Welcome to Query Of The Week
Welcome to this week’s Query Of The Week. Each week our technical team respond to a huge number of client queries and in this segment, we share with you the most common questions that keep coming up time and time again.
In this week’s Query Of The Week, John Murphy discusses the recent changes to FRS 102 and if there are any potential advantages to early adoption of the changes.
Triennial Review – FRS 102 Revisited (FRS102 Bootcamp 1)
If this Query Of The Week was of interest to you, you will also be interested in our Triennial Review – FRS 102 Revisited (FRS102 Bootcamp 1) webinar which is scheduled for Wednesday, 17 April 2019.
Full details for this webinar can be found here.
|Date||Wednesday, 17 April|
|CPD Allocation||1 Hour|
|Fee||€38 (or 1 CPD Club point)|
|Presenter||John Murphy – OmniPro|
Query Of The Week – Video Transcript
(Please note that this is a direct unedited transcript of the spoken word as recorded on the video)
Hello and welcome to this week’s query of the week. My name is John Murphy, and I work in the OmniPro Practice Support and the Tax and Legal side of the OmniPro business.
This week’s query of the week came in when we were providing advice in relation to managing statements. The client had heard that there was a new version of FRS 102 and he wanted to know when was this would become applicable and if there were advantages to early adopting this FRS 102 version.
The new version came out in March of 2018 and came about as a trial and error review by the FRC of the FRS 102 which the FRC have said they’ll update every three years so effectively this is a three-year update. The March version of FRS 102 is effective if you’re doing section 1A in Ireland, and it’s effective for periods beginning on or after 1st of January 2017. The March 2018 version brought the small companies regime for Ireland into section 1A. It brought in a new appendix it takes you on to FRS 102 – you’re referring to appendix D for all your disclosures in that respect.
So, that’s the first part of the question in relation to when is it mandatory for us for section 1A to be applicable – it’s compulsory for periods beginning on or after 1st January 2017. However, for all the other changes from section one to thirty-five, they are only applicable for periods beginning on or after 1st of January 2019. So, I suppose it’s good news in that you don’t have to adopt it now for the 30th of December ’18 year ends. You know you have till the following year, but it would be remiss of yourselves if you didn’t advise clients of some of the benefits that are there.
Benefits that I’m going to highlight in this particular session here concerns, e.g. section 16 investment property. Under the pre-March ’18 version which is the currently enforced section, section 16 of investment properties states that where a company is in a group or a group of companies, one of the companies owns a property, and another company in the group uses that property, section 16 says where you hold the property for long term rental or capital appreciation must be treated as an investment property and you must fair value that on the balance sheet. The changes as made were on the tri-annual review in section 16. Effectively it gives the entities in that group a choice for the company that holds the asset, and another company in the group that uses it, for the company that holds it to just treat it as property, plant and equipment. So effectively it means using your holding at cost and applying depreciation at your year-end using your residual value. That can be very beneficial for groups because where this is applied they had to go on private market value for the investment property on that subsidiaries balance sheet and that created cost and administration hassle.
So as a result of this change they can effectively treat it as if it’s all plant and property, plant and equipment. You don’t have to, it’s a choice, and there is a good exemption if and when you do follow this new approach, if you decide to go down that route, that you can deem the previous amount that you had on the balance sheet the previous year as your deemed cost and appreciate from then on.
That’s an example of just some of the changes when they come into effect and one possible benefit for maybe one of your client’s early adoption of the changes so that they can save in time and money in relation to it.
If you’re interested in this topic we’re going to do an FRS 102 boot camp series, where we’ll look at trying to review the changes that have been made by it, the advantage of early adopting and, from my perspective I already see great advantages in this FRS 102, it’s all good in there for FRS 102 March 2018 version. So, that webinar is on the 17th of April, and if you’re interested in that area please log on to the weblink.