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Análise de Amostras de Hoje e Análise de Amostras em Tempo Real Após Horas Pre-Market News Resumo de Citações de Flash Citação Gráficos Interativos Configuração Padrão Por favor, note que uma vez que você fizer sua seleção, ela se aplicará a todas as futuras visitas ao NASDAQ. Se, a qualquer momento, estiver interessado em voltar às nossas configurações padrão, selecione Configuração padrão acima. Se você tiver dúvidas ou tiver problemas ao alterar suas configurações padrão, envie um e-mail para isfeedbacknasdaq. Confirme sua seleção: Você selecionou para alterar sua configuração padrão para a Pesquisa de orçamento. Esta será agora sua página de destino padrão, a menos que você altere sua configuração novamente ou exclua seus cookies. Tem certeza de que deseja alterar suas configurações? Temos um favor a perguntar Desabilite seu bloqueador de anúncios (ou atualize suas configurações para garantir que o javascript e os cookies estejam ativados), para que possamos continuar fornecê-lo com as notícias do mercado de primeira linha E os dados que você chegou a esperar de nós. Quais são as penalidades fiscais para vender ações Quando você vende ações para um lucro, aqui como determinar seus impostos sobre ganhos de capital. Se você vender o estoque para mais do que você pagou originalmente para ele, a seguir você pode ter que pagar impostos em seus lucros, que são considerados ser uma forma de renda nos olhos do IRS. Especificamente, lucros resultantes da venda de ações são conhecidos como ganhos de capital e têm suas próprias implicações fiscais únicas. Heres o que você precisa saber sobre a venda de ações e os impostos que você pode ter que pagar. Como calcular seus lucros Quando você vende o estoque, você é somente responsável para pagar impostos sobre os lucros - não a quantidade inteira da venda. Para determinar seus lucros, você precisa subtrair sua base de custos (também conhecida como base tributária), que consiste no valor que você pagou para comprar o estoque em primeiro lugar, mais as comissões que você pagou para comprar e vender as ações. Uma vez que você determinou seus lucros, o imposto que você terá que pagar depende de sua taxa de imposto marginal (suporte de imposto) e do comprimento de tempo onde você prendeu as partes. Ganhos de curto prazo são tributados como renda Se você mantiver seu estoque por um ano ou menos, então ele será tributado como ganhos de capital a curto prazo. Isto é bastante simples de determinar: As taxas de imposto sobre o rendimento de capitais a curto prazo são iguais à sua taxa marginal de imposto, ou suporte fiscal. Sua taxa de imposto marginal depende de sua renda tributável, e você pode ter uma idéia do que o seu pode estar aqui. Ganhos a longo prazo têm taxas mais baixas O IRS incentiva o investimento a longo prazo em oposição à negociação, como as taxas de imposto de ganhos de capital são mais baixos se youve realizada suas ações por mais de um ano. A taxa de imposto de renda de ganho de capital exata youll pagar é baseado em seu suporte de imposto, e pode variar de 0 a 20. Fonte de dados: IRS (atual a partir de 2016 ano fiscal). Portanto, para calcular sua obrigação fiscal para a venda de ações, determinar o seu lucro e multiplicar pela percentagem adequada na tabela. Como evitar o pagamento de impostos quando você vende ações A única maneira (legal) para evitar a responsabilidade fiscal quando você vende ações, além de estar em um dos ganhos de capital de longo prazo, é comprar ações em um imposto diferido ou imposto - Conta gratis. Uma conta de imposto diferido é uma conta de investimento como um 401 (k), 403 (b), ou IRA tradicional, apenas para citar alguns exemplos. Nessas contas, suas contribuições podem ser dedutíveis, mas suas retiradas qualificadas normalmente contam como receita. Enquanto isso, uma conta Roth é livre de impostos você não pode obter uma dedução fiscal para contribuir, mas todos os seus levantamentos qualificados não vai contar como renda e, portanto, não será tributado. Com qualquer uma dessas contas, você não será responsável pelo pagamento de imposto sobre ganhos de capital, ou dividendos para esse assunto, contanto que você mantenha o dinheiro na conta. A desvantagem é que estas são contas de aposentadoria, e você geralmente tem que deixar o seu dinheiro sozinho até que você vire 59-12 anos de idade, mas há exceções. Se você está interessado em opções de investimento com vantagens fiscais, aqui estão alguns artigos aprofundados sobre IRAs e contas 401 (k) para ajudá-lo a determinar a melhor maneira de economizar e investir para o seu futuro. Para comparar os recursos de contas de investimento padrão e contas de aposentadoria oferecidos por diferentes corretores, visite nossa ferramenta de corretor on-line. Este artigo faz parte do The Motley Fools Knowledge Center, que foi criado com base na sabedoria recolhida de uma fantástica comunidade de investidores. O amor de Wed para ouvir suas perguntas, pensamentos, e opiniões no centro do conhecimento no general ou esta página no detalhe. Sua entrada nos ajudará a ajudar o mundo a investir, melhor Envie-nos um e-mail para knowledgecenterfool. Obrigado - e Fool on Try qualquer um dos nossos serviços de boletim Foolish gratuitos por 30 dias. Nós Fools não todos podem ter as mesmas opiniões, mas todos nós acreditamos que, considerando uma gama diversificada de insights nos torna melhores investidores. Introdução O objetivo deste documento de visão geral (doravante o documento) é auxiliar as empresas que estão pensando em escolher ou já optaram por aplicar a FRS 102. Em particular, Fornece uma visão geral das principais mudanças contábeis e as principais considerações fiscais que surgem para as empresas que a transição de UK UK GAAP 1 para FRS 102. O documento é igualmente relevante para as pequenas empresas que optam por aplicar Seção 1A da NDR 102. Seção 1A fornece Para certas modificações dos requisitos completos para as pequenas empresas e, em particular, fornece exigências reduzidas de divulgação e apresentação. Para facilidade de referência, o comentário neste documento que se refere à NFR 102 também se aplicará às empresas que apliquem a Seção 1A da NCR 102, a menos que seja indicado o contrário nessa seção do artigo. A parte principal deste artigo é dividida em duas partes: A Parte A deste artigo fornece uma comparação das diferenças contábeis e tributárias que surgem entre o antigo UK GAAP e FRS 102 Parte B deste documento fornece um resumo das principais considerações contabilísticas e fiscais Que surgem na transição de UK GAAP antigo para FRS 102 O papel concentra-se na posição de imposto sobre as sociedades. Ele também pode ajudar os indivíduos (e outras entidades) que estão dentro do custo de imposto de renda como muitas das questões contábeis e fiscais serão semelhantes. No entanto, existem diferenças significativas entre os dois regimes fiscais que não são reflectidos neste documento. Em particular, existem regras específicas para as relações de crédito, contratos de derivados e imobilizações incorpóreas que só se aplicam para efeitos do imposto sobre as sociedades. Para as empresas que fazem a transição do antigo UK GAAP para o FRS 101, um documento separado que fornece uma visão geral das principais considerações contábeis e tributárias está disponível. Este documento reflete o pensamento atual da HM Revenue and Customs (HMRC) e sua baseia-se na lei como tal como a data de publicação. Pretende-se que este documento será atualizado à medida que novas informações estiverem disponíveis e à medida que forem desenvolvendo novas normas contábeis e legislação tributária. O comentário fornecido no documento é de natureza geral. As empresas não devem basear-se isoladamente no comentário e não pretendem substituir a referência às normas contabilísticas e à legislação fiscal. Mudando a base em que as contas são preparadas é uma área complexa e as empresas podem querer considerar discutir as implicações da transição com seus conselheiros e ou consultar as orientações detalhadas nos manuais HMRC. Continua a ser da responsabilidade da entidade ou indivíduo garantir que prepara contas de acordo com os GAAP relevantes e submete uma auto-avaliação em conformidade com a legislação tributária do Reino Unido. Observe que onde HMRC considera que há, ou pode ter sido, evitando de imposto a análise como apresentada não necessariamente se aplicará. Versão atualizada Este documento é uma atualização de artigos anteriores publicados em janeiro de 2014 e outubro de 2015. As principais alterações do documento original são: comentário adicional em relação aos empréstimos sem juros atualizados comentário sobre a aplicação dos Regulamentos de Desrespeito e Alteração de Refletindo as alterações efetuadas a esses instrumentos estatutários em dezembro de 2014, os comentários contábeis atualizados para refletir as emendas à IAS 102 emitidas em agosto de 2014 e julho de 2015, quando aplicável, foram atualizados para qualquer comentário específico à seção 1A da IAS 102. Propõe alterações às regras tributárias, por exemplo, mudanças na relação de empréstimo e regras de contratos de derivativos e mudanças na legislação intangível incluída na Lei de Finanças (No.2) 2015 Antecedentes Síntese das alterações às normas contabilísticas Actualmente existe um conjunto de Contabilidade no Reino Unido. Sob reserva de certas restrições detalhadas nas respectivas normas, as empresas podem escolher ou podem ser obrigadas a preparar as suas contas de acordo com uma das seguintes regras: IAS IFRS aprovada pela UE. As contas preparadas de acordo com as Normas Internacionais de Contabilidade, na acepção do §395 da Lei das Sociedades Comerciais - a seguir denominada IAS, para efeitos do presente novo documento, no UK GAAP. FRS 100, FRS 101 e FRS 102. As entidades que aplicam os novos PCGA no Reino Unido aplicarão, no âmbito da FRS 100, uma das seguintes: A FRS 101 é efectivamente os requisitos de reconhecimento e medição das IAS, sujeitos a alguns ajustamentos para assegurar o alinhamento com as empresas britânicas Lei e também exigências de divulgação reduzidas A NBR 102 é um novo conjunto de requisitos contábeis que estão estreitamente alinhados com, mas não são iguais a IFRS Seção 1A da NCR 102, disponíveis para pequenas empresas, estão alinhados com a NBR 102, mas com revelações e apresentação reduzidas A FRS 105 baseia-se nos requisitos de reconhecimento e medição do FRS102, com algumas simplificações contabilísticas e divulgações reduzidas para micro-entidades elegíveis. Futuro Novo UK GAAP para os fins deste documento: Old UK GAAP. Substancialmente as FRS, SSAP s, UITFs e práticas aceitas relevantes existentes e aplicadas antes da introdução de New UK GAAP - para fins deste documento este é descrito como Old UK GAAP - para evitar dúvidas este documento inclui FRS 26 (E normas relacionadas) dentro do seu significado de UK UK GAAP, a menos que indicado de outra forma FRSSE. As empresas que satisfazem os critérios de elegibilidade podem preparar e arquivar contas abreviadas Micro-entidades: as empresas que satisfazem os critérios de elegibilidade podem preparar e arquivar contas abreviadas, com efeitos para períodos que comecem em ou após 1 de Janeiro de 2016 estes requisitos Estão contidas na NRF 105. Para os períodos que comecem em ou após 1 de Janeiro de 2015, as empresas médias e grandes do Reino Unido não serão autorizadas a preparar as suas contas de acordo com o antigo UK GAAP. Em vez disso, as entidades que aplicaram o antigo UK GAAP terão de passar do antigo UK GAAP para uma das alternativas. Espera-se que, para muitas empresas que actualmente aplicam o antigo UK GAAP, passarão para uma das FRS 101 ou FRS 102. Para períodos que comecem em ou após 1 de Janeiro de 2016, as pequenas empresas não poderão preparar as suas contas de acordo com o FRSSE. Em vez disso, essas empresas terão de fazer a transição para uma das novas alternativas do UK GAAP. Espera-se que, para muitas entidades que actualmente aplicam o FRSSE, transite para a Secção 1A da NIC 102. A transição para os novos PCGA do Reino Unido terá impacto nas contas de