Significant differences between FRS 102 and the IFRS for SMEs Accounting Standard
Published: 27 March 2024
19 minute read
Introduction
The requirements in FRS 102 are based on the IASB’s IFRS for SMEs Accounting Standard, with some significant amendments made for application in the UK and Republic of Ireland. The following table outlines these significant amendments; more minor amendments are not included.
The following table is based on the current edition of each standard. It may be necessary to refer to the specific section or paragraph of the standard as appropriate. This page was last updated in March 2024.
Section 1 Scope
This section of the IFRS for SMEs Accounting Standard has been replaced. The IFRS for SMEs Accounting Standard applies to small and medium sized entities that publish general purpose financial statements and that do not have public accountability. FRS 100 Application of Financial Reporting Requirements sets out the scope of entities applying FRS 102.
This section includes an optional reporting regime for entities that are part of a group and included in the group’s consolidated financial statements. Entities are required to apply the underlying recognition and measurement requirements of FRS 102, but are permitted to take advantage of certain disclosure exemptions.
Section 1A Small Entities
This section has been inserted to set out the information that is to be presented and disclosed in the financial statements of a small entity, based on the legal framework for small companies. There is no equivalent in the IFRS for SMEs Accounting Standard.
Section 2 Concepts and Pervasive Principles
Section 2 of the IFRS for SMEs Accounting Standard has been entirely replaced with revised requirements. These are based on the IASB’s Conceptual Framework for Financial Reporting, issued in 2018. As a consequence, some definitions used throughout FRS 102 are different to those in the IFRS for SMEs Accounting Standard.
This section does not include the guidance on undue cost or effort exemptions as these are not included in FRS 102.
Section 2A Fair Value Measurement
The guidance in Section 11 of the IFRS for SMEs Accounting Standard on fair value measurement is not included. Instead, a new section is included with requirements for measuring at fair value that are based on IFRS 13 Fair Value Measurement.
Section 3 Financial Statement Presentation
The drafting of the requirements has been more closely aligned with the drafting of company law.
The requirements in paragraph 3.7 are deleted.
Paragraph 3.8A is inserted to require an entity to make certain disclosures about the preparation of the financial statements on a going concern basis.
Paragraph 3.16 is amended to clarify the role of materiality in the preparation of financial statements. Paragraph 3.16A is inserted to provide guidance on the aggregation of information that is aligned with IAS 1.
Paragraph 3.16B is inserted to specify that disclosures are not required if the information resulting from that disclosure is not material.
Section 4 Statement of Financial Position
The requirements of this section have been modified to reflect the requirements set out in company law. Entities that do not report under this legislation comply with the requirements of this section, except to the extent that these requirements are not permitted by any statutory framework under which such entities report.
The requirements that cover the information to be presented in the statement of financial position and the notes to this statement, and the classification of liabilities as either current or non-current, have been retained in FRS 102. These apply to entities that choose to adapt one of the presentation formats required by company law.
Section 5 Statement of Comprehensive Income and Income Statement
The requirements of this section have been modified to reflect the requirements set out in company law. Entities that do not report under this legislation comply with the requirements of this section except to the extent that these requirements are not permitted by any statutory framework under which such entities report.
The requirements that cover the information to be presented in the statement of comprehensive income have been retained in FRS 102. These apply to entities that choose to adapt one of the presentation formats required by company law.
Paragraph 5.10 has been amended and paragraphs 5.10A and 5.10B are inserted to comply with company law and include the definition of an extraordinary item.
Section 6 Statement of Changes in Equity and Statement of Income and Retained Earnings
Paragraph 6.3A is inserted to require presentation for each component of equity of an analysis of other comprehensive income by item, either in the notes, or in the statement of changes in equity.
Paragraph 6.3B is inserted to require, when an entity has more than one class of share capital, disclosure of dividends paid (in aggregate and per share) separately for each class of share capital.
Section 7 Statement of Cash Flows
The scope of this section is amended to exclude mutual life assurance companies, pension funds and certain investment funds.
Paragraph 7.7(a) and paragraph 7.8 are amended to allow, under the indirect method, net cash flows from operating activities to be determined by adjusting a measure of profit or loss disclosed in the statement of comprehensive income, in line with IAS 7 Statement of Cash Flows.
Paragraphs 7.10A to 7.10E are inserted to require the reporting of cash flows on a net basis in some circumstances.
