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 67 (22 Jun)
I'm still picking my way through section 16 (investment property) but we're getting there!
16.8-16.9 deal with transfers to/from investment property. 16.9 is patently obvious - transfer items when they meet or cease to meet the definition of investment property (whoever wrote that paragraph better not have felt too self-satisfied with that effort).
Para 16.8 is more interesting. Remember the undue cost or effort opt-out I've been chewing over for the last few entries? Well, it's important to note that whilst applying this opt-out entails transferring the property to the rules of an entirely different section of FRS 102 (section 17), this does not constitute a change of accounting policy, merely one of circumstance. The previous fair value becomes the cost (which is then depreciated) until fair value is readily available once more. So there's no prior period adjustment to process - you simply disclose the change in circumstances and the effect on the accounts.
Speaking of disclosure, FRS 102 does love to strew a few picky disclosures across the accounts whenever it can. And this topic is no exception: there are five separate disclosures as follows:
- Valuation methods and assumptions
- The presence (or lack of) an independent, qualified and experienced valuer
- Restrictions on income, saleability and disposal proceeds of any property
- Contractual obligations to purchase, construct, develop or maintain & repair property
- A reconciliation of the movements - including transfers to/from property, plant & equipment ('PPE').
...not forgetting, of course, any other lease disclosures from section 20.
We've reached the end of section 16 and therefore have finished with investment properties - or have we? Find out in tomorrow's enthralling edition...
P.S. If you missed the last instalment click here