duas formas principais: os activos e passivos na data da transição contabilística serão identificados, De acordo com as novas normas, os lucros e perdas serão reconhecidos de acordo com as novas normas - estes poderão diferir dos lucros e perdas que teriam sido reportados se o antigo UK GAAP ou o FRSSE tivessem sido mantidos Interacção destas alterações com impostos A legislação tributária para as empresas exige que os lucros de uma negociação sejam calculados de acordo com a prática contábil geralmente aceita, sujeito a qualquer ajuste exigido ou autorizado por lei no cálculo dos lucros para fins de imposto de corporação. Existem regras semelhantes noutras partes da legislação fiscal. A prática contabilística geralmente aceita para fins de imposto sobre as sociedades é definida na secção 1127 Lei do Imposto sobre o Rendimento das Pessoas Colectivas 2010 e é: Reino Unido A prática contabilística geralmente aceita em relação às contas de empresas britânicas (que não sejam contas IAS) Fair view Em relação a uma empresa que prepara as contas IAS, entende-se a prática contabilística geralmente aceita em relação às contas IAS. Como referido acima, o tratamento fiscal das sociedades para as empresas baseia-se fortemente no tratamento contabilístico adoptado nas contas da empresa. Com a introdução do IAS em 2004 2005, foram introduzidas algumas alterações à legislação fiscal para tratar de certas questões levantadas pelas empresas que passaram para o IAS nas suas contas de entidade. Em muitos casos, o efeito destas regras é o de proporcionar um tratamento fiscal que é, em termos gerais, equivalente a empresas que continuaram a utilizar os anteriores PCGA do Reino Unido. As alterações feitas ao estatuto tributário geralmente não se aplicam às empresas que possuem contas IAS. Assim, as regras também se aplicam às empresas que, por exemplo, adotaram a FRS 26 com o resultado de que os contratos de derivativos foram avaliados de forma justa. É provável que as regras também sejam relevantes para as empresas que adotam a FRS 101, a FRS 102 ou a Seção 1A da IAS, onde enfrentam problemas semelhantes aos encontrados pelas empresas que adotam as IAS. Sociedades não constituídas no Reino Unido É possível que as sociedades constituídas fora do Reino Unido sejam residentes no Reino Unido. Além disso, o estatuto fiscal pode exigir a consideração da aplicação de práticas contábeis geralmente aceitas para empresas que não residem no Reino Unido (por exemplo, Controlled Foreign Companies). Na maioria dos casos, aplica-se a mesma definição estatutária de prática contábil geralmente aceita. Como tal, quando a empresa prepara as contas IAS, estas serão utilizadas para calcular os lucros e, noutros casos, os lucros serão calculados com base nos UK GAAP (tal como seria aplicável a tal empresa). PARTE A Comparação entre os antigos GAAP do Reino Unido e FRS 102 Esta parte do documento fornece uma comparação das diferenças contábeis e tributárias em andamento entre o antigo UK GAAP e a FRS 102. 1. Relatórios de desempenho financeiro Antigas Contas GAAP do Reino Unido preparadas de acordo com o Velho Reino Unido GAAP são obrigados a apresentar, entre outras coisas, uma conta de ganhos e perdas (PampL), balanço e, quando aplicável, uma demonstração do total de ganhos e perdas reconhecidos (STRGL). O formato da PAML eo balanço são determinados pelo direito das sociedades, enquanto que o formato do STRGL é definido pela FRS 3. FRS 102 (excluindo a Secção 1A da NDR 102) As contas preparadas de acordo com a NIC 102 também são obrigadas a apresentar um balanço Ou demonstração da posição financeira). A Seção 5 da NBR 102 oferece aos preparadores a opção de apresentar seu lucro abrangente total para um período como: uma única demonstração do resultado abrangente, caso em que a demonstração apresenta todos os itens de receitas e despesas reconhecidos no período 2 Declaração e uma declaração separada de renda abrangente A abordagem de declaração única é semelhante a um PAMPA combinado e STRGL, enquanto a abordagem declaração 2 mantém-los separados. Embora o FRS 102 difira do antigo UK GAAP a este respeito, deve notar-se que para as empresas que adoptam a FRS 102 os requisitos de formato da Lei de Sociedades Comerciais continuam a ser aplicáveis. A IAS 102 também exige que seja apresentada uma demonstração das mutações do patrimônio líquido que inclua o lucro ou prejuízo de uma entidade durante um período de relatório, outro resultado abrangente do período, os efeitos de mudanças nas políticas contábeis e correções de erros relevantes reconhecidos no período, Os montantes de investimentos por, e dividendos e outras distribuições a, investidores de capital durante o período. Embora os requisitos de formato do Companies Act permaneçam em muitos casos, a terminologia usada no FRS 102 difere do Old UK GAAP. Como resultado, é possível que certos itens serão descritos de forma diferente em comparação com o anterior e de uma entidade para outra. A FRS 102 permite o uso de títulos que diferem daqueles usados ​​no próprio padrão, e algumas empresas podem manter as descrições do Old UK GAAP. Reconciliação dos movimentos nos fundos de acionistas Demonstração das mutações do patrimônio líquido O antigo PCGA do Reino Unido inclui a opção de apresentar a reconciliação dos movimentos nos fundos de acionistas como uma demonstração preliminar como mencionado anteriormente, seção 5 da NBR 102, permite que uma entidade prepare um único Demonstração de desempenho em vez de uma demonstração de resultados separada e uma demonstração separada de rendimento integral - esta declaração combinada é normalmente denominada uma demonstração do rendimento integral ou uma demonstração do resultado e outros rendimentos abrangentes em algumas circunstâncias FRS 102 permite que uma entidade para produzir uma declaração Do lucro e dos lucros acumulados em vez da demonstração do resultado abrangente e da demonstração das mutações do patrimônio líquido O Apêndice 3 da NBR 102 fornece uma tabela de comparação da terminologia da Lei das Sociedades e da Seção 1A da FRS 102 da FRS 102 As entidades que preparam suas contas usando a Seção 1A Da FRS 102 apenas terá de apresentar um balanço, lucros e perdas Nt e notas limitadas. Eles não serão obrigados a apresentar quaisquer outras declarações primárias, mas são encorajados a apresentar uma demonstração do resultado abrangente (às vezes referida como a demonstração do total de ganhos e perdas reconhecidos) e uma demonstração mostrando as alterações no capital próprio. Eles também terão a opção de apresentar um balanço abreviado e conta de ganhos e perdas. O balanço abreviado inclui apenas as rubricas principais (activos intangíveis, activos tangíveis, investimentos, acções, devedores, numerário, pré-pagamentos, credores, provisões, acréscimos, capital social, prémio de emissão, reserva de reavaliação, outras reservas e reserva PampL). Não é necessária uma nova análise destas rubricas. A conta de ganhos e perdas abreviada começa com um único valor para o lucro ou prejuízo bruto e outros rendimentos operacionais. Não há divulgação separada do volume de negócios, custo de vendas e outros rendimentos operacionais. Posição tributária Embora as referências e os títulos usados ​​no Pronunciamento Técnico-Financeiro 102 estejam alinhados com os utilizados no IAS, o estatuto tributário foi atualizado para cobrir ambos os conjuntos de terminologia. Uma referência em estatuto à demonstração de resultados, por exemplo, terá o seu significado contabilístico normal. Além disso, os requisitos de divulgação reduzidos permitidos pela Secção 1A da NIC 102 não teriam normalmente qualquer efeito sobre a posição fiscal da empresa. Se as contas consolidadas são consolidadas, as participações em associadas e as joint ventures são preparadas com base em Old UK GAAP ou New UK GAAP, a relevância das contas consolidadas e da contabilidade patrimonial é muito limitada na legislação tributária do Reino Unido e não se pensa que a FRS 102 represente qualquer alteração significativa Que exigiria a revisão das poucas áreas da legislação fiscal do Reino Unido que tenham em conta as contas consolidadas (como os aspectos dos contratos de locação financeira (Capítulo 2 Parte 21 CTA 2010), as regras sobre imobilizações incorpóreas (Parte 8 CTA 2009) eo World Wide Regras do limite de dívida (Parte 7 do TIOPA 2010)). Nem normalmente o tratamento de associadas, por exemplo, joint ventures em demonstrações financeiras separadas tem relevância para o imposto sob a lei BRITÂNICA atual. Contudo, as contas consolidadas podem ser informativas e podem fornecer informações úteis que não aparecem na face das contas individuais. 3. Políticas contábeis, estimativas e erros A contabilização de uma mudança na política contábil A Requisição de desempenho financeiro requer que as alterações na política contábil sejam aplicadas retrospectivamente e que o efeito cumulativo dos ajustes do período anterior seja apresentado na base da STRGL. A Seção 10 da NBR 102 exige que uma mudança na política contábil resultante de uma mudança nas exigências de um resumo de FRS ou FRS seja contabilizada de acordo com os requisitos desse resumo revisado de FRS ou FRC. Quando o padrão não contém requisitos específicos, a mudança na política, de uma forma comparável ao antigo UK GAAP. Será aplicada retrospectivamente à data mais antiga possível, como se a nova política tivesse sempre sido aplicada. A exigência de aplicar a política retrospectivamente é semelhante entre o antigo UK GAAP eo FRS 102, mas há uma diferença na forma como este é apresentado. Conforme mencionado acima, em Old UK GAAP. A FRS 3 exige que os efeitos cumulativos dos ajustes de períodos anteriores sejam apresentados ao pé da STRGL. Em contrapartida, a FRS 102 exige que a alteração seja reconhecida na demonstração de variação do capital próprio. Contabilização da alteração na estimativa O antigo UK GAAP exige que uma alteração na estimativa seja aplicada prospectivamente. Por exemplo, quando uma entidade altera a vida útil estimada de um activo fixo tangível, não ajusta a depreciação apresentada. Em vez disso, a depreciação é ajustada prospectivamente para refletir a vida econômica útil revisada. A FRS 102 é consistente com o antigo UK GAAP a este respeito. Contabilização de erros Sempre que seja identificado um erro fundamental, a FRS 3 exige que isto seja contabilizado pela reposição dos valores comparativos do período anterior. Erros que não são considerados fundamentais são contabilizados no período em que são identificados. A Seção 10 da NIF 102 exige que, na medida do possível, uma entidade corrija os erros materiais retrospectivamente nas primeiras demonstrações financeiras autorizadas para emissão após o erro ser descoberto, repetindo os números comparativos do período anterior. Erros que não são considerados representar erros materiais são contabilizados no período em que são identificados. Tratamento fiscal Para o lucro comercial Capítulo 14 Parte 3 O CTA 2009 prevê que, quando houver uma alteração de uma base válida em que os lucros de uma transacção são calculados para outra base válida (por exemplo, numa alteração de política contabilística), deve ser efectuado um ajustamento Calculado para garantir que os recibos de negócios serão tributados uma vez e uma única vez e deduções serão dadas uma vez e apenas uma vez. Para efeitos do imposto sobre as sociedades, os ajustamentos são tratados como receitas ou deduções no cálculo dos lucros comerciais. Essa abordagem continuará a ser aplicada para ajustes de períodos anteriores decorrentes de acordo com a Seção 10 da IAS 102. O acima se aplica a mudanças de uma base válida para outra. Quando a alteração é inválida (tal como pode ocorrer quando um erro material é identificado nas contas), a legislação fiscal do Reino Unido exige que a base inválida seja corrigida para efeitos fiscais no período em que ocorreu pela primeira vez, com períodos subsequentes também corrigidos por impostos Finalidades. A questão de saber se os impostos podem ser cobrados ou os reembolsos pedidos para períodos anteriores depende dos prazos para a elaboração ou alteração das auto-avaliações. Regras fiscais semelhantes aplicam-se a mudanças nas políticas contábeis ou erros em itens não comerciais, tais como relações de empréstimo, contratos de derivativos e ativos intangíveis. 