Paragraphs 7.11 and 7.12 are amended to provide some relaxation of the exchange rates permitted to be used. Paragraph 7.12 is also amended to clarify the currency in which consolidated financial statements are presented.
Paragraphs 7.20B and 7.20C are inserted to require disclosure of an entity’s supplier finance arrangements, based on the IASB’s May 2023 Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7).
Paragraph 7.22 is inserted to require the disclosure of a net debt reconciliation.
Section 8 Notes to the Financial Statements
Paragraph 8.5 is amended and paragraphs 8.5A to 8.5D are inserted to require disclosure of material accounting policy information, in line with the 2021 amendments to IAS 1 Presentation of Financial Statements.
Section 9 Consolidated and Separate Financial Statements
The scope of this section is amended to clarify that it applies to all parent entities that present consolidated financial statements intended to give a true and fair view.
The requirements to present consolidated financial statements are amended to comply with company law.
Clarification is added to paragraph 9.10 that Employee Share Ownership Plans and similar arrangements are Special Purpose Entities.
Paragraph 9.13(d) is amended to clarify the measurement of non-controlling interests.
Paragraphs 9.18 and 9.19 have been amended, and paragraphs 9.18A, 9.18B and 9.19A to 9.19D have been inserted, to include more detailed requirements for the acquisition and disposal of subsidiaries.
Paragraph 9.23(d) is inserted to require disclosures about unconsolidated subsidiaries.
Paragraph 9.23(e) is inserted to require additional disclosures of unconsolidated Special Purpose Entities. This disclosure is derived from IFRS 12 Disclosure of Interests in Other Entities.
Paragraph 9.23A of the IFRS for SMEs Accounting Standard covers the disclosure of subsidiaries that are not consolidated based on the requirements to present consolidated accounts. As the disclosures of unconsolidated subsidiaries required by paragraph 9.23 were considered sufficient, the paragraph was deleted.
Paragraph 9.23A is replaced and paragraphs 9.24 and 9.25 are amended to clarify the distinction between the individual financial statements and separate financial statements and that company law specifies when individual financial statements are required to be prepared.
Paragraph 9.26 is amended to remove the option for an entity to account for investments in subsidiaries, associates and jointly controlled entities in its financial statements using the equity method.
Paragraphs 9.28 to 9.30 relating to combined financial statements are deleted.
Paragraphs 9.31 and 9.32 provide guidance on exchanges of businesses or other non-monetary assets for an interest in a subsidiary, joint venture or associate. This guidance was previously contained in UITF Abstract 31 Exchanges of businesses or other non-monetary assets for an interest in a subsidiary, joint venture or associate.
Paragraphs 9.33 to 9.38 are inserted to provide guidance on the accounting treatment for intermediate payment arrangements. These were previously contained in UITF Abstract 32 Employee benefit trusts and other intermediate payment arrangements and UITF Abstract 38 Accounting for ESOP trusts.
Section 10 Accounting Policies, Estimates and Errors
Paragraph 10.5 clarifies when an entity is required to refer to Statements of Recommended Practice (SORPs) in developing an accounting policy.
Paragraph 10.10A is amended to include intangible assets, reflecting the option for an entity to use the cost model or revaluation model in Section 18 of FRS 102.
Paragraphs 10.14A to 10.14D are inserted and paragraph 10.15 is amended to define accounting estimates, in line with the 2021 amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
Section 11 Basic Financial Instruments
The scope of Section 11 is amended to clarify that certain financial instruments are not within its scope.
The references to ‘non-convertible preference shares and non-puttable ordinary and preference shares’ in this section of the IFRS for SMEs Accounting Standard are removed and replaced with ‘non-derivative financial instruments that are equity of the issuer’. This allows those instruments that are liabilities of the holder to be measured at amortised cost (if that instrument is classified as ‘basic’).
Paragraph 11.2(b) is amended to restrict the ability to newly-adopt the option to apply the recognition and measurement requirements of IAS 39 Financial Instruments: Recognition and Measurement.
Paragraph 11.2(c) is inserted to allow entities the option to apply the recognition and measurement requirements of IFRS 9 Financial Instruments.
Paragraphs 11.2A and 11.2B are inserted to deal with the financial reporting implications associated with the replacement of interest rate benchmarks for entities taking the option to apply the recognition and measurement requirements of IAS 39 or IFRS 9.
