The ICAEW has issued an exposure draft updating its 2010 Guidance on the determination of realised profits and losses in the context of distributions under the Companies Act 2006. Comments on the draft guidance are invited by 9 June 2016. The update reflects changes to International Financial Reporting Standards since 2010 and new UK GAAP, principally in the form of FRS 102.
Besides updating references to standards and removing obsolete material, the draft contains a number of proposed changes to guidance. These include:
· additional guidance concerning the definition of a distribution in relation to certain intra-group off-market loans;
· additional guidance on accounting for intra-group off-market loans initially at fair value rather than face value, in accordance with FRS 102;
· simplified guidance on retirement benefit schemes;
· new paragraphs drawing attention to doubts concerning the operation of the special rule in Companies Act 2006 s 843 for defining realised profits in the case of long-term insurance business for accounting years ending on or after 1 January 2016, as a result of the new Solvency II regulatory regime; and
· reorganised guidance on deferred tax, to clarify that a deferred tax credit which results in the recognition of a deferred tax asset will generally be an unrealised profit, because a deferred tax asset does not usually meet the definition of qualifying consideration.
Comments received on the draft guidance will also help to inform the ICAEW’s conclusions on questions of what profits and losses fall to be treated as realised in accordance with ‘generally accepted’ principles. See http://bit.ly/1LkPD4Y.
The ICAEW has issued an exposure draft updating its 2010 Guidance on the determination of realised profits and losses in the context of distributions under the Companies Act 2006. Comments on the draft guidance are invited by 9 June 2016. The update reflects changes to International Financial Reporting Standards since 2010 and new UK GAAP, principally in the form of FRS 102.
Besides updating references to standards and removing obsolete material, the draft contains a number of proposed changes to guidance. These include:
· additional guidance concerning the definition of a distribution in relation to certain intra-group off-market loans;
· additional guidance on accounting for intra-group off-market loans initially at fair value rather than face value, in accordance with FRS 102;
· simplified guidance on retirement benefit schemes;
· new paragraphs drawing attention to doubts concerning the operation of the special rule in Companies Act 2006 s 843 for defining realised profits in the case of long-term insurance business for accounting years ending on or after 1 January 2016, as a result of the new Solvency II regulatory regime; and
· reorganised guidance on deferred tax, to clarify that a deferred tax credit which results in the recognition of a deferred tax asset will generally be an unrealised profit, because a deferred tax asset does not usually meet the definition of qualifying consideration.
Comments received on the draft guidance will also help to inform the ICAEW’s conclusions on questions of what profits and losses fall to be treated as realised in accordance with ‘generally accepted’ principles. See http://bit.ly/1LkPD4Y.