4. Instrumentos financeiros 4.1 Introdução Em termos contabilísticos, um instrumento financeiro é um contrato que dá origem a um activo financeiro de uma entidade e um passivo financeiro ou instrumento de capital próprio de outra. Exemplos de instrumentos financeiros comuns incluem caixa, devedores comerciais, credores comerciais, obrigações, instrumentos de dívida e derivados. As empresas que aplicam o antigo UK GAAP caem em 2 campos principais aqueles que aplicam FRS 26 e aqueles que não. As empresas que não adotaram a FRS 26 provavelmente verão as maiores mudanças como resultado da adoção da IAS 102. Além disso, de acordo com a IAS 102, uma empresa possui efetivamente 3 opções para a contabilização de instrumentos financeiros: (i) Seções 1112 da IAS 102 (ii) IAS 39 ou iii) IFRS 9. Isto significa que existem 6 possibilidades de transição de UK GAAP antigo para FRS 102. Este capítulo do documento centra-se sobre as empresas que actualmente não aplicam FRS 26 como o seu provável que estas empresas irão ver o Maior mudança. O artigo cobre as opções das Seções 1112 e IAS 39 sob a FRS 102. Este artigo não considera a interação contábil e tributária onde a terceira opção, IFRS 9, é adotada. Esta secção do documento é aplicável para os períodos contabilísticos com início antes de 1 de Janeiro de 2016. Para os períodos contabilísticos com início em ou após 1 de Janeiro de 2016, existem alterações na relação de empréstimo e nas regras do contrato de derivados que podem afectar o tratamento fiscal. Em particular, o tratamento fiscal segue agora os montantes reconhecidos no resultado. Dado que muitas empresas do Reino Unido vão adotar a FRS 102 pela primeira vez em 2015, o documento não foi atualizado para essas mudanças. Observe que este documento trata dos custos de empréstimos no capítulo 14, conversão de moeda estrangeira no capítulo 17 e passivos e capitais próprios no capítulo 18. 4.2 Requisitos gerais Antigo UK GAAP Conforme mencionado acima, para as empresas que aplicam o antigo UK GAAP a contabilização de instrumentos financeiros pode ser segregada Em 2 campos aqueles que aplicam FRS 26 e aqueles que não. O FRS 26 está alinhado com a IAS 39 e é obrigatório para empresas com dívida listada ou patrimônio líquido que não estão usando o IAS. É opcional para todas as outras entidades, e eles podem aproveitar a opção de usar a contabilidade de valor justo que faz parte do direito das empresas no Reino Unido. Para as empresas que não aplicam a FRS 26, não existe um padrão específico e abrangente para os instrumentos financeiros no antigo UK GAAP. Em vez disso, a contabilização de instrumentos financeiros é determinada principalmente pelas exigências da IFRS 4 (emissor de instrumentos de capital), da SSAP 20 (transações em moeda estrangeira) e da IFRS 5 (substância sobre forma, incluindo algumas questões de baixa de reconhecimento). Caso contrário, para as empresas que não aplicam a NCR 26, a contabilização dos instrumentos financeiros baseia-se, em grande parte, nos princípios gerais da NRF 18, em especial no conceito de acréscimo, e nas disposições relevantes do direito das sociedades. A Lei das Sociedades Comerciais prevê que os activos correntes (tais como os devedores em numerário e os devedores comerciais) são reconhecidos ao preço de compra enquanto que o conceito de acréscimo é aplicado na determinação, por exemplo, do reconhecimento e mensuração dos juros dos mutuantes. Em contraste com o antigo UK GAAP (em que a FRS 26 não foi adoptada), a FRS 102 fornece a uma empresa orientações específicas sobre a contabilização de todos os instrumentos financeiros. Na Seção 11, são apresentadas três opções contábeis: aplicação da Seção 11 e Seção 12 da aplicação da IAS 39 dos critérios de reconhecimento e mensuração da IFRS 9 (e da IAS 39, conforme alterada para a IFRS 9) 11 e Seção 12 As seções 11 e 12 da IFRS 102 fornecem orientações específicas sobre a contabilização de instrumentos financeiros. A Seção 11 aborda os instrumentos financeiros básicos, enquanto a Seção 12 considera todos os outros instrumentos financeiros. Embora as Seções 11 e 12 abordem a contabilização de instrumentos financeiros, existem certas exceções ao seu escopo, incluindo contratos de seguro, investimentos em subsidiárias, associadas e joint ventures e arrendamentos. Porém, a Seção 12 aplica-se, por exemplo, a todos os instrumentos financeiros derivativos. Instrumentos financeiros básicos são aqueles considerados como tendo termos diretos - exemplos fornecidos na Seção 11 incluem dinheiro, devedores comerciais, credores comerciais e empréstimos bancários simples com condições de reembolso padrão. Esses instrumentos são tipicamente reconhecidos ao preço de transação e mensurados numa base de custo amortizado. Isto é em grande parte consistente com o antigo UK GAAP. Outros instrumentos financeiros não-básicos referem-se a todos os outros instrumentos financeiros. Em contraste com os instrumentos financeiros básicos, outros instrumentos financeiros são tipicamente reconhecidos e posteriormente mensurados ao justo valor na PampL. Em particular, os seguintes são exemplos de instrumentos que agora serão mantidos pelo valor justo de acordo com a Seção 12 da IAS 102: todos os derivativos (incluindo swaps de taxa de juros, um compromisso de compra de uma mercadoria que possa ser liquidada em caixa e Opções e contratos a termo) que não são simples dívida de baunilha, onde, por exemplo, o montante reembolsável pode variar ou quando são utilizadas taxas de juros não-padrão investimentos em dívida convertível onde o retorno ao detentor pode variar com o preço das ações do emissor ações Em vez de apenas com as taxas de juro do mercado 3 Os requisitos da Secção 12 da NIF 102 representam uma alteração significativa em relação aos Antigos PCGA do Reino Unido (ambos nos quais a NRF 26 foi adoptada e não foi adoptada). É provável que muitos outros instrumentos financeiros sejam obrigados a ser avaliados de forma justa segundo a FRS 102 do que é atualmente o caso em Old UK GAAP. Opção do IAS 39 Conforme mencionado acima, a FRS 102 também permite que o usuário tome a decisão de aplicar os critérios de reconhecimento e mensuração do IAS 39. Embora o IAS 39 não distinga entre instrumentos financeiros básicos e outros, da mesma forma, compartilha algumas semelhanças com a Seção 12 da FRS 102, por exemplo, em ambos os casos, uma empresa será tipicamente obrigada a contabilizar todos os instrumentos financeiros separadamente, enquanto que os instrumentos sintéticos ou compostos são relativamente comuns segundo os antigos GAAP (onde a FRS 26 não é adotada). Abaixo estão as características que resultariam em um instrumento financeiro que está sendo mensurado pelo valor justo de acordo com a IAS 39: ativos e passivos mantidos para fins de negociação ou especulativamente ativos e passivos designados inicialmente pela empresa como ao valor justo através do resultado todos os instrumentos financeiros derivativos Note que, de acordo com a opção IAS 39, os instrumentos de dívida designados como Disponíveis para Venda (AFS) serão mensurados ao justo valor com ganhos e perdas de justo valor reconhecidos directamente em Outros Resultados Abrangentes, enquanto as receitas de juros, Continuam a ser reconhecidos no resultado. Mais uma vez, isso representa uma mudança significativa do antigo UK GAAP (onde o FRS 26 não é adotado). Tratamento fiscal Para as empresas, a maior parte dos instrumentos financeiros passará a ser a relação de empréstimo (de acordo com a Parte 5 CTA 2009), dívidas em dinheiro não credoras (tratadas como relações de empréstimo ao abrigo do Capítulo 2 da Parte 6 CTA 2009) . A legislação fiscal do Reino Unido prevê, em geral, que o tratamento contabilístico destes tipos de instrumentos é seguido para efeitos fiscais. Este documento não abrange os instrumentos financeiros que não se enquadram nessas categorias, por exemplo, instrumentos de capital na forma de ações e garantias. Um aspecto particular da tributação das relações de crédito e dos contratos de derivados é que se afasta do princípio normal de apenas olhar para a conta de ganhos e perdas (ou demonstração de resultados). A legislação garante que a maior parte dos itens levados às reservas são levados em conta. Isso inclui os montantes reconhecidos na STRGL sob o antigo UK GAAP e os valores reconhecidos como itens de OCI sob a FRS102 ou IAS. Uma outra regra garante que, quando um lucro ou uma perda de um contrato de empréstimo ou de um contrato derivado for reconhecido diretamente no patrimônio líquido, isso seria levado em conta da mesma forma como se fosse reconhecido em lucros ou prejuízos ou por meio de reservas. Como resultado, quando as contas mensuram o instrumento ao valor justo, ou com lucros passando a lucros ou perdas, ou como itens de outros resultados abrangentes, essas movimentações de valor justo normalmente serão levadas em conta para fins tributários. Existem, contudo, certas excepções em que o estatuto fiscal especifica um tratamento contabilístico específico. O exemplo mais comum é onde há uma relação de empréstimo entre empresas ligadas. Nesse caso, a seção 349 CTA 2009 exige que os lucros sejam calculados para fins fiscais com base em uma base de custo amortizado. Além disso, existem regras específicas que tratam de contratos de derivativos que fazem parte de uma relação de hedge (estes são explicados em mais detalhes abaixo). Além disso, quando, de acordo com a opção IAS 39, os activos financeiros são tratados como mantidos até ao vencimento, existe a expectativa de que esses activos sejam mantidos até ao vencimento. Estes são mensurados ao custo amortizado. No entanto, a venda de um pequeno número de tais ativos antes do vencimento pode resultar em todos os ativos HTM ficando contaminado, de modo que os ativos seriam obrigados a ser contabilizados como sendo AFS. Neste cenário, são aplicáveis ​​regras fiscais específicas - ver CFM 33150 para mais detalhes. Ajustes transitórios Quando um instrumento financeiro é medido numa base diferente ao abrigo da NBRF 102 em comparação com o antigo UK GAAP, é provável que surjam ajustamentos transitórios na adopção da NCR. Para mais orientações sobre as disposições transitórias aplicáveis ​​aos instrumentos financeiros, ver a Parte B do presente documento. Mais pormenores sobre transacções específicas envolvendo instrumentos financeiros onde as exigências da NCR 102 diferem das exigências do antigo UK GAAP são apresentadas abaixo. 4.3 Conversão de dívida Quando a dívida é extinta através da emissão de um capital próprio de uma entidade, a contabilidade aplicada de acordo com o antigo UK GAAP pode diferir da exigida pela FRS 102. Old UK GAAP. Onde a FRS 26 não foi adotada, permite uma escolha de política contábil no que diz respeito ao reconhecimento de um ganho ou perda. Em certas situações, pode ser apropriado adotar uma política de não ganho não perdas, de forma que o valor do capital emitido seja tratado como sendo igual ao valor contábil da dívida cedida. No entanto, as empresas podem adotar uma política de reconhecimento de ganhos ou perdas em tais transações. De acordo com as duas abordagens, é necessário considerar a interacção com os requisitos do direito das sociedades no que se refere ao montante do prémio de emissão a registar e às exigências relativas aos lucros realizados 4. FRS 102 não fornece orientação específica sobre swaps de dívida-capital. A Seção 11 da NIF 102 5 exige que qualquer diferença entre o valor contábil do passivo financeiro extinto e a contraprestação paga seja reconhecida no resultado. Além disso, a Seção 22 exige que os instrumentos patrimoniais sejam reconhecidos na emissão pelo valor justo do caixa ou outros recursos recebidos. No entanto, as empresas terão de considerar os fatos específicos ea natureza da transação realizada. Por exemplo, as considerações do direito das sociedades relativas aos lucros realizados e às contas de prémio de acções terão de ser consideradas e poderão ter impacto no tratamento contabilístico. Tratamento fiscal De acordo com os princípios gerais do regime de relações de crédito, um montante de lucro reconhecido na conta de ganhos e perdas, ou em reservas, seria levado em conta. No entanto, a seção 322 CTA 2009 normalmente isenta ganhos que surjam quando uma dívida é liberada em consideração de ações ordinárias. Ver CFM 33200 para mais detalhes sobre esta isenção. 