Revaluation under FRS 105

Have a client with a commercial property that it rents out

Didn't find your answer?

How do I, and can I, enter the increase in value under FRS105 as no obvious section for revaulation reserves etc.- or do I have to change to FRS102 reporting for this and retrospective periods.

Any guidance appreciated, thank you

Replies (6)

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paddle steamer
By DJKL
30th May 2018 12:35

You don't unless you switch to FRS102A etc.

See FRS105

2.33 Property, plant and equipment, investment property and biological assets are measured at cost less accumulated depreciation and accumulated impairment
losses

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Replying to DJKL:
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By sarah levine
30th May 2018 12:48

Thank you for this - the client is thinking of borrowing against this company and so a revaluation may be in their favour -presumably if I change to FRS102A do I have to resubmit prior years under this template ? This is a one off revaluation and don't think they will want to undertake yearly valuations which I believe will be the case if reporting under FRS102A ?

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Replying to sarah levine:
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By Wanderer
30th May 2018 12:54

Is it worth bothering?

In my experience most lenders ignore valuations in the accounts & have their own valuations carried out.

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Replying to Wanderer:
paddle steamer
By DJKL
30th May 2018 13:08

I find it makes things simpler talking with them if the two are in accord, however we when we are sorting banking are dealing with a pitch to the bankers re an entire group portfolio of investment properties rather than just one or two odd properties.

The catch if they are out of kilter can be that everyone gets confused discussing things as yield / LTV figures have more than one dataset etc

In my experience (and I do not want to be cruel) bankers can cope with very basic accounting matters but tend to get out of their depth with the slightly more exotic (try explaining to them pref dividends treated as interest paid etc), so KISS is a very good maxim when presenting figures to them.

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Replying to Wanderer:
RLI
By lionofludesch
30th May 2018 13:09

Wanderer wrote:

Is it worth bothering?

In my experience most lenders ignore valuations in the accounts & have their own valuations carried out.

Exactly.

Why would lenders need to have the valuation shown in the accounts ?

Unless it's to tick their boxes, obviously.

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Replying to sarah levine:
paddle steamer
By DJKL
30th May 2018 13:00

When I changed from the FRSSE to FRS102 I needed to change and restate the comparatives , however there I had a Revaluation Reserve to eliminate/ tweaks re Deferred tax etc etc, given for you no revaluations have yet taken place such a restatement ought to be pretty straightforward.

They will need, under FRS102, to consider the valuation each year and continue to revalue but that does not require professional valuation each year, the directors merely need to consider valuation and explain the basis, not that arduous. As an example we had our last professional valuations done in December 2016 and I do not expect to bother getting another set (and that will just be a desktop) until late 2019 or maybe sometime in 2020.

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