over useful life - 10 year rebuttable presumption)

Impairment reversal allowed for goodwill

Gain on bargain purchase is called negative goodwill and is shown separately in the asset section of the CSFP as a deduction from positive goodwill

Acquisition costs -IFRS vs UK GAAP

IFRS - Acquisition costs are expenses to the SPL

uk GAAP Goodwill amortised- acquisition costs are added to consideration

NCI - IFRS VS UK GAAP

Choice of fair value or proportionate method

Only the proportionate method is allowed

Ias16 PPE IFRS VS UK GAAP

IFRS IAS 16 Ppe

Proceeds arising from sale of items produced in the process of brining PPE to the location/ condition necessary are recognised in the SPL in the period earned.

Uk GAAP-these proceeds are deducted from the carrying amount of the PPE ITEM

Related party transactions

IAS 24 related party disclosures

Uk GAAP- does not require disclosure of transactions entered into between 2+ members of a group

Leases

IFRS 16 leases

All leased assets are now capitalised and recognised as ROU assets by leases

leases if <12 months are charged to the SPL on a straight line basis

UK GAAP

distinction made between operating and finance leases

a finance lease is a lease that transfers substantially SPL the risks and rewards to the party using the asset.

An operating lease is any lease other than a finance lease

Finance leases are treated like ROU ASSETS.

Operating leases charged to the PL