Specialising in the training of qualified accountants for CPD he has lectured in several countries around the world as well as regular in house courses for large listed companies, SMEs and public sector entities on the subject of International Financial Reporting Standards.

1. FRS 102
The Main Differences from previous Irish Gaap
and the Transition rules
Presenter
Robert Kirk
Professor of Financial Reporting

3. Differences between current Irish Gaap
and FRS 102
• Inclusion of basic concepts and principles (Section 2)
• Marriage of EU Law in Companies Act with IFRSSME need for major
headings in B/S – current/non current and equity
• Need for multi column reporting in profit and loss account for
discontinued operations

5. Differences between current Irish Gaap
and FRS 102
• Inclusion of Statement of Changes in Equity
• Possible option of Statement of Income and Retained
Earnings
• Compulsory Cash Flow Statement
(reconcile to cash and cash equivalents)
(only three headings – operating, investing and financing)
(direct and indirect methods – operating activities)

19. Differences from Irish Gaap
and FRS 102
• Introduction of two options in accounting for grants – accruals and
performance models
• Need to disclose other government assistance
• Introducing a specific section on Revenue which includes construction
contracts
• Inclusion of employee benefits section NOT just retirement benefits

20. Differences from Irish Gaap
and FRS 102
• Implementation of the concept of Functional Currency and
death of the temporal method
• Use of weighted average method only for translating profit and
loss
• Single line for associates after tax in pre tax profit and loss
• Use of effective interest rate model for most financial
instruments

21. Differences from Irish Gaap
and FRS 102
• Deferred tax – timing differences +
• VAT and withholding tax
• Material NOT fundamental errors
• Information about judgments and key sources of estimation uncertainty
• Introduction of two models for agriculture – cost and fair value

22. Differences from Irish Gaap
and FRS 102
• Operating lease disclosure – total commitments NOT annual
• No 90% test for finance leases – more subjective judgment
• Investment property – more fair values – gains and losses through
profit

23. Differences from Irish Gaap
and FRS 102
• Death of merger accounting for business combinations
• More intangibles in business combinations
• Ability to reverse inventory writedowns
• More emphasis on component accounting

24. Differences from Irish Gaap
and FRS 102
• Goodwill – max 10 yr life if no reliable EU
• Impairment writedown - first to goodwill then other assets pro rata
basis and no reversal of goodwill impairment
• New section on hyperinflation
• Need to split hybrid financial instruments into debt and equity

25. Differences from Irish Gaap
and FRS 102
• Service concessions – introduced
• Financial institutions – additional disclosures
• Retirement benefits plans – content
• PBEs - Concessionary loans, non exchange transactions, mergers

26. Topics excluded from the IFRS for SMEs
but under FRS 102 must follow full
standard if adopt
• Operating Segments
• Earnings Per Share
• Interim Financial Reporting

27. First Time Adoption of FRS 102
• Must apply Section 35
• Explicit and Unreserved Statement of Compliance
EXAMPLE – STATEMENT OF COMPLIANCE
The financial statements have been prepared under the historical cost convention as
modified by the revaluation of certain assets. The financial statements of the
company for the year ended 31 December 2015 have been prepared in accordance
with the Financial Reporting Standard applicable in the United Kingdom and Republic
of Ireland (FRS 102) issued by the Financial Reporting Council and endorsed by The
Institute of Chartered Accountants in Ireland. These are the company’s first set of
financial statements prepared in accordance with FRS 102

28. Transition Date - 31 December year end
Comparative
year
1st year of
adoption
Transition
Date
1.1.14 31.12.14 31.12.15
First full FRS
102 accounts

29. Transitional Arrangements
Requirements
• Opening Balance Sheet (i.e. equity) as at 1st January 2014 and
reconciled to UK Gaap (Date of Transition)
• Closing Balance Sheet (i.e. equity) as at 31st December 2014
and reconciled to UK Gaap
• Reconcile profit and loss for year ended 31st December 2014
• Fully into FRS 102 year ended 31st December 2015

30. RECONCILIATIONS at TRANSITION
Four Steps
(i) Recognise assets and/or liabilities previously not recognised – e.g. forward
exchange contracts, holiday pay accrual;
(ii) Derecognise items as assets or liabilities if FRS 102 does not permit their
recognition – e.g. homegrown brand names;
(iii) Restate certain assets and liabilities at a different value – e.g. financial
instruments measured at amortised cost using the effective interest rate,
which may vary from a previously used historical cost, deferred tax under
timing differences + method;
(iv) Reclassify items – e.g. into different groupings within equity (revaluation
reserve on investment property into retained earnings
Adjustments on transition are usually recognised in retained profit (or loss), or where
appropriate another category within capital and reserves.

