What you need to know about FRS 102 for Financial Reporting

27 February 2017

Student conundrum: Within the Financial Reporting material, how much do I need to know about FRS 102 and how it might be examined?

As you know from the FR course, we concentrate on IFRS and that is the textbook you will take into the exam. However, FRS 102 (also FRS 100-101) has fundamentally reformed financial reporting in the UK and has replaced all previous UK accounting standards, so you need some awareness of it. 

We include a section in each of the FR modules comparing the accounting treatments. A good idea would be to create a summary on a couple of pages of the differences between IFRS and FRS - you could do this as you work through the FR course. 

Remember to note down if there are no significant differences, as you may have to give this as part of an answer.

There are relatively few differences between FRS 102 and IFRS / IAS, as FRS 102 is an amended version of IFRS for Small and Medium Enterprises (SMEs).

For the exam, you need to be able to compare IFRS and FRS and identify any differences. Usually, it will be examined as one of the requirements in the longer questions e.g. as a separate morning paper requirement. 

Or it could also be a short form question in the afternoon paper, however, we would not expect it to be more than a few marks. Remember; you know the IFRS, so make sure you detail those in any answer and then contrast with the UK standard.

A good idea would be to create a summary of the differences between IFRS and FRS  - you could do this as you work through the FR course.

Here are the group accounting differences for the consolidation modules:

FRS 102



Cost includes directly attributable acquisition costs.

Not included in the cost – written-off as incurred.

Stepped acquisition

When control is achieved in stages the cost is the aggregate of cost of previous holdings ie they are not revalued.

Previous holdings are revalued at the date control is acquired.

Impairment or amortisation

Goodwill is assumed to have a finite useful life and should be amortised over this period. If a reliable estimate of the useful life cannot be made, the life is assumed to be a maximum of ten years.

Goodwill is not amortised. Goodwill should be tested for impairment annually.

Negative goodwill

Negative goodwill (bargain purchase) should be deducted from goodwill in the statement of financial position. 

Negative goodwill should be recognised in profit or loss in the periods the non-monetary assets of the acquired company are recovered (written-off).

A bargain purchase is recognised immediately in profit or loss.


NCI always a share of net assets.

NCI can be a share of net assets or FV.

Investment Cost

Cost of investment includes directly attributable costs.

Directly attributable costs are written off to P/L.


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