4.4 Desreconhecimento da reestruturação da dívida A dívida pode ser reestruturada ou modificada de tal modo que, de acordo com a FRS 5 e os antigos GAAP do Reino Unido (onde não foi adoptada a NRF 26), nenhum ganho ou perda seria reconhecido nas contas. Em contrapartida, a NIF 102 exige que, quando a modificação ou reestruturação da dívida for considerada substancial, o instrumento de dívida original será desreconhecido e o novo instrumento de dívida será reconhecido pelo seu justo valor. Na medida em que o valor justo do novo instrumento difere do valor contábil do instrumento de dívida original, um ganho ou perda será tipicamente reconhecido como um item de lucro ou perda. Este ganho ou perda deve reverter sobre a vida restante do instrumento. Tratamento fiscal A relação de empréstimo seria normalmente tributada em função do montante reconhecido nas contas. Como tal, o lucro ou perda em renegociação de desreconhecimento será tipicamente levado em conta. Note-se que o governo incluiu na Lei de Finanças (No.2) 2015 uma isenção para cobrir dívidas em dificuldades, o que se aplicaria em certos casos em que o empréstimo é modificado ou substituído. The proposal is that the exclusion would apply to modifications and releases from 1 January 2015. Transition On transition Section 35 of FRS 102 provides that financial assets and liabilities derecognised under the previous accounting framework shall not be recognised on adoption of FRS 102. Section 35 also provides that where a financial asset or liability would have been derecognised under FRS 102 but under the companys previous accounting framework hadnt been derecognised a company may, on transition, either (i) derecognise the financial asset or liability on adoption of FRS 102 or (ii) continue to recognise until disposed of or settled. However, no exclusions apply where the derecognition occurs after the accounting transition date for example, after the start of the prior period comparatives. As a result, the company may be required to derecognise recognise the debt. The Change of Accounting Practice Regulations were amended in December 2014 to address this issue in certain instances of distressed debt. For further guidance on the transitional provisions applying to financial instruments see Part B. 4.5 Initial recognition - non-market instruments Old UK GAAP. where FRS 26 isnt applied, typically requires that financial instruments are initially recognised at cost. This cost may or may not equate to the fair value of the financial instrument. In contrast under FRS 102, whether through the application of Section 11 and 12 or through the IAS 39 option, financial instruments are typically measured on initial recognition at (i) transaction price (ii) present value (of there is a financing element) or (iii) at fair value. The transaction price (or cost) will typically, but may not always, equate to the present value fair value of the instrument. Where the transaction cost differs from the present value fair value of the instrument its possible that a day-one gain or loss could arise. For example, this can be an issue with non-interest bearing debts which arent repayable on demand. Tax treatment The loan relationship would normally be taxed in line with the accounts. As such, any day-one gain or loss will typically be brought into account. However, consideration should be given to the facts which led to the transaction price differing from fair value. In particular, there are 2 sets of provisions which may alter this position. Provision 1 Where the loan arises between connected companies, the amounts to be brought into account on the basis of an amortised cost basis of accounting as required by sections 313 and 349 CTA 2009 - in particular this requires the tax treatment to be based on the loan shown in the accounts at cost and adjusted for amortisation and impairments What constitutes cost will depend on the particular facts in question. HMRC would normally accept that this equates to the cost of the loan under Old UK GAAP (where FRS 26 has not been applied), such that in this case the tax treatment under FRS 102 will largely follow the Old UK GAAP position (where FRS 26 has not been applied). See CFM35190 for further details of the rules for taxing loan between connected companies. Provision 2 Secondly, if the loan did not arise as a result of a transaction between persons acting at arms length it may be necessary to apply the transfer pricing rules in Part 4 of TIOPA 2010. Where any tax advantage is already negated by the connected companies then the transfer pricing rules are unlikely to apply See the International Manual for further details of the transfer pricing rules. HMRC has published draft guidance on this issue. Transition Potentially this could result in a transitional adjustment. For further guidance on the transitional provisions applying to financial instruments see Part B of this paper. 4.6 Hedging relationshipssynthetic instuments Old GAAP. where FRS 26 has not been adopted, requires derivatives that are entered into as part of a companys hedging strategy to be accounted for on an historic cost basis equivalent to that used for the underlying asset, liability, position or cash flow. In contrast, both Section 12 of FRS 102 and the IAS 39 option typically require all derivatives to be accounted for separately and to be measured at fair value. Section 12 of FRS 102 and IAS 39 both then provide certain hedge accounting rules. Under both Section 12 of FRS 102 and the IAS 39 option, hedge accounting is only permitted where certain criterion are met. However as part of the amendments made to FRS 102 in July 2014 the criteria was changed making hedge accounting more readily available to entities where its consistent with their risk management processes. The mechanics of hedge accounting, whether applying Section 12 of FRS 102 or under the IAS 39 option are thereafter comparable. Whether applying Section 12 of FRS 102 or under the IAS 39 option, the mechanics for hedge accounting are significantly different to the accounting for synthetic instruments under Old UK GAAP (where FRS 26 isnt applied). Tax treatment Without special rules, hedge relationships would not typically be effective for tax purposes, whether or not they were designated as a hedge for accounting purposes. The Disregard Regulations (SI 2004 3256) were introduced to address this issue. Broadly speaking, where a derivative is part of a hedging relationship the rules operate to restore the Old UK GAAP position (for example, where FRS 26 isnt applied). In particular, there are specific regulations for derivatives dealing with currency, commodities, debt and interest rates. The rules apply in a number of different circumstances and they also contain particular elections that may be made. For periods of account commencing on or after 1 January 2015, the default setting is for the tax treatment of derivative contracts to follow the profit and loss account. Companies have the option of electing into computational provisions in the Disregard Regulations. Previously, companies had the ability to elect out from the Regulations. For companies that already apply fair value accounting in respect of derivatives which potentially fall within the scope of the Disregard Regulations, they will continue with their existing treatment. These company can, if they so wish, change their status in the future on a prospective basis. Companies that will be applying fair value accounting for the first time in a period of account commencing on or after 1 January 2015 will need to decide whether to elect-in to regulations 7, 8 and 9. There are strict deadlines for making these elections. Its also likely that transitional issues could arise in such cases. For further guidance on the transitional provisions applying to financial instruments and the interaction with the Disregard Regulations see Part B of this paper. Further information HMRC has published additional guidance to help companies with hedging instruments making the transition to new accounting standards. This is available at: Corporation Tax: Disregard Regulations for derivative contracts . Further information is available in the Corporate Finance Manual (CFM ) as follows: derivative contracts are explained at CFM13010 onwards hedge accounting is explained at CFM27000 onwards the tax treatment of derivatives is explained at CFM57000 onwards 4.7 Hybrid instrumentsembedded derivatives This paper doesnt address in detail the position of hybrid instruments and the embedded derivatives. This is a complex area and affected companies will need to consider the accounting and tax treatment carefully. In overview, FRS 26 and IAS 39 require companies to separate out (bifurcate) embedded derivatives from host contracts. However, bifurcation isnt typically permitted under Old UK GAAP (where FRS 26 isnt applied) or under Sections 11 12 of FRS 102 (although in both cases the issuer of compound instruments will still separate out the equity component in accordance with FRS 25 or Section 22 respectively). Links to the relevant guidance is set out in chapter 18 (liabilities and equity) of this paper. 4.8 Companies that currently apply FRS 26 The above commentary focuses on companies that dont currently apply FRS 26. Companies that have adopted FRS 26 and choose to apply the IAS 39 option under FRS 102 are likely to see no change in the accounting of financial instruments. For those that choose to apply the Section 11 12 option certain elements wont change but the basicother distinction has the potential to result in significant changes. For example, such companies could see the following differences: as noted above, financial instruments are required to be fair valued under Section 12 for all but basic instruments - loans previously recognised on an amortised cost basis may therefore be measured at fair value in accordance with Section 12 as noted above, Sections 11 and 12 dont permit the bifurcation of embedded derivatives (although the issuer of compound instruments will still separate out the equity component under Section 22) - for example the holder of a hybrid financial instrument is required under FRS 26 to bifurcate the instrument into its host debt and embedded derivative - the host debt is then measured on an amortised cost basis and the embedded derivative at fair value - in contrast FRS 102 Section 12 there is no equivalent requirement to split the instrument for accounting purposes, and the whole instrument would typically be fair valued As such, transition adjustment may arise - see Part B of this paper. 5 Inventoriesstock Section 13 of FRS 102 differs from SSAP 9 insofar as it specifically excludes from its scope WIP in the course of construction contracts (covered in section 23 of FRS 102), agricultural produce and biological assets (covered in section 34 of FRS 102) and financial instruments (section 11 and 12 of FRS 102). For many entities these differences will have no impact on the recognition or measurement of stock. However entities operating in the agriculture sector, for example, may, in accordance with FRS 102, apply either a cost model or a fair value model. The use of the fair value model is likely to represent a significant change in the measurement basis of stock and hence the timing of profitslosses on such stock. For tax purposes there are 2 acceptable valuation bases for stock, either the lower of cost and net realisable value, or mark to market (fair value). If either of these methods are used no ongoing adjustment is required for tax purposes. Where mark to market is used there is no tax law that requires the profits or losses disclosed by the accounts to be adjusted for tax purposes. Note there are particular tax rules, the herd basis, that can be applied to particular farm animals. Guidance on this and the valuation of farming stock is in the Business Income Manual. 