Paragraph 11.4 is deleted to remove the undue cost or effort exemption from measuring investments in equity instruments at fair value.
Paragraph 11.6A is inserted to clarify when the reclassification of a financial instrument is necessary.
Amendments were made to paragraph 11.9 to clarify and, in some cases, extend the classification of financial instruments as basic.
Paragraphs 11.9A and 11.9B are deleted. Examples are inserted after paragraph 11.9 that illustrate the principles of this paragraph. Paragraph 11.9A is replaced with a new paragraph that provides a principle-based description of a ‘basic’ financial instrument. Paragraphs 11.11(b) and (c) are deleted as the instruments shown as examples are excluded from debt instruments within the scope of Section 11 under paragraph 11.8(b).
Paragraphs 11.13A to 11.13C are inserted to allow small entities the option to measure loans from a director (or their group of close family members when that group contains at least one shareholder) at transaction price.
Paragraph 11.14(a) is amended to clarify: that debt instruments measured at an undiscounted amount are at amortised cost; the conditions under which short-term debt-instruments can be measured at an undiscounted amount; and the requirements for the subsequent measurement of financing transactions.
Paragraphs 11.14(b) and 11.14(c) of the IFRS for SMEs Accounting Standard are included as paragraphs 11.14(c) and 11.14(d). Paragraph 11.14(b) is inserted to clarify that entities may choose to designate debt instruments and loan commitments as at fair value through profit or loss under certain circumstances. Paragraph 11.14(c) is amended to provide accounting policy options for the measurement of investments in other group entities consistent with company law.
Paragraph 11.17 is amended to clarify how to account for changes in an index of general price inflation when calculating the effective interest rate.
Paragraphs 11.20A to 11.20E are inserted to deal with the financial reporting implications associated with the replacement of interest rate benchmarks.
The guidance on fair value measurement in paragraphs 11.27 to 11.32 of the IFRS for SMEs Accounting Standard is not included. Guidance on fair value measurement is included in Section 2A Fair Value Measurement.
Paragraph 11.38A is inserted to allow offsetting of certain financial assets and financial liabilities in the statement of financial position.
Paragraph 11.39 is deleted.
Paragraph 11.41 is amended to restrict the disclosure of the carrying amounts of financial instruments at the reporting date to those measured at fair value through profit or loss.
Paragraph 11.42 is amended to note that additional disclosure may be required when the risks arising from financial instruments are particularly significant to the business.
Paragraph 11.44 is amended to remove the reference to the undue cost or effort exemption from measuring investments in equity instruments at fair value.
Paragraph 11.48 is amended to include disclosures that are required if entities apply the recognition and measurement requirements of IFRS 9.
Paragraphs 11.48ZA and 11.48ZB are inserted to require, when an entity has made the accounting policy choice in paragraph 11.2(c) to apply the recognition and measurement provisions of IFRS 9, disclosure about expected credit losses.
Paragraph 11.48A is inserted to provide disclosures required in accordance with company law for certain financial instruments held at fair value.
Paragraphs 11.48B and 11.48C are inserted to require additional disclosures for financial institutions and retirement benefit plans.
Paragraphs 11.49 and 11.50 are inserted to deal with disclosures associated with the financial reporting implications associated with the replacement of interest rate benchmarks.
Section 12 Other Financial Instruments Issues
The scope of Section 12 is amended to exclude financial instruments issued by an entity with a discretionary participation feature, reimbursement assets and financial guarantee contracts.
Paragraph 12.2(b) is amended to restrict the ability to newly-adopt the option to apply the recognition and measurement requirements of IAS 39 Financial Instruments: Recognition and Measurement.
Paragraph 12.2(c) is inserted to allow entities the option to apply the recognition and measurement requirements of IFRS 9 Financial Instruments.
Paragraphs 12.2A and 12.2B are inserted to deal with the financial reporting implications associated with the replacement of interest rate benchmarks for entities taking the option to apply the recognition and measurement requirements of IAS 39 or IFRS 9.
Paragraph 12.7 is amended to clarify the treatment of transaction costs and the initial measurement of financing transactions.
Paragraphs 12.8(a) and 12.8(b) of the IFRS for SMEs Accounting Standard are included as paragraphs 12.8(b) and 12.8(a). Paragraph 12.8(b) is amended to remove the reference to the undue cost or effort exemption from measuring investments in equity instruments at fair value.
