Even after numerous courses I am still confused about the new standards and how they fit with current clients. Is it possible that the simplest clients wouldnt have any transitional adjustments whatsoever? No payroll, so no holiday accrual, no assets so no revaluations, no properties......it just seems too simply that there isnt anything to change on these types of clients.
Also, with clients with small brought forward assets (office equipment etc) Do these have to be revalued???
Is there any online stuff that actually makes sense of this for the smaller companies. They are not really suited to FRS105, so dont really want to go there.
Thank you in advance!!
Replies (10)
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Have you not been on any courses? It's probably a bad idea to try and pick it up as you go along.
I believe there is an out re revaluation of plant etc under FRS102, 17.5 and 17.5A
17.15 An entity shall measure all items of property, plant and equipment after initial
recognition using the cost model (in accordance with paragraph 17.15A) or the
revaluation model (in accordance with paragraphs 17.15B to 17.15F). Where the
revaluation model is selected, this shall be applied to all items of property, plant and
equipment in the same class (ie having a similar nature, function or use in the
business). An entity shall recognise the costs of day-to-day servicing of an item of
property, plant and equipment in profit or loss in the period in which the costs are
incurred.
Cost model
17.15A Under the cost model, an entity shall measure an item of property, plant and
equipment at cost less any accumulated
I'm finding that for the type of clients you are referring to above there aren't any adjustments other than a simple Employee note and the relevant wording being changed.
There was a lot of wailing and gnashing of teeth, and consequently seminars sold when FRS102 came in. In my experience, the very limited disclosures required under FRS102 1A is a massive simplification from FRSSE. Most small, plain vanilla clients do not appear to require any transitional adjustments.
I think there has been a lot of people scared of FRS 102 for no reason and mainly because they haven't read it.
For a lot of companies there will be no changes to the numbers and it will only be disclosure which will appear differently. You just need to do a review on each client to ensure you don't miss the one client which does have a transitional adjustment.
If you were dealing with it properly this review would have been done at transition date or at very least prior period as there were/are opportunities with some clients to choose favourable accounting policies.
I've now reviewed a number of files prepared using FRS102 and I have been (pleasantly) surprised, as stated by others on this thread, how often there are no adjustments to make. The main culprit is the fraught subject of investment properties, otherwise the transition is often quite painless.
I suspect a lot of accounts will be filed with no transitional adjustments even when they do need them.