6. Investment property Old UK GAAP (SSAP 19) requires an entity to carry investment property at their open market value with movements in value recognised each period in the STRGL unless they represent a permanent diminution in value in which case they are recognised in the PampL. Where investment properties are let to and occupied by another group entity for its own purpose, SSAP 19 contains an exemption which excludes such properties from its scope (hence they would be included as part of fixed assets). FRS 102 requires that investment property is initially recognised at cost 6 and subsequently measured at fair value. However in contrast to SSAP 19, FRS 102 section 16 requires those fair value movements to be recognised in the PampL. In addition FRS 102 section 16 doesnt contain an exemption comparable to that present in SSAP 19 for property let to and occupied by group entities. Hence certain properties treated as fixed assets under Old UK GAAP may now be classified as investment property under Section 16 of FRS 102. Note that FRS 102 section 16 does permit the use of the cost model where the fair value cannot be reliably measured without undue cost or effort. The accounting treatment of investment properties doesnt determine, for tax purposes, whether the property is held as an investment property (giving a capital receipt on disposal) or whether its part of a trading transaction (and so is on revenue account and forms part of the companys trading profits). Assuming the property is held, for tax purposes, as an investment, the income arising on the property is bought into tax as its recognised in the accounts (for example rental income would be bought into tax as recognised in profit or loss). In this case, movements in fair value of investment properties arent taxable. The disposal of the investment properties will typically give rise to a chargeable gain. In certain circumstances a company holding investment property as a lessee under an operating lease may, under section 16 for FRS 102, account for it as an investment property. Where it does so, the property is initially recognised at the lower of its fair value and the present value of the minimum lease payments. The corresponding creditor is accounted for as a finance lease (see Section 20 of FRS 102). Where this happens the tax rules applying to finance leases will apply. 7. Property, plant and equipment Section 17 of FRS 102 and FRS 15 are primarily about Property, plant and equipment (PPE ) or fixed assets to use the Companies Act and FRS 15 terminology. Both standards are broadly consistent in principle. However differences are present in particular Section 17 of FRS 102 requires that major spare parts are included in PPE Section 17 of FRS 102 requires that cost is measured by reference to the present value of all future payments where the asset is acquired under terms beyond normal credit terms Section 17 of FRS 102 doesnt permit the use of Renewals Accounting Section 17 requires that residual values are based on current prices rather than historic prices While such differences for accounting purposes are present, UK tax law departs from the accounting standards by disallowing depreciation and revaluations in respect of capital assets, and instead granting capital allowances (on some assets). Hence accounting changes arent expected to have a significant tax impact. In some cases where revenue expenditure is added to the cost of an asset, tax law follows the accounts by recognising for tax purposes amounts reflected in profit and loss account by way of depreciation charge to the extent that they are a write off of revenue expenditure. In those cases where depreciation under Section 17 of FRS 102 differs from that under FRS 15 (for example, because of revaluation of residual values) tax will follow the amount as per Section 17 of FRS 102. As noted above there is no equivalent to Renewals accounting (FRS 15 paragraph 97-99) under Section 17 of FRS 102 so there may be an adjustment for tax purposes made under the change of basis legislation see part B of this paper. 8. Intangible assets including goodwill Intangible assets and goodwill arising on business combinations The definition of an intangible asset in Old UK GAAP (FRS 10) states that intangible asset are Non-financial fixed assets that dont have physical substance but are identifiable and are controlled by the entity through custody or legal rights. FRS 102 defines an intangible asset (other than goodwill) as an identifiable non-monetary asset without physical substance where identifiable is an asset that is separable or arises from a legal contract or other legal right. This definition is different from that present in Old UK GAAP in so far as the intangible asset need not be separable from the business. Consequently either on transition (where the exemption to retain previous GAAP figures isnt used) or on subsequent business combinations, more intangible assets may be recognised under FRS 102 than would have been recognised under Old UK GAAP . For tax purposes Sections 871-879 of Part 8 CTA 2009 provide a comprehensive set of rules for changes in accounting for intangibles and especially for cases where what is included entirely as goodwill under Old UK GAAP is disaggregated into different types of intangible property with different amortisation rates or impairment factors under FRS 102. Intangible assets and goodwill - Useful Economic Life (UEL ) FRS 10 states that goodwill and intangibles should be amortised over their UEL. It also states that there is a rebuttable presumption that the UEL wont exceed 20 years. FRS 10 does permit the use of an indefinite UEL in which case its not amortised but is instead subject to annual impairment reviews. FRS 102 differs from Old UK GAAP in respect of UEL. Firstly FRS 102 doesnt permit an indefinite life. All intangibles and goodwill are presumed to have a finite life and the period over which they are subject to amortisation should reflect this. Where the useful life of the intangible asset can be reliably estimated this life is used as the UEL. Where a reliable estimate of the UEL cannot be made, FRS 102 states that the UEL must not exceed 5 years (note however, that effective periods commencing on or after 1 January 2016 this is changed to 10 years). In general tax relief is provided on either the amortisationimpairment of goodwill and intangibles recognised in the accounts. Sections 871 to 873 of CTA 2009 ensure that any write up on the transition from Old UK GAAP to FRS 102 will be a taxable credit for Part 8, and section 872 ensures that any such credit is limited to the net amount of relief already given. Any impairment from written up cost will be deductible. Tax relief is unlikely to be affected if an entity has elected for a fixed rate of 4. Note that a fixed rate election must be made within 2 years of the end of the accounting period in which the expenditure was incurred and cannot be reversed. Software costs FRS 10 requires that software costs which are directly attributable to bringing an item of IT into use within the business are recognised as part of tangible fixed assets. Where such costs did not relate to bringing an item of IT into use they would typically have been written off direct to the PampL. In addition UITF 29 provides that, where certain criteria are met, website development costs are recognised as part of tangible fixed assets. FRS 102 doesnt specify how such costs should be treated. Hence the nature of the item should be considered in determining its treatment. Its possible that having considered the nature of the software that its recognised as an intangible asset. For companies where costs on expenditure such as software have been previously written off to profit and loss account and claimed as a deduction in a Case I computation in respect of expenditure on a tangible asset, the following tax consequences will apply in respect of the change of accounting policy. First the adjustment in respect of the change of accounting basis will be taxed under Chapter 14 Part 3 CTA 2009. For example, a positive adjustment is brought into account as a taxable receipt. Second, capitalised expenditure in respect of an intangible asset will be relieved under the rules in Part 8 CTA 2009 as its written down in the accounts (subject to the normal exclusions, including the pre-FA 2002 rule). Guidance on many of these issues is in HMRC s CIRD Manual (in particular see CIRD12300 which address changes in accounting policies for intangible assets within Part 8 CTA 2009). 9. Business combinations Section 19 of FRS 102 is broadly comparable to FRS 6 and FRS 7. However particular differences are present: because of the difference in the definition of an intangible asset an acquisition under FRS 102 may result in a different balancing figure being assigned to goodwill on a business combination there is a change in the measurement of the consideration given where that consideration is contingent the look back period in which provisional fair values can be amended is different (FRS 102 look back period is 12 months since acquisition date) a change in step acquisitions in some circumstances FRS 6 and 7 of Old UK GAAP are relevant in UK tax law only where the carrying value of an asset or liability acquired in a business combination is relevant for tax purposes, for example, for loan relationships. This also applies where a company is applying FRS 102. Tax law determines the value of trading stock for the business ceasing and its value for the successor business see Chapter 11 Part 3 CTA 2009. In respect of goodwill on business combinations please see chapter 8 of this paper. 10. Leases Entities that apply Old UK GAAP will use SSAP 21, UITF 28 and FRS 5 in determining the accounting treatment of leases. Entities that adopt FRS 102 will apply the recognition and measurement requirements of Section 20. Both Old UK GAAP and FRS 102 consider whether a lease transfers substantively the risks and rewards of the leased asset. However it should be noted that SSAP 21 includes a presumption that if the present value of the minimum lease payments is 90 or more of the fair value of the leased asset that it would typically be classified as a finance lease. Section 20 of FRS 102 doesnt contain this presumption. Nevertheless the emphasis on the transfer of risk and rewards is such that in most cases the classification of leases will be consistent between Old UK GAAP and FRS 102. Once the lease has been classified the accounting treatment thereafter is also, generally, comparable. However differences, even where the classification is the same, do exist and the interaction with tax is noted below. UITF 28 requires that operating lease incentives in the lessee are spread over the period ending on the date from which its expected that the prevailing market rent will be payable (if this period is shorter than the lease term, otherwise over the lease term). Section 20 of FRS 102 requires that lease incentives are spread over the term of the lease unless another way would better reflect the reality. Consequently there may be differences in respect of the period over which such incentives are recognised. Since the accounting is followed where the incentive isnt capital (for example, a rent free period) the difference may alter the timing of income recognition for tax purposes. UK tax law isnt entirely consistent with SSAP 21 (see Statement of Practice 391). But accounts figures (including where appropriate consolidated accounts) are recognised for the purposes of Chapter 2 Part 9 CTA 2010 and Chapter 2 Part 21 CTA 2010 which deal with leasing and finance leases with return in a capital form. For lessors, FRS 102 Section 20 requires use of the net investment method for finance leases, whilst SSAP 21 requires the net cash investment method. There may be differences in the timing of income recognition under the 2 bases. In some cases these affect the timing of income for tax purposes, for example, where Schedule 12 Finance Act 1997 applies. Legislation in sections 228B to 228F Capital Allowances Act 2001, and Chapter 5A Part 12 ICTA (inserted by FA 2006) brings the tax treatment of both lessors and lessees of finance leases of plant amp machinery into line with the accounting basis in FRS 102 Section 20 or SSAP 21 as appropriate. Note that its not envisaged that s.53 FA11 will apply to entities on transition to Section 20 of FRS 102 by virtue of subsection 3 of s.53 FA11. 