Route 102 – One man’s year-long journey……Day 37

  • By Jeremy Williams
  • 11/03/2015

To mark this momentous year for UK GAAP, I'm embarking on a mission to work my way through FRS 102, reading a portion on each working day of 2015 and writing a short blog entry on my thoughts and musings (be they few or many).

Day 37 (11 Mar)

The beginning of section 12 is similar to section 11 in that there is a reminder of the alternative options for recognition and measurement of financial instruments (either FRS 102, IAS 39 or IFRS 9) and notes on what is scoped out of the section. Important among these exclusions are forward contracts for selling off businesses at a future acquisition date - this can occur to seal a deal subject to the necessary administrative procedures to complete the transaction, and normal delays of this nature are acceptable.

Note also para 12.4. Contracts to buy or sell non-financial items are not normally covered by section 12 because they aren't in essence financial instruments. However, if the contract specifies terms that you wouldn't expect in such a contract, and these terms expose either side to potential loss beyond the normal perils of exchange rate movements and bad debts, then the contract is included. So a contract whose price is contingent on seemingly unrelated events (such as movements in interest rates, the price of indexed commodities etc.) may still require full section 12 accounting.

It'll be a brief post tomorrow as I travel from Leeds to Haydock to lecture all day (if you're going to be there, it'll be a fabulous experience!)

P.S. If you missed the last instalment please click here.

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