However FRS 102 requires a deferred tax provision to be recognised on investment property that is measured at fair value irrespective of whether the entity is likely to sell the asset and rollover any relief. FRS 19 prohibits the recognition of deferred tax on timing differences when fixed assets are revalued unless there is a commitment to sell that fixed asset. Tax on profit on ordinary activities 8 xxxx xxxx ... Intangible assets 10 xxxx xxxx Tangible assets 11 xxxx xxxx Investments 12 xxxx xxxx xxxx xxxx Current assets Stocks 13 xxxx xxxx ... * FRS 102 has adopted a variety of terminology from IFRS (such as property, plant Both FRS 102 for small companies and the company law changes are mandatory for periods commencing on or after 1 January 2016 (one year later than for FRS 102 itself). Example of a Deferred Tax calculation: 1 April 20X8: Entity XYZ acquires an investment property for £22,000,000. Previously under FRS 19, no deferred tax was recognised on revalued assets unless there was a binding commitment to sell. (vii) Terms defined in the Glossary are in bold type the first time they appear in each section, and sub-section within Section 34. FRS 102 offers several options to establish the value at which intangible assets already recognised at the point of transition to FRS 102 can be brought into the new reporting regime. What will the impact be? The section in FRS 102 on intangible assets, other than goodwill, replaces FRS 10 and SSAP 13. There are no significant differences between Section 21 of FRS 102 and FRS 12. At UHY FDW our dedicated tax team aims to minimise your tax exposures and deliver the best advice for your situation. FRS 102: (a) Permits early adoption of FRS 102, provided that the revised regulations are also early Both FRS 102 and IAS 38 define an intangible asset as an identifiable non-monetary asset without physical substance. capable of being sold separately from the remainder of the business). FRS102 Does deferred tax need to be recognised on intangible assets ,say a customer listing after acquistion? Deferred tax being increased for all property revaluations including investment properties Under FRS 102 deferred tax must now be provided on all revaluations of property. An intangible asset can be shown at the original cost, at fair value as deemed cost or at the most recent revaluation amount before transition, if such a revaluation is possible. Under FRS 102 companies now specifically need to account for holiday pay accruals. 2. FRS 10 deals with both goodwill and intangible assets. Deferred Tax Deferred tax is now required to be recognised on the revaluation of assets, including goodwill, intangible assets, and fair value adjustments on acquisition. In the old UK GAAP (FRS 10) intangible assets are defined as ‘Non-financial fixed assets that do not have physical substance but are identifiable and are controlled by the entity through custody or legal rights’.’ FRS 102's definition of an intangible asset is now more in line with IFRS and expands on what is defined as an intangible asset in comparison to the old UK GAAP. Intangible assets. Consider whether work-loads can be reduced given the new requirement for impairment reviews to only be performed once impairment indicators exists. FRS 102, s 29 sets out the recognition, measurement, presentation and disclosure requirements for both current and deferred tax. On transition to FRS 102, you will have to recognise the deferred tax liability in respect of any past rolled over gains. 102 for financial institutions. Under new UK GAAP, businesses are required to recognise deferred tax on temporary differences that have arisen as a result of business combinations (with the usual requirements to consider recoverability before recognising deferred tax assets). FRS 102 requires disclosure of estimates relating to the amount of net reversals of deferred tax assets and liabilities expected to occur during the following accounting period. This will reduce your distributable reserves and could impact on your ability to pay dividends or meet your banking covenants. It will impact the recognition of goodwill, intangible assets, deferred tax, valuation of investment properties and financial instruments, to name just a few. Revalued assets: FRS 102 requires that deferred tax be recognised on all timing di#erences whether arising in pro"t or loss, other comprehensive income, or equity. (viii) This edition of FRS 102 issued in March 2018 updates the edition of FRS 102 issued in FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland is now tightening its grip on small companies that are mandatorily required to prepare their financial statements under the standard for accounting periods starting on or after 1 January 2016 (i.e. A company which previously discounted deferred tax will see an increase in the deferred tax charge, as FRS The FRSSE deals with them in the same section. In the Balance Sheet, a Deferred Tax liability is required to be presented within ‘provisions for liabilities’ and a Deferred Tax asset to be presented within ‘debtors’. This will include revaluations or other fair value adjustments to fixed assets, including investment properties. Under the previous version of FRS 102, intangible assets need to be recognised if they arise from legal or contractual rights, or are separable (i.e. Under Section 18, the residual value is assumed to be zero whereas under old GAAP a residual value could be assigned if it could be measured reliably with the exception of goodwill which was considered to be nil. A comparison of the recognition treatment of intangibles and goodwill between old UK GAAP and FRS 102, including the potential tax impact of the new standard. Investment property revaluations require deferred tax; Under old UK GAAP, deferred tax was only provided on revaluations of investment property and investments where there was a binding commitment to sell the asset at the year end. That all changes under FRS 102 as deferred tax is automatically provided for on all revaluation gains. 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