11. Provisions There are no significant differences between Section 21 of FRS 102 and FRS 12. For tax purposes the recognition and measurement of provisions in the accounts forms the basis for the quantum and timing of tax relief (subject to adjustment where the expenditure is capital for tax purposes or otherwise disallowable). Consequently, for most companies its not expected that FRS 102 will have a significant tax impact in this area. 12. Revenue recognition In general, reporting of revenue in accounts is followed for tax purposes. There is no specific standard for revenue recognition in Old UK GAAP. However, Application note G of FRS 5 provides revenue recognition guidance in respect of the sale of goods and services as well as other specific revenue recognition scenarios, SSAP 9 provides guidance in respect of long term contracts and UITF 40 addresses service contracts. The general principles of revenue recognition within FRS 5 Application note G are that revenue is recognised when the seller obtains the right to consideration in exchange for the goods, services, or work performed. The right to consideration typically derives from the performance of its obligations under the terms of the exchange with the customer. FRS 5 application note G requires that, on recognition, revenue is measured at the fair value of the consideration received or receivable. Revenue recognition under FRS 102 will primarily be determined by Section 23 of FRS 102. The recognition criteria within Section 23 are broadly aligned with Old UK GAAP. In addition, where the respective recognition criteria are met, Section 23 also requires that revenue is recognised at the fair value of the consideration received or receivable. Hence while there are a few differences between Old UK GAAP and FRS 102 (for example the latter expressively addresses and defines construction contracts in Section 23), for many entities there will be no change following adoption of FRS 102. Consequently for many companies there will be no accounting or tax impact. 13. Government grants SSAP 4 requires that grants are recognised when there is reasonable assurance that related conditions, if any, will be met. Where reasonable assurance is present grants are then recognised in the accounts based on the relationship between the grant and the related expenditure. FRS 102 Section 24 states that the grant wont be recognised until the entity has reasonable assurance that it will or has complied with the grant conditions and that the grants will be received. It requires that an entity adopts either the accruals or performance model to determine the subsequent accounting for the grant. Under the accruals model grants relating to revenue are recognised in income on a systematic basis over the periods in which the entity recognises the relevant grant costs. Under the performance model Section 24 of FRS 102 states: a grant that doesnt impose specified future performance-related conditions on the recipient is recognised in income when the grant proceeds are received or receivable a grant that imposes specified future performance-related conditions on the recipient is recognised in income only when the performance-related conditions are met grants received before the revenue recognition criteria are satisfied are recognised as a liability Whether the accruals model or the performance model is adopted in overall terms the differences, if there are any, are limited to timing differences on recognition. For tax purposes grants which meet revenue expenditure, such as interest payable, are normally trading receipts, and this will continue where Section 24 of FRS 102 applies. 14. Borrowing costs FRS 102 Section 25 and FRS 15 on capitalising borrowing costs are similar both permit such treatment where relevant criteria are met. For companies section 320 CTA 2009 provides specific rules which allow relief for capitalised borrowing costs but only where they relate to a fixed capital asset or project. However, relief isnt available where the costs are capitalised in the carrying value of an intangible fixed asset which falls within Part 8 CTA 2009. The same approach will continue where Section 25 of FRS 102 is applied. See CFM 33160 for further details. 15. Share based payments Accounting for share based payments under Old UK GAAP (FRS 20) and FRS 102 (Section 26) are aligned with few differences. Tax deductions in respect of share based payments are governed by specific legislation in Part 12 CTA 2009. 16. Employee benefits Pension schemes In respect of accounting for pension schemes Section 28 of FRS 102 differs to FRS 17 in particular: it removes the multi employer exemption on defined benefit schemes such that the scheme position is reported in the solus accounts of the entity contractually or legally responsible for the plan the calculation of the net interest on defined benefit schemes is different. Under Section 28 of FRS 102 the net interest comprises the expected interest income on plan assets excluding the effect of any surplus that isnt recoverable and the interest cost on the scheme obligation. These changes, and others, arent expected to have an impact for tax. Under current UK tax law, sections 196, and 246 FA 2004 and sections 1290-6 CTA 2009 provide relief on a contributions paid basis. Holiday pay accural Under Old UK GAAP many entities did not accrue or provide for holiday pay. FRS 102 requires that when an employee has rendered services to an entity during a period any related holiday pay or similar is accrued for. For tax purposes this accrual would be treated in line with the treatment of unpaid remuneration which is dealt with at Part 20 Chapter 1 CTA 2009. Employee benefit trusts Under Old UK GAAP. UITF 32 provides guidance on how to account for Employee benefit trusts. The requirements of FRS 102 (Section 9) are comparable. FRS 102 states that there is a rebuttable presumption that contributions to an intermediate payment arrangement where the employer is a sponsoring entity are made in exchange for another asset and dont represent an immediate expense. In addition the assets and liabilities of the intermediary will be accounted for by the sponsoring entity as an extension of its own business. The above treatment doesnt apply where it can be demonstrated that the sponsoring entity wont obtain future economic benefit from the amounts transferred or it doesnt have control of the right or other access to the future economic benefit. For tax purposes the treatment of employee benefit contributions is dealt with at Part 20 Chapter 1 CTA 2010. 17. Foreign currency translation Under Old UK GAAP a company accounts for its currency exchange transactions in line with either SSAP 20 (where FRS 26 isnt applied) or FRS 23 (where FRS 26 is applied). For companies which have adopted FRS 23 (and FRS 26) the transition to FRS 102 and Section 30 isnt expected to result in any significant changes. For companies that applied SSAP 20 many wont encounter differences but when they do they may be significant. 5 main areas of difference are set out below. 17.1 Functionalpresentational currency Determination of functional currency under FRS 102 requires consideration of the currency of the primary economic environment in which the entity operates. Key factors in determining this are the currency that mainly influences the sales prices for goods and services and the currency of the country whose competitive forces and regulations mainly determine the sales prices of its goods and services. Consideration is also given to the currency in which funds from financing activities are generated and the currency in which receipts from operating activities are usually retained. This is in line with the accounting adopted by companies which currently apply SSAP 20. However, in contrast to SSAP 20, FRS 102 also specifically requires consideration of the influence of the parent on the companys operations and activities. It may be that when these factors are taken into account this will result in a different assessment of the companys functional currency. This could have a significant impact on the calculation of the profits recognised in the companys accounts. In particular, this can create exchange rate volatility where the companys assets and liabilities are denominated in a different currency to that of its functional currency. In addition, FRS 102 allows an entity to have a presentation currency which isnt necessarily the same as the functional currency. This typically has less impact on the calculation of the companys profit for a period (just that its expressed presented in a different currency). Chapter 4 of Part 2 CTA 2010 provides detailed rules as to how the companys profits are to be calculated for tax. CFM64000 explains the operation of these rules. It should be noted, though, that where an investment company changes its functional currency, exchange gains and losses arising on loan relationships and derivative contracts are excluded from tax if they arise as a result of a change in functional currency in the period of account in which the gains or losses arise and a period of account ending in the 12 months preceding that period. See CFM64120 for details. Where a company is a UK investment company it may be eligible to make a designated currency election. This must be made in advance of the date its to take effective. See CFM64500 onwards for further details. 17.2 Foreign operations (including branches) Income and expenditure of foreign operations (including branches) are translated from the functional currency of the foreign operation into the companys functional currency at actual or average rates not at closing. Exchange movements arising on retranslating the companys net investment in the foreign operation recognised in other comprehensive income. Note that where the company disposes of the foreign operation, the exchange movements previously recognised to other comprehensive income arent recycled to profit or loss. For tax purposes, the calculation of the companys profits from a trade or business undertaken through a foreign operation will typically be based on the amounts of profit or loss translated into the companys function currency in accordance with GAAP. Exchange differences arising from the retranslation of the net investment arent typically brought into account for Corporation Tax purposes. 