Paragraph 12.8(c) is inserted to clarify when financial instruments within the scope of Section 12 should be measured at amortised cost, based on the legal framework.
Paragraph 12.9 is amended to remove the reference to the undue cost or effort exemption from measuring investments in equity instruments at fair value.
Paragraph 12.12 is deleted as the treatment of transaction costs is included in paragraph 12.7.
Paragraphs 12.15 to 12.25 are deleted and replaced with paragraphs 12.15 to 12.25V to include revised hedge accounting requirements which have the following effect:
- the scope of permissible hedged items and hedging instruments is expanded;
- the hedge accounting conditions are revised and simplified;
- it determines three hedge accounting models, ie cash flow, fair value and net investment hedges;
- it allows the option for entities to apply the macro-hedging requirements of IAS 39 whilst using the recognition and measurement requirements of Section 11 and 12;
- it introduces a documentation requirement in cases of voluntary hedge accounting discontinuation; and
- it deals with the financial reporting implications associated with the replacement of interest rate benchmarks.
Paragraph 12.25W is inserted to allow offsetting of certain financial assets and financial liabilities in the statement of financial position.
Paragraph 12.26 is amended to comply with company law.
Paragraphs 12.28 and 12.29 are deleted and replaced with paragraphs 12.28 to 12.29A to included revised disclosure requirements for the three hedge accounting models, ie cash flow, fair value and net investment hedges.
Paragraph 12.30 is inserted to require additional disclosures when an entity applies the hedge accounting requirements associated with the replacement of interest rate benchmarks.
The Appendix to Section 12 is inserted to illustrate by way of example the application of the hedge accounting requirements.
Section 13 Inventories
Paragraph 13.3 is amended to permit inventory to be measured at fair value less costs to sell through profit or loss in certain circumstances.
Paragraphs 13.4A and 13.20A are inserted to provide guidance on inventories held for distribution at no or nominal consideration.
Paragraph 13.5A is inserted to provide guidance on inventory acquired through non-exchange transactions.
Paragraph 13.8A is inserted to clarify the treatment for provisions made against dismantling and restoration costs (of PPE) in the cost of inventory.
Paragraph 13.12 is deleted because of the revisions to the hedge accounting requirements.
Paragraph 13.15 is amended to allow for the inclusion of a cost model for agricultural produce in Section 34 Specialised Activities.
Paragraph 13.22(c) is deleted to remove the requirement to disclose the amount of inventories recognised as an expense during the period.
Section 14 Investments in Associates
The scope of this section is amended to clarify its application to consolidated financial statements and to the individual financial statements of an entity that is not a parent but which holds investments in associates.
Paragraph 14.4(b) is deleted to remove the option for non-parent investors to account for investments in associates in their individual financial statements using the equity method.
Paragraph 14.4(d) is inserted to allow non-parent investors to account for investments in associates at fair value with changes recognised in profit or loss.
Paragraph 14.4A is inserted to require parent investors to account for investments in associates in their consolidated financial statements using the equity method.
Paragraph 14.4B is inserted to require parent investors that have investments in associates that are held as part of an investment portfolio to measure those investments at fair value with the changes recognised in profit or loss in their consolidated financial statements.
Paragraph 14.9 is amended to require transaction costs to be included as part of the transaction price on initial recognition.
Paragraph 14.10 is amended to remove the undue cost or effort exemption from measuring investments in associates at fair value, and to require changes in fair value to be recognised through other comprehensive income, in accordance with paragraphs 17.15E and 17.15F, rather than through profit or loss.
Paragraph 14.11 is deleted for consistency with company law, which requires investments to be classified as current assets in some circumstances.
Paragraph 14.15 is amended to remove the reference to the undue cost or effort exemption from measuring investments in associates at fair value.
Paragraph 14.15A is inserted to provide information about associates held by entities that are not parents.
Section 15 Investments in Joint Ventures
The scope of this section is amended to clarify its application to consolidated financial statements and to the individual financial statements of a venturer that is not a parent.
Paragraph 15.9(b) is deleted to remove the option for non-parent investors to account for investments in jointly controlled entities in their individual financial statements using the equity method.
Paragraph 15.9(d) is inserted to allow non-parent investors to account for investments in jointly controlled entities at fair value with the changes recognised in profit or loss.
