What you need to know about FRS 102 for Financal Reporting

12 February 2016

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

As you know, from the Financial Reporting (FR) course we concentrate on in IFRS (International Financial Reporting Standards) and that is the textbook you have with you in 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 and we include a section in each of the FR modules comparing the accounting treatments.

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 the IFRS and FRS and identify any differences.

Usually, it will be examined as one of the requirements in the longer questions, for example, 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 as there will be marks available for this - 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.

Don't forget to note down if there are no significant differences as you may have to give this as part of an answer.

To give you some idea of what you could do. here is a head start on 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 5 years.

style="text-align: justify"> 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 share of net assets

NCI can be share of net assets or FV

Now you can add to this from the FR modules as you work through them.


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