FRC Exposure Draft clarifies accounting for residential management companies
05 Aug, 2013
The Financial Reporting Council (FRC) has issued a financial reporting Exposure Draft FRED 50 containing Draft FRC Abstract 1: Residential Management Companies’ Financial Statements which sets out the treatment of residential management transactions in the financial statements of residential management companies (RMCs). The FRC has also issued consequential amendments to the Financial Reporting Standard for Smaller Entities (FRSSE).
FRED 50 Draft FRC Abstract 1 replaces UITF Draft Abstract 49 Residential Management Companies’ Financial Statements and applies to residential management companies preparing financial statements under FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’. It clarifies that all RMCs act as principals and not agents in their residential management transactions with third party suppliers. On the basis that they RMCs are acting as principals, FRED 50 Draft FRC Abstract 1 addresses how RMCs shall recognise transactions with third party suppliers in their financial statements when discharging their duties to manage and arrange maintenance of a property.
Entities will be required to apply FRED 50 Draft FRC Abstract 1 and the consequential amendments to the FRSSE for accounting periods beginning on or after 1 January 2015 with early adoption permitted.
The FRC invite comments by 11 November 2013.
FRED 50: Draft FRC Abstract 1 - Residential Management Companies' Financial Statements can be found here (link to FRC website).