Paragraph 15.9A is inserted to require parent investors to account for investments in jointly controlled entities in their consolidated financial statements using the equity method.
Paragraph 15.9B is inserted to require parent investors that have investments in jointly controlled entities that are held as part of an investment portfolio to measure those investments at fair value with the changes recognised in profit or loss in their consolidated financial statements.
Paragraph 15.14 is amended to require transaction costs to be included as part of the transaction price on initial recognition.
Paragraph 15.15 is amended to remove the undue cost or effort exemption from measuring investments in jointly controlled entities at fair value, and to require changes in fair value to be recognised through other comprehensive income, in accordance with paragraphs 17.15E and 17.15F rather than through profit or loss.
Paragraph 15.17 is amended to permit the recognition of profits of the joint venture when the venturer realises the carrying amount of an asset purchased from the joint venture in circumstances other than through resale to an independent party.
Paragraph 15.21 is amended to remove the reference to the undue cost or effort exemption from measuring investments in jointly controlled entities at fair value.
Paragraph 15.21A is inserted to provide information about jointly controlled entities held by venturers that are not parents.
Section 16 Investment Property
Section 16 is amended to remove the undue cost or effort exemption in relation to fair value measurement of investment property. The section is also amended to provide an accounting policy choice for investment property rented to another group entity. Paragraph 16.4A is inserted to allow entities to measure such properties at cost.
Section 16 is amended, as a consequence of the differences arising in Section 20 Leases, to bring all leases for which right-of-use assets are recognised within scope of Section 16 if the other criteria for accounting for the property as investment property are met. This approach is similar to the approach taken in IAS 40 Investment Property.
Paragraph 16.4 is amended to include criteria for separating portions of mixed use property consistent with IAS 40.
Paragraphs 16.9A to 16.9C are inserted to provide guidance on the accounting treatment when a property meets, or ceases to meet, the definition of an investment property.
Section 17 Property, Plant and Equipment
Section 17 is amended to remove references to the undue cost or effort exemption in relation to fair value measurement of investment property. The section is also amended to include requirements for investment properties rented to another group entity that are measured at cost, as permitted by Section 16 of FRS 102.
Paragraphs 17.15C and 17.15D are inserted to provide guidance on determining the fair value of property, plant and equipment measured using the revaluation model.
Paragraph 17.33 of the IFRS for SMEs Accounting Standard is included as paragraph 17.32A, and has been amended to remove the requirement to disclose the revaluation surplus of property, plant and equipment measured using the revaluation model.
Section 18 Intangible Assets other than Goodwill
Section 18 is amended to permit entities to recognise intangible assets that result from expenditure incurred on the internal development of an intangible item (subject to certain criteria). The section provides guidance on what comprises the cost of an internally generated intangible asset and the criteria for initial recognition.
The section is also amended to provide that, after initial recognition, an entity may use the cost model or revaluation model.
Paragraph 18.3(c) is amended to align the scope of the section with IAS 38 Intangible Assets.
Paragraph 18.8 is amended to require entities to recognise some, but not all, intangible assets acquired in a business combination separately from goodwill. The paragraph also includes an option for entities to recognise more intangible assets separately from goodwill. If taken, this option must be applied consistently and additional disclosures provided.
Section 19 Business Combinations and Goodwill
Section 19 is amended to permit the use of the merger accounting method for group reconstructions. The merger method is set out in paragraphs 19.29 to 19.33.
Paragraph 19.11B is inserted to provide guidance on determining whether arrangements for contingent payments to selling shareholders are contingent consideration in the business combination or are separate transactions.
Paragraphs 19.12 and 19.13 are amended to clarify when a provision for contingent consideration should be discounted. Paragraphs 19.13A and 19.13B are inserted to clarify the accounting treatment of adjustments to contingent consideration and the unwinding of discounting.
Paragraph 19.15(a) is amended to require intangible assets to be recognised separately in a business combination when it is probable that any associated future economic benefits will flow to the acquirer.
Paragraph 19.15(c) is deleted to remove the undue cost or effort exemption in relation to the fair value measurement of intangible assets.
Paragraphs 19.15A and 19.15B are inserted and include guidance on the treatment of deferred tax assets or liabilities and employee benefit arrangements of a subsidiary on acquisition, similar to that in paragraph 19.14 of the IFRS for SMEs Accounting Standard.
