Where do I post a Fair Value adjustment for FRS102?

Article ID

ias-12396

Article Name

Created Date

21st March 2017

Product

IRIS Accounts Production

Problem

FRS102 requires fair value adjustments on investment properties and some financial instruments to be recognised in the profit and loss account (income statement). These could be included as part of operating profit, for example for an investment property company or it may be more appropriate to show such gains/losses after operating profit along with to investment income and similar items. Such fair value adjustments could be included within an income/expense heading such as other operating income/administrative expenses or shown separately on the face of the profit and loss account. Note: The revised Accounting Directive has “including value adjustments” in a number of the format expense headings, as well as a separate heading for fair value adjustments (although these amendments have not been made in the UK formats).

Resolution

Although previous versions of IRIS allowed fair value adjustments to be recognised in the profit and loss account simply by using an existing account within the relevant format heading, dedicated accounts have now been made available on v17.1 (“Gain/Loss on revaluation of fixed assets”). Accounts have been provided within each expense heading as well as within other operating income, in addition accounts 107 and 410 have been provided which will allow the gain/loss to be shown separately on the face of the profit and loss account (income statement) within or below operating profit respectively. Note: Each account includes sub accounts 1-4 to allow a breakdown per asset type if required. Where postings do not exist to the main account 107 or 410, but exist within the multiple sub-account codes (1 to 4) the description of the new line item should be taken from the accounts/extended description on nominal code 107 or 410. Where postings do not exist to the main account 107 or 410 but only exist within 1 sub-account (either /1, 2, 3 or 4) the description of the new line should be taken from the accounts/extended description of that sub account. A data screen option is also available under Profit and Loss Account | Options | General to append the expense headings with “including value adjustments” if required.

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