FRSSE: Frequently asked questions

 

After summarising the arguments surrounding the government's plans to simplify financial reporting for small companies, Steve Collings provides answers to some of the most commonly asked questions on Financial Reporting Standard for Smaller Entities (FRSSE).
Q. My client is eligible to prepare financial statements in accordance with the FRSSE and they do have a material amount of deferred tax, which I have included  within provisions for liabilities and charges. Is this correct?
A. This is the correct treatment, but provisions for liabilities and charges are no longer referred to as such anymore; instead they are termed provisions for liabilities.
 
Q. My client reports under FRSSE but doesn’t prepare a cash flow statement. I have made disclosure in the notes to the accounts that the company is exempt, but is this disclosure really necessary?
A. Many companies choose to disclose the fact that a cash flow statement has not been  produced on the grounds that the company is a small company in the eyes of Companies legislation. There is no requirement, however, to disclose this fact.
 
Q. My client has got some purchased goodwill and he has calculated the amount to be subjected to amortisation using the formula cost – residual value = amount to amortise. Is this correct?
A. Paragraph 6.14 to FRSSE (effective April 2008) states that the residual amount of  goodwill will be zero. The full cost of the capitalised goodwill must be amortised on a straight-line (or more appropriate) basis over its useful economic life which cannot exceed 20 years in accordance with paragraph 6.13.
 
Q. Can goodwill and intangible assets be revalued in the same way as, say, a building?
A. No. Paragraph 6.16 to the FRSSE does not permit the revaluation of goodwill or other intangible assets.
 
Steve Collings is the audit and technical partner at Leavitt Walmsley Associates Ltd and the author of ‘The Interpretation and Application of International Standards on Auditing’ (Wiley March 2011). He is also the author of ‘The AccountingWEB Guide to IFRS’ and lectures on financial reporting and auditing issues.

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Comments
Malcolm Veall's picture

"Frequently" asked questions    2 thanks

Malcolm Veall | | Permalink

"My client has a deferred tax liability in respect of its defined benefit pension scheme liability. I have chosen to recognise this within the deferred tax liability account. Is this correct?"  --> how many FRSSE companies have liabilities for defined benefit pension schemes?

def ta

Tosie | | Permalink

Company has revalued assets but has no intention to sell can def tax be ignored

If not can revised accounts be filed at companies house

Thanks.