The Impact of Frs 101 Reduced Disclosure Framework

Corporate Business

www.croweclarkwhitehill.co.uk

The impact of FRS 101 Reduced Disclosure Framework

Key points } Will benefit preparers of subsidiary company accounts that are currently prepared under IFRS by offering a reduced disclosure framework. } Recognition and measurement criteria will remain consistent with IFRS except for certain amendments for government grants and negative goodwill and contingent consideration arising on a business combination. } Available for early adoption and could be applied to December 2012 year ends.

Scope FRS 101 may be applied to the individual accounts of a qualifying entity that otherwise applies the recognition, measurement and disclosure requirements of EU-adopted International Financial Reporting Standards (‘IFRS’). A qualifying entity is a member of a group where the parent of the group prepares publically available consolidated financial statements and that member is included in the consolidation. Such consolidated financial statements need only intend to give a true and fair view and hence may be prepared under accounting frameworks other than IFRS, such as US accounting standards.

This definition would include the entity accounts of a parent company as well as the financial statements of subsidiary companies. Consolidated accounts are not included in the scope of FRS 101. Parents or subsidiaries currently applying UKGAAP would be required to transition to the recognition and measurement criteria of IFRS, subject to certain amendments, should they wish to apply FRS 101. Should they wish to continue to apply UKGAAP FRS 102 will contain disclosure exemptions for their individual financial statements. Conditions for applying FRS 101 1. The shareholders must have been notified in writing and do not object to the use of the disclosure exemption. In order to prevent the use of FRS 101 the objection must be from the immediate parent or from shareholders holding more than 5% of the total allotted shares or more than...