17.3 Contract rate accounting Where a company enters into a contract to settle a transaction at a particular rate of exchange, SSAP 20 stated that the exchange rate fixed by the contract may be used to record the transaction. The position is different under FRS 102. The use of a contracted rate of exchange to translate monetary items isnt permitted. The closing rate as at the balance sheet date should be used instead. The contract would typically represent a derivative financial instrument which would then be separately recognised and measured at fair value in the accounts. This is a further example of a hedging relationship where under FRS 102 the hedged item and the hedging instrument need to be recognised separately in the accounts. The accountancy and tax treatment of hedging relationships is discussed above (see chapter 4.6). The Disregard Regulations (regulations 7 and 10) may apply to restore the Old UK GAAP position (where FRS 26 has not been adopted). Guidance on the application of this is available at CFM 57000 onwards. Note that where the forward contract is taken out as a hedge of qualifying expenditure, the amount of capital allowances is based on the amount of actual qualifying expenditure incurred (for example, translated at the spot rate at the date of that the expenditure is incurred) - see CA11750 Transitional adjustments may also arise - see Part B of this paper for commentary on this. 17.4 Net investment hedging (also known as the Cover method or SSAP 20 matching) Where an equity investment denominated in a foreign currency is hedged by a loan, SSAP 20 allows a company to re-translate the investment at the balance sheet date as if it were a monetary item. Exchange differences on the shares are taken to reserves. Exchange differences on the hedging loan are also taken to reserves, and offset against the gain or loss on the shares. Any excess on the loan that cannot be offset is taken to profit and loss account. This method of accounting is sometimes called the cover method or net investment hedging. S328 and S606 CTA 2009 ensure that exchange movements taken to reserves arent immediately brought into account. Potentially an adjustment would be made to any chargeable gain calculation where the shares are subsequently disposed of. There is no equivalent in Section 30 of FRS 102 for the cover method of hedging non-monetary assets. Hedge accounting is instead dealt with by Section 12 of FRS 102 (or IAS 39 where this option is taken) see chapter 4.6 above. However, under either Section 12 of FRS 102 or IAS 39, net investment hedging in respect of a shareholding in a subsidiary company is only permitted at consolidation. Where a company has a loan liability or a derivative to act as a hedge of the exchange risk from holding an investment in shares, regulations 3 and 4 of the Disregard Regulations (SI 20043256) would typically mean that the exchange gain or loss on the loan or derivative would be disregarded for tax. Potentially an adjustment would be made to any chargeable gain calculation where the shares are subsequently disposed of. For further details of net investment hedging see CFM 62000 onwards. 17.5 Permenent-as-equity debt The following commentary concerns permanent-as-equity loans, for example made by a parent to a subsidiary undertaking, which represent an arms length provision. Where the loan isnt undertaken on at arms length terms, then special rules apply for calculating the amount of exchange gains and losses to be taxed. See CFM38500 for further details. For companies that apply SSAP 20 its possible for permanent as equity loans to be treated as non-monetary items and be carried at historic rates on the balance sheet rather than be retranslated as at each period end. In such cases, the cumulative exchange movement would be reflected in any gain or loss on eventual disposal of the instrument. Tax would typically follow the accounting in this case. Alternatively, its possible that the permanent as equity loan is retranslated at the year end, but with exchange movements recognised through reserves. This might arise in respect of a standalone loan investment, or it may arise where the company has applied the cover method in respect of borrowings or a currency contract matching the loan investment. S328 and S606 CTA 2009 ensure that exchange movements taken to reserves arent immediately brought into account. The cumulative exchange gain or loss would typically be brought into account when the loan investment is subsequently disposed of. In both cases, accounting for such exchange differences is only possible where companies have adopted SSAP 20 (and not FRS 23) and isnt permitted for companies applying FRS 102. As a result, under FRS 102 such instruments will need to be retranslated at the year end, with exchange movements being recognised in profit or loss. In most cases such amounts will be brought into account for tax. There is a specific rule to deal with cases where a loan asset or derivative contract matches the companys own share capital see CFM62850 for further details. In addition, in December 2014 the Disregard Regulations were extended so to exclude exchange movements on certain instruments that were previously accounted for as permanent as equity debt under SSAP20. These exchange amounts are disregarded and brought back into account on disposal of the loan instrument (in line with the treatment under the old accounting). Transitional adjustments may arise where the debt was not previously retranslated at the year end, although the amendment to the Disregard Regulations may also apply to this transitional amount. See Part B of this paper for commentary on this. 18. Liabilities and Equity Accounts prepared in accordance with Old UK GAAP will apply the presentation and disclosure requirements of FRS 25 in respect of financial instruments and in particular liabilities and equity. FRS 102 contains comparable requirements in Section 22, Liabilities and Equity. Consequently on transition from Old UK GAAP to FRS 102 no changes are expected in respect of the classification or presentation of liabilities and equity that currently fall within the scope of FRS 25. However, while the classification and presentation may not change the subsequent measurement of such items may change on adoption of FRS 102. For example the accounting on issue of a compound financial instrument is comparable across Old UK GAAP (FRS 25) and FRS 102 (section 22). In all cases the issuer will be required to account for the debt and the equity components separately (see CFM21260 ). However, the issuer of such an instrument will need to consider the measurement requirements of Section 11 and 12 (or IAS 39) in respect of subsequent measurement of the debt component. Guidance on the taxation of hybrid and compound instruments in both issuer and holder is available in the HMRC Corporate Finance Manual. In particular, see: CFM37600 (Bifurcated instruments under the loan relationship rules) CFM50410. CFM50420. CFM50430 and CFM52500 (Bifurcated instruments under the derivative contract rules) CFM55200 (Holder of convertible or share-linked securities) CFM55400 (Issuer of convertible or share-linked securities) For further guidance on the transitional provisions applying to hybrid instruments see Part B of this paper. 19. Specialised activities FRS 102 section 34 includes specific guidance on a number of specialised activities such as service concession arrangements, agriculture and extractive industries. Such specialised activities arent addressed within this paper. PART B - Transitional adjustments (Old UK GAAP to FRS 102) This part of the paper provides a summary of the key accounting and tax considerations that arise on transition from Old UK GAAP to FRS 102. 20. Accounting In accounting terms transition to FRS 102 is addressed in Section 35 of FRS 102. On transition FRS 102 section 35 requires that the balance sheet presented in respect of the accounting transition date: recognises all assets and liabilities whose recognition is required by FRS 102 doesnt recognise assets and liabilities if FRS 102 doesnt permit such recognition reclassifies assets, liabilities and components of equity to ensure presentation is consistent with FRS 102 measures all recognised assets and liabilities in accordance with FRS 102 The transition date, for accounting purposes, is the first day of the earliest accounting period presented in the accounts. For example for entities preparing their accounts at 31 December 2015 the transition date will be 1 January 2014. FRS 102 contains certain transitional exceptions and exemptions to the above requirements. These arent repeated here in detail but cover areas such as business combinations, estimates, intangibles, investment property and service concession arrangements. However, even with such exceptions and exemptions its expected that on transition there may be a significant number of adjustments both to the carrying value of assets and liabilities recognised previously under Old UK GAAP and in terms of newly recognised assets and liabilities. For accounting purposes these adjustments will be made to the assets and liabilities as at the accounting transition date with a corresponding adjustment made directly to the opening PampL reserves. For trading profit Chapter 14 Part 3 CTA 2009 provide that where there is a change from one valid basis on which the profits of a trade are calculated to another valid basis (for example on a change of accounting policy), an adjustment must be calculated to ensure that business receipts will be taxed once and once only and deductions will be given once and once only. For Corporation Tax purposes, adjustments are treated as receipts or deductions in computing the trade profits. Details of the calculation are set out at BIM 34130 . 21. General trading The relevant legislation for companies is in CTA 2009 Chapter 14 Part 3. Section 180(4) reads: (4) A change of accounting policy includes, in particular (a) a change from using UK generally accepted accounting practice to using generally accepted accounting practice with respect to accounts prepared in accordance with international accounting standards, and (b) a change from using generally accepted accounting practice with respect to accounts prepared in accordance with international accounting standards to using UK generally accepted accounting practice. So while it details UK GAAP to IAS and vice versa, the key phrase is that a change of accounting policy includes in particular those 2 cases. While the change from Old UK GAAP to FRS 102 isnt listed its still included within the scope of this provision. For companies with property income sections 261-2 CTA 2009 deal with adjustment income or expenditure where the basis on which the profits are calculated changes. 22. Intangibles The relevant legislation is in CTA 2009 at Part 8, Chapter 15. Where there is a change of accounting policy in drawing up a companys accounts from one period of account to the next, and both those accounts are drawn up in accordance with GAAP in relation to those periods then the provisions of Chapter 15 will apply. No taxable credit or allowable debit is to be brought into account under Chapter 15 to the extent that its already brought into account by section 723 (revaluations), section 725 (reversal of accounting loss) or section 732 (reversal of accounting gain). See section 878 CTA 2009 Change in accounting value When there is a change of accounting policy its possible that there will be a difference between the accounting values recognised at the end of the earlier period and the opening balance in the later period for certain intangible fixed assets. Where such a difference arises and no section 730 election has been made section 872 treats an increase as a taxable credit, and a decrease as an allowable debit, arising at the start of the later accounting period. The amount of the debit or credit is the difference multiplied by the fraction tax written-down valueaccounting value, where both these values are those at the end of the earlier period. Section 872(5) caps the amount of any credit to the net amount of previous debits on the asset less previous credits on the asset. Chapter 15 also contains different rules to deal with a change of policy involving disaggregation or where the asset is subject to a fixed-rate writing down election under section 730. Primacy of other parts of Part 8 Section 878 contains provisions to ensure that where all or part of the difference is brought into account under other sections of Part 8 that part isnt brought into account again. The relevant other paragraphs are section 723 (gain on revaluation CIRD 13050 ), section 725 (reversal of accounting loss CIRD 13090 ) and section 732 (reversal of accounting gain CIRD 12560 ). Section 872 doesnt apply to a chargeable intangible asset in respect of which a fixed rate election has been made under section 720 (see CIRD 12905 ). 