CFM23099 | New UK GAAP: FRS 105: transition

For those entities applying FRS 105 with an accounting period beginning on or after 1 January 2016.

First-time adoption of New UK GAAP

FRS 105 was effective for accounting periods beginning on or after 1 January 2016.

A micro-entity applying FRS 105 for the first time should recognise all financial assets and liabilities that qualify for recognition, and which have not yet qualified for derecognition. However assets previously recognised and then derecognised under previous GAAP need not be recognised on adopting of FRS 105.

FRS 105, subject to certain exceptions, requires that its recognition and measurement criteria are applied retrospectively, with the opening balance of retained earnings for the earliest presented (for example, with effect from 1 January 2015 for 1 January 2016 first time adopters) and all other comparative amounts adjusted as if the standard had always been in use.

The transitional provisions for FRS 105 must be considered carefully. There are detailed provisions relating to the transition to adopting FRS 105; the information above is only a broad summary.

HMRC has published on line guidance which addresses the key tax implications of transition to FRS 105, which can be found here: https://www.gov.uk/government/publications/accounting-standards-the-uk-tax-implications-of-new-uk-gaap (GOV.UK website).