Paragraph 19.15C is inserted and includes guidance on the treatment of share-based payments of a subsidiary on acquisition.
Paragraphs 19.15D to 19.15F are inserted to clarify the circumstances in which a contingent liability shall be recognised.
Paragraph 19.19A is inserted to specify the accounting for leases in which the acquiree is the lessee, in light of the revised Section 20 Leases.
Paragraph 19.24 is amended and paragraph 19.26A is inserted to comply with the requirements of company law for bargain purchases (negative goodwill).
Paragraph 19.25 is amended to require additional disclosures about business combinations.
Paragraph 19.25B is inserted to require disclosure of the use of provisional amounts.
Paragraph 19.26B is inserted to require disclosure of the useful economic life of goodwill chosen in exceptional cases when the entity was unable to make a reliable estimate.
An Appendix is added to provide additional guidance in identifying which of the combining entities is the acquirer.
Section 20 Leases
Section 20 of the IFRS for SMEs Accounting Standard has been entirely replaced with revised requirements. These provide an on‑balance sheet lease accounting model based on that in IFRS 16 Leases.
Section 21 Provisions and Contingencies
The scope of Section 21 is amended to include financial guarantee contracts. Paragraph 21.17A is inserted to provide guidance on the accounting treatment of financial guarantee contracts.
Paragraph 21.16 is amended to remove the undue cost or effort exemption from disclosing an estimate of the financial effect of a contingent asset.
Paragraph 21.17 is amended to comply with disclosure requirements set out in the Regulations.
Section 22 Liabilities and Equity
The scope of Section 22 is amended to refer to financial guarantee contracts and insurance contracts, which are outside the scope of Section 22 of FRS 102 and are covered by Section 21 of FRS 102 and by FRS 103 respectively.
Paragraph 22.3A is amended to clarify that a financial instrument where settlement is dependent on the occurrence or non-occurrence of uncertain future events beyond the control of the issuer and the holder, is a financial liability of the issuer unless specific circumstances apply.
Paragraph 22.7(a) of the IFRS for SMEs Accounting Standard is deleted as the presentation of unpaid share capital as an offset to equity is not compliant with company law.
Paragraph 22.8 is amended to remove the exemption from initially measuring equity instruments issued as part of a business combination at fair value. The paragraph is also amended to include the exemption from initially measuring equity instruments at fair value available in company law.
Paragraph 22.8A is inserted and includes the clarification in paragraph 22.15C of the IFRS for SMEs Accounting Standard that certain debt-for-equity swaps are excluded from the scope of Section 22.
The requirement for an entity to recognise a liability at fair value when non-cash assets are distributed to owners is removed and only disclosure is required in paragraph 22.18. The undue cost or effort exemption from measuring non-cash distributions at fair value and guidance on partial extinguishment are also removed.
Section 23 Revenue
Section 23 of the IFRS for SMEs Accounting Standard has been entirely replaced with revised requirements. These provide a new five-step revenue recognition model based on that in IFRS 15 Revenue from Contracts with Customers.
Section 24 Government Grants
Paragraph 24.4 is amended and paragraphs 24.5C to 24.5G are inserted to allow the option to use an additional model of accounting for grants (the accrual model) based on IAS 20 Accounting for Government Grants and Disclosure of Government Assistance. The accrual model permits entities to recognise grant income on a systematic basis over the period in which the entity recognises the related costs for which the grant is intended to compensate, or on a systematic basis over the expected useful life of the related asset.
Section 25 Borrowing Costs
Section 25 is amended to allow an option that permits entities to capitalise borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset. The borrowing costs eligible for capitalisation are consistent with IAS 23 Borrowing Costs.
Section 26 Share-based Payment
Paragraph 26.1B is inserted to align the scope of Section 26 more closely with IFRS 2 Share-based Payment.
Paragraph 26.2A is inserted to clarify the accounting treatment for an entity settling a share-based payment transaction in group plan.
Paragraph 26.9 has been amended to include terminology consistent with IFRS 2 Share-based Payment.
Paragraph 26.13A is inserted to clarify the accounting treatment when settling an equity-settled share-based payment transaction with cash as an alternative to the transfer of equity instruments.
Paragraphs 26.14A to 26.14C are inserted to clarify the measurement of cash-settled share-based payment transactions.
