Need to know — ICAEW and ICAS publish exposure draft of updated guidance on realised and distributable profits under the Companies Act 2006

Published on: 15 Mar, 2016

Only ‘realised profits’ can be paid out as a dividend.  Determining what is a realised profit can be tricky especially in an intragroup scenario and when using fair value accounting rules.  To assist companies, the Institute of Chartered Accountants in England and Wales (ICAEW) and the Institute of Chartered Accountants of Scotland (ICAS) have jointly issued TECH 05/16 BL; an exposure draft of revised guidance to assist companies in determining whether profits made are realised and can be paid out as dividends.  The guidance will, when finalised, replace TECH 02/10 which requires updating following changes to International Financial Reporting Standards (IFRSs) and UK GAAP and to reflect new issues that have arisen in practice.

Substantive changes have been made to the guidance on accounting for intragroup off-market loans and the guidance on retirement benefit schemes.  Other changes are in the nature of updating references to the revised standards and removing obsolete material.  

This Need to know publication discusses the key changes that have been made in TECH 05/16/BL.


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