31. List of Mandatory Exceptions to Retrospective Application of
FRS 102
• Derecognition of
financial assets &
financial liabilities
• Hedge accounting
• Accounting estimates
• Discontinued operations
• Measuring Non
Controlling Interests
FRS 102 prohibits retrospective application of these items.

32. List of Possible Exemptions
• Business combinations
• Share based payment
• Fair value or revaluations at
deemed cost
• Individual or separate financial
statements
• Dormant companies
• Deferred development costs
• Compound financial instruments
• Service concessions
• Extractive Industries
• Arrangements containing a lease
• Decommissioning liabilities in
PP&E
Entities may elect to apply these exemptions.

33. (a) Business combinations including group reconstructions
Business combinations after the transition date must be accounted for under
FRS 102. This includes the treatment and measurement of intangible assets and
NCIs.
The entity may elect not to apply FRS 102 to business combinations before
the date of transition, but if it elects to apply FRS 102 to some transactions
before the transition date, it must apply it to all later business combinations,
but is not required to apply it to earlier ones.
(b) Share based payment transactions
A first-time adopter is not required to Section 26 (Share based payments) to
equity instruments that were granted before the date of transition, or to liabilities
that were settled before the date of transition. However if the first time adopter
has previously followed FRS 20 or IFRS 2, no amendment can be made on
transition.
(c) Fair value as deemed cost
A first-time adopter may elect to measure an item of P,P & E, investment property
or Intangible asset at the date of transition at its fair value and use that fair value
as its deemed cost at the date of transition. This may be of interest to an entity
which has previously revalued property but has not kept the valuations up to
date, and does not wish to keep valuations up to date.

34. (d) Revaluation as deemed cost
On a similar basis to (c) above, a previous revaluation may be used as deemed cost
revaluation may be used as deemed cost.(e) Not used
(f) Individual and separate financial statements
In a parent company accounts investments in subsidiaries, associates and joint
ventures may be carried at cost or valuation. A first time adopter may use previous
GAAP as deemed cost.
(g) Compound financial instruments
Section 22 requires a compound financial instrument to be split into liability and
equity elements. Where the liability component is not outstanding at the date of
transition, a first-time adopter need not separate the elements.
(h) Not used
(i) Service concession arrangements – accounting by operators
No requirement to apply sections 34.12J to 34.16A to service concessions
entered into before the date of transition. Such concession should continue to be
accounted for under previous GAAP.
(j) Extractive industries
Special transitional rules may apply

35. (k) Arrangements containing a lease
May elect to determine whether an arrangement existing at the date of transition contains a
lease on the basis of facts and circumstances existing at that date, rather than when the
arrangement was entered into.
(l) Decommissioning liabilities included in the cost of property, plant and equipment
May elect to measure initial estimate of the costs of dismantling and removing the item and
restoring the site in the cost of an item of property, plant and equipment at the date of
transition to this FRS, rather than on the date(s) when the obligation initially arose.

36. (m) Dormant companies
May elect to retain its accounting policies for measurement until there is any change to the
balances or the company undertakes any new transactions. This ensures that, in general,
the adoption of FRS 102 does not of itself trigger a transaction which needs to be
recorded and therefore causes the company to cease to be dormant. However, where
FRS 102 required the recognition of a new asset or liability, this would need to be
recorded and the company would cease to be dormant.
(n) Deferred development costs as deemed cost
A first-time adopter may use the deferred development costs under SSAP 13 as deemed
cost for the purposes of section 18 of FRS 102.
(o) Borrowing costs
The date of transition may be the date on which capitalisation of borrowing costs
commences.
(p) Lease incentives
Not to apply requirements of section 20.15 where term of lease commenced before date of
transition.

37. (q) Public benefit entity combinations
May elect not to apply paragraphs PBE34.75 to PBE34.86 relating to PBE entity combinations to
combinations that were effected before the date of transition to this FRS. However, if on first-time adoption
a public benefit entity restates any entity combination to comply with this section, it shall restate all later
entity combinations.
(r) Assets and liabilities of subsidiaries, associates or joint ventures
This exemption relates to subsidiaries, joint ventures and associates which become first time adopters later
than the parent entity, and allows them to use date of parent transition for consolidation purposes, but own
date of transition for other requirements of FRS 102.
(s) Designation of previously recognised financial instruments
Permitted to designate, as at the date of transition to this FRS, any financial asset or financial liability at fair
value through profit or loss provided the asset or liability meets the criteria in paragraph 11.14(b) at that
date.
(t) Hedge accounting
Detailed transition rules apply

38. Travelodge under FRS 102

39. Travelodge under FRS 102

40. Travelodge under FRS 102

47. END OF PRESENTATION
Thank you for
your kind
attention
Any questions?