Paragraph 26.15 is deleted and replaced with new paragraphs 26.15 to 26.15B to bring the accounting for share-based payment arrangements with cash alternatives closer to that required by IFRS 2 when the entity has the settlement choice.
Paragraph 26.16 is amended to specify the measurement bases that may be used when an entity applies the simplification provided by this paragraph.
Paragraph 26.17 of the IFRS for SMEs Accounting Standard applies to all share-based payment transactions in which the identifiable consideration appears to be less than the fair value of the equity instruments granted or the liability incurred. Paragraph 26.17 of FRS 102 applies only to transactions provided as part of government-mandated plans.
Section 27 Impairment of Assets
The scope of this section is amended to exclude the impairment of assets arising from insurance contracts.
Paragraph 27.14 is amended and paragraph 27.14A is inserted to provide guidance on measuring an asset at fair value less costs to sell.
Paragraph 27.20A is inserted to provide guidance on the treatment of impairments on assets held for their service potential.
Paragraph 27.33A is inserted to include a descriptive disclosure requirement of the events and circumstances that led to the recognition or reversal of the impairment loss.
Section 28 Employee Benefits
The presentation of the cost of a defined benefit plan and the accounting for group plans have been amended to be consistent with the requirements of IAS 19 Employee Benefits.
Paragraph 28.11A is inserted to require the recognition of a liability on a defined benefit multi-employer plan, which is accounted for as a defined contribution scheme, where funding of a deficit has been agreed.
Paragraphs 28.11B to 28.11D are inserted to include requirements for the transition from defined contribution accounting to defined benefit accounting for these plans.
Paragraph 28.19 is deleted to remove the option that permits an entity to use a simplified valuation method to measure its defined benefit obligation.
Paragraph 28.41(l) is inserted to require an entity to disclose, when applicable, the basis used to determine the limit on recognising a plan surplus.
Section 29 Income Tax
Section 29 of the IFRS for SMEs Accounting Standard has been entirely replaced with revised requirements. These require a ‘timing differences plus’ approach to deferred income taxes, rather than a temporary difference approach.
Section 30 Foreign Currency Translation
The requirement in paragraph 30.13 to recognise exchange differences arising from monetary items which form part of an entity’s net investment in a foreign operation in profit or loss is amended for consistency with company law.
Paragraph 30.21 is amended to specify procedures for translating the financial statements of an entity whose functional currency is the currency of a hyperinflationary economy into a different presentation currency.
Section 31 Hyperinflation
The requirement in paragraph 31.13 to recognise gains or losses on an entity’s net monetary position in profit or loss is amended for consistency with company law.
Section 32 Events after the End of the Reporting Period
Paragraphs 32.7A and 32.7B are inserted to provide guidance on the impact of changes in an entity’s going concern status.
The requirement in paragraph 32.9 to disclose if an entity’s owners or others have the power to amend the financial statements after issue has been removed for consistency with company law.
Section 33 Related Party Disclosures
Paragraph 33.1A is inserted to provide an exemption, from disclosing related party transactions between wholly-owned entities, available in company law.
Paragraph 33.7A is inserted to include an exemption from the disclosure of key management personnel compensation for companies that are required by company law to disclose directors’ remuneration if the key management personnel and directors are the same.
Section 34 Specialised Activities
Agricultural Activities – this sub-section is amended to allow the option to hold biological assets and agricultural produce at cost.
Extractive Activities – this sub-section has been amended to require application of IFRS 6 Exploration for and Evaluation of Mineral Resources.
Service Concession Arrangements – this sub-section is amended to clarify the accounting by operators based on IFRIC 12 Service Concession Arrangements and provide guidance to grantors. The sub-section is also amended to require additional disclosures derived from SIC‑29 Disclosure—Service Concession Arrangements.
The following additional sub-sections are inserted:
- Financial Institutions – specifies additional required disclosures for financial institutions;
- Retirement Benefit Plans: Financial Statements – specifies disclosures and presentation requirements for retirement benefit plans;
- Heritage Assets;
- Funding Commitments;
- Incoming Resources from Non-Exchange Transactions;
- Public Benefit Entity Combinations; and
- Public Benefit Entity Concessionary Loans.
Section 35 Transition to this FRS
Amendments to this section reflect the changes in preceding sections and the transition from other UK and Ireland accounting standards.