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FRC publishes document of editorial amendments and clarification statements to FRS 102

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16 Apr 2015

The Financial Reporting Council (FRC) has issued a document detailing editorial amendments and clarification statements in relation to FRS 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’.

The FRC has previously issued editorial amendments and clarification statements to FRS 102 in both November 2013 and March 2014.  Further amendments were made in July 2014 in relation to hedge accounting and classification of financial instruments and a revised version of FRS 102 was issued in August 2014.  This latest set of amendments reflects changes since August 2014.

The areas of FRS 102 affected are: 

  • Section 12 ‘Other Financial Instruments Issues’.  The FRC has issued editorial amendments regarding ‘Example 1' in the examples of hedge accounting within Section 12 of FRS 102.  The FRC have also clarified that a hedge of a net investment in a foreign operation remains a permitted type of hedging relationship under FRS 102.  It clarifies, therefore, that FRS 102 continues to permit hedge accounting for net investments in foreign branches in the separate financial statements of a parent, provided that the conditions in paragraph 12.18 are met.
  • Section 29 ‘Income tax’.  The FRC have provided clarity of the phrase “the amount that can be deducted for tax” included within paragraph 29.11 of FRS 102 in relation to deferred tax arising on a business combination.  The FRC clarify that in applying this paragraph of FRS 102 “an entity should consider the manner in which it expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities”.  The FRC indicate that this assessment should “include consideration of all taxes, including operating taxes and taxes arising from the sale of the item, if appropriate”.

The document of editorial amendments and clarification statements to FRS 102 can be found on the FRC website.

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