Section 716 | “Recognised” amounts and “GAAP-compliant accounts”

(1)References in this Part to an amount “recognised” in determining a company's profit or loss for a period are to—

(a)an amount recognised in—

(i)the company's profit and loss account, income statement or statement of comprehensive income for that period,

(ii)the company's statement of total recognised gains and losses, statement of recognised income and expense, statement of changes in equity or statement of income and retained earnings for that period, or

(iii)any other statement of items brought into account in calculating the company's profits and losses for that period, and

(b)an amount that would have been so recognised if such an account or statement had been drawn up for that period in accordance with generally accepted accounting practice.

(2)An amount that in accordance with generally accepted accounting practice is shown as a prior period adjustment in any such statement as is mentioned in subsection (1) must be brought into account for the purposes of this Part in calculating the company's profits and losses for the period to which the statement relates.

(3)Subsection (2) does not apply to an amount recognised for accounting purposes by way of correction of a fundamental error.

(4)In this Part “GAAP-compliant accounts” means accounts drawn up in accordance with generally accepted accounting practice.

(5)In the case of a company that is a member of a group, see also section 718.