FRS 102: The UK's Main Accounting Standard
FRS 102 is the main accounting standard used by UK companies. Understanding its requirements is essential for preparing compliant financial statements.
**What is FRS 102?**
FRS 102 is the Financial Reporting Standard that applies to most UK entities. It's based on the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) but with modifications for the UK context. Most UK companies are required to use FRS 102 unless they qualify for a simpler standard.
**Who must use FRS 102?**
Companies that don't qualify for the micro-entities regime or the small companies regime must use FRS 102. This includes most medium-sized and large companies. However, companies can choose to use FRS 102 even if they qualify for a simpler standard.
**Key requirements**
FRS 102 requires companies to prepare a statement of comprehensive income, a statement of financial position, a statement of changes in equity, and a cash flow statement. The standard also requires extensive disclosures about accounting policies, judgements, and estimates.
**Measurement bases**
FRS 102 allows companies to use either the historical cost model or the fair value model for measuring assets and liabilities. Most companies use historical cost, which is generally simpler and more conservative.
**Impairment**
FRS 102 requires companies to assess whether assets have been impaired. If an asset's carrying value exceeds its recoverable amount, the difference must be written off as an impairment loss. This is particularly important for goodwill and intangible assets.
**Provisions**
FRS 102 requires companies to recognise provisions for liabilities that are probable and can be reliably estimated. This includes provisions for restructuring, legal claims, and onerous contracts.
**Transition to FRS 102**
If your company is transitioning to FRS 102 from another standard, there are specific transition requirements. These include restating comparative figures and making certain adjustments to opening balances.
**Learn more:** For professional guidance on this topic, visit [Accounted For Ltd](https://accountedforltd.co.uk/accounting-standards).
Learn more: For professional guidance on this topic, visit Accounted For Ltd