23. Financial instruments Transitional adjustments - general Adjustments on loan relationships as a result of changes in accounting policy can arise under 2 separate parts of the regime. Prior period adjustments In cases where a company stays within the same accounting framework, or otherwise doesnt restate its opening figures, the accounts will normally show a prior period adjustment (PPA ) either in reserves or in equity. For loan relationships section 308 ensures that this amount is brought into account for tax purposes where its taken to the statement on total recognised gains and losses (in Old UK GAAP ) or statement of changes in equity (in FRS 101, FRS 102 or IAS ). A transitional adjustment which takes the form of a PPA will also be adjusted for tax purposes by any relevant provision. For example, if the company changes the accounting treatment of a loan to a connected company so that its in future accounted in its accounts on a fair value basis, there will be a PPA reflecting the difference between the carrying value under an accrual method and fair value. However, s349 CTA 2009 requires the profits and losses on the asset continue to be brought into account for tax purposes as if the change to fair value accounting has not been made. Therefore the PPA is in this example ignored. No prior period adjustment In some cases there may be no PPA even though there is a change in accounting measurement for a particular instrument. For example, no PPA will be recognised where there is a change to the overall accounting framework and the opening figures have been restated. This will often be the case where a company adopts IAS. FRS 101 or FRS 102 for the first time. In these cases sections 315 to 319 CTA 2009 will apply. These calculate the transitional adjustment by comparing the opening accounting value in the current accounting period with the closing accounting value for the previous accounting period. Accounting carrying value is defined to mean the carrying value of the asset or liability as shown in the balance sheet of the company subject to adjustments for specific tax provisions which have the effect of changing the carrying value for tax purposes (for example, s349 CTA 2009 for connect party debt). The derivative contract regime has equivalent rules in sections 597 and 613 to 615 CTA 2009. The overall effect in either case is to ensure that no amount should fall out of account as a result of a change in accounting policy. Change of Accounting Practice Regulations In 2004 and 2005, the Government considered various representations about the impact of the transitional rules when a company moves from Old UK GAAP to either IAS or FRS 26. In view of the size of some of the known impacts, and the fact that many of the impacts could not be determined until companies made the calculations after the year end, the Government decided to defer the tax impact of all transitional adjustments. This deferral was given effect in Change of Accounting Practice (COAP ) Regulations (SI 20043271), which have been the subject of subsequent amendments. The COAP Regulations apply to most transitional adjustments arising in respect of loan relationships or derivative contracts from change in accounting practice. As such, the Regulations are applicable to transitions to FRS 101 and FRS 102 in the same way as they applied to transitions to IAS or FRS 26. In most cases, the effect of the Regulations is to spread the transitional adjustment over 10 years, starting with the first period in which the new accounting policy applies. A company has a loan with non-vanilla terms in an unconnected company which is due to be repaid in 5 years. Under Old UK GAAP it measures the loan on a historic cost basis. Under FRS 102 its required to measure the loan at fair value. On transition, the difference between the closing value for the previous period and opening value in the current period is to be brought into account, with the amount spread over a period of ten years. There are certain exclusions from the COAP Regulations. In these cases the COAP Regulations dont apply at all. This is likely to mean that the transitional adjustment will be brought into account in full on transition (ie subject to the normal rules). The main exclusions are for transitional adjustments in respect of: a loan relationship which comes to a natural end in the accounting period that the transition takes place because its repaid or redeemed on the date which is the latest date on which, under its terms, it falls to be repaid or redeemed an embedded derivative that is bifurcated out of a loan asset or liability described in the first bullet a derivative contract which hedges a loan asset or liability described in the first bullet A company has a designated a financial instrument as AFS with maturity in 6 months. Under Old UK GAAP it measures the loan and derivative on an historic cost basis. Under FRS 101 its required to measure the derivative at fair value. On transition, the difference between the closing value for the previous period and opening value in the current period is to be brought into account in full in the current period. The COAP Regulations also include provision for some further cases where transitional adjustments will never be brought into account. These specific issues are explained below, but are intended to ensure that the correct amounts are brought into account overall for loan relationships and derivative contracts. Transitional adjustment - specific issues (1) Convertible loans and asset-linked instruments (pre-2005) There are rules which grandfather the previous tax treatment for most convertible debt and asset-linked instruments issued before the companys first period of account beginning on or after 1 January 2005 (see CFM 37680 to 37710 for further details). The COAP Regulations (reg 3C(2)(a), reg 3C(2)(aa) and reg 3C(2)(f)) require that amounts that arise on transition in respect of such contracts are never brought into account. This ensures that there is continuity of treatment. (2) Embedded derivatives where the host instrument isnt a loan relationship Going forwards under FRS 102 (with the IAS 39 option) embedded derivatives in a contract are typically required to be bifurcated in the accounts. However, where section 616 CTA 2009 applies, the embedded derivative is treated as if it were closely related to the host contract and therefore not separated out. The COAP Regulations (reg 3C(2)(b)) requires that amounts that arise on the transition to FRS 102 on such contracts are never brought into account. This ensures that there is continuity of treatment. (3) Interest rate contracts in a hedging relationship (Reg 9 contracts) Under IAS. FRS 101 and FRS 102, derivative contracts will typically be measured at fair value in the companys accounts. Regulation 9 of the Disregard Regulations deals with interest rate contracts used for hedging. Amounts on such contracts are brought into account on an appropriate accruals basis. In effect, the tax treatment of such contracts under Old UK GAAP continues where regulation 9 of the Disregard Regulations applies. The COAP Regulations (reg 3C(2)(c)) means that no transitional adjustments arising on such contracts are to be brought into account under these Regulations. This ensures that there is continuity of treatment. The amounts will be brought into account under the Disregard Regulations in priority to the COAP Regulations. (4) Currency, commodity and debt contracts in a hedging relationship (Regs 7 or 8 contracts) Under IAS. FRS 101 and FRS 102, derivative contracts will typically be measured at fair value in the companys accounts. Regulations 7 and 8 of the Disregard Regulations deals with currency, commodity and debt contracts used to hedge a forecast transaction or firm commitment. Amounts on such contracts are brought into account under regulation 10. Generally, the effect of these regulations is that the tax treatment of such contracts follows the Old UK GAAP accounting treatment. The Disregard Regulations (regs 7(1) and 8(1)) provide that no transitional adjustments arising on such contracts are to be brought into account these amounts are disregarded. This ensures that there is continuity of treatment the amounts will subsequently be brought into account under the Disregard Regulations in priority to the COAP Regulations. (5) Designated cashflow hedges (Reg 9A contracts) Under IAS. FRS 101 and FRS 102, derivative contracts will typically be measured at fair value in the companys accounts. Under a designated cash flow hedge, the company will recognise certain movements in the fair value through other comprehensive income, and maintained as part of a cash flow hedging reserve. Regulation 9A will apply in respect of designated cash flow hedges, unless the instrument is within regulation 7, 8 or 9 of the Disregard Regulations. The effect of this regulation is to disregard for tax purposes the amounts recognised in the statement of equity (as items of other comprehensive income) until they are recycled to the income statement. The COAP Regulations (reg 3C(2)(e)) exempts the spreading on transition amounts to the extent that they hedge future cashflows. Its aimed at the opening adjustments to the cashflow hedge element of shareholders equity reserves. These amounts will subsequently be recycled through the income statement and so ensures continuity of treatment. (6) Contract rate accounting Under Old UK GAAP where FRS 23 (and FRS 26) doesnt apply, a company can translate a foreign currency amount on a monetary item (typically a money debt or a loan relationship) using the rate implicit in a contract (typically a derivative contract). This isnt permitted under IAS. FRS 101 or FRS 102 which all require the foreign currency amount to be translated using the spot exchange rate. Typically the derivative contract will be required to be recognised separately and measured at fair value. Potentially the company may apply hedge accounting in respect of the hedging relationship in its accounts. Where regulation 9 of the Disregard Regulations applies, any adjustment to the derivative contract is effectively ignored see (3) above. Where this happens, the COAP Regulations (reg 3C(2)(d)) disregards any loan relationship adjustment as well. (7) Reversal of previous exchange gains and losses Very occasionally an issue can arise where transitional adjustments represent the reversal of previous exchange gains and losses, typically where the company treats the loan as an equity instrument. The COAP Regulations (reg 3C(2)(ca) and reg 3C(2)(da)) provide that such transitional adjustments arent to be brought into account to the extent that those previous exchange gains or losses had been disregarded for tax. (8) Permanent as equity debt Under Old UK GAAP where FRS 23 (and FRS 26) doesnt apply, a company can translate permanent as equity debt at its historic cost. This isnt permitted under IAS. FRS 101 or FRS 102 which all require the foreign currency amount to be translated using the spot exchange rate. In certain cases, regulation 12A of the Disregard Regulation can apply to exclude the transitional adjustments on permanent as equity debt. (9) Modification and replacement of distress debt Under Old UK GAAP where FRS 26 doesnt apply, where debt is restructured or have its terms modified, no gain or loss would be recognised in the accounts. In contrast, FRS 102 requires that where modification is considered substantial the original debt instrument will be derecognised and the new instrument recognised at its fair value. In certain cases where the company is in financial distress, the COAP Regulations (reg 3C(2)(g)) exempts the credits arising on transition, together with any debits representing the reversal of these amounts. For further details of the treatment of transitional adjustments for loan relationships and derivative contracts see CFM76000 onwards. Defined, for purposes of this paper only, on page 3 See FRS102 11.7 and 12.3 for comprehensive list Note that where the convertible debt is a compound financial instrument the accounting in the issuer will also be determined by reference to Section 22 of FRS 102 The appendix to UITF Abstract 47 provides some further explanation of these points IAS 39 has a similar requirement for companies that have chosen the IAS 39 option If payment terms are deferred beyond normal credit terms, the cost is determined by reference to the present value of the future payments