SSAP's & FRS's

System

Has anyone got or found any good notes on these for the FRA exam? :shock:

Thanks

Nickie

System

Re:SSAP's & FRS's

I've got a brief outline here that might be of use.

Chris

System

Re:SSAP's & FRS's

SSAP 4 Accounting for government grants:
Normally, grants are capitalised as deferred income and released to the p&l account to match them with the relevant expenditure.

SSAP 5 Accounting for Value Added Tax:
Turnover is reported net of VAT. Any irrecoverable VAT on the purchase of fixed Assets and other items is included in their cost.

SSAP9 Stocks and long term contracts:
These are to be stated at the lower of cost and net realisable value. Production overheads and other overheads incurred in bringing stock to its present condition and location should be included in the cost.
When the anticipated outcome of a long term contract can be assessed, ‘prudence’ should apply and a portion of the profit should be matched to the p&l account over the life of the contract. Any foreseeable losses should be recognised immediately.

SSAP 13 Accounting for research and development:
Defines various types of research and development expenditure. In certain specific circumstances, development expenditure can be carried over to future periods and released to the p&l account using the matching concept – matched in future revenue. Research expenditure is to be written off in the year in which it is incurred.

SSAP 17 Accounting for post balance sheet events:
Defines ‘adjusting’ and ‘non-adjusting’ post balance sheet events and gives examples of items in each category.

SSAP 19 Accounting for investment properties:
Investment properties defined in the standard are not subjected to depreciation as would other property under FRS 15. They should also disclosed on the Balance sheet at open market value.

SSAP 20 Foreign currency transactions:
Outlines two methods of treatment, temporal and closing rate/net investment. It gives guidance on when each should apply . it relates to individual transactions and consolidation of foreign subsidiaries.

SSAP 21 Accounting for leases and hire purchase transactions:
Defines both finance and operating leases and sets out the accounting treatment for both lessors and lessees.
When assets are leased under finance leases, where the lessee takes on substantial risk and reward of ownership, these must be capitalised and depreciated over their useful life.

SSAP 25 Segmental Reporting:
This requires segmental reporting beyond that required by the companies act 1989. It requires businesses to disclose information by class of business and geographical segment.

FRS 1 Cash flow statement:
Requires medium and large entities to provide a cash flow statement in addition to its other primary statement s, as specified in the ASB statement of principals.

FRS 2 Accounting for subsidiary undertakings:
Includes definitions from the companies Act 1989 relating to parent and subsidiary companies with focus on dominant influence. Parent companies, other than those exempt, must prepare consolidated financial statements.

FRS 3 Reporting financial performance:
The standard introduced the most comprehensive and complex profit and loss statement of total recognised gains and losses, a primary statement ranking alongside the p&l account, balance sheet and cash flow statement.
It comprises a layered format showing results relating to continuing and discontinued operations and includes definitions of exceptional items, extraordinary items and prior period adjustments.

FRS 4 Capital instruments:
Defines capital instruments as ‘…instruments that are issued by reporting entities as means of raising finance , including shares, debentures , loans and debt instruments, options and warrants that give the holder the right to subscribe for or obtain capital instruments.

FRS 5 Reporting the substance of transactions
Regulates the presentation of complex transactions in financial statements. It requires that transactions are dealt with in accordance with their commercial substance rather than their technical legal form.

FRS 6 Acquisitions and mergers
Merger accounting applies if there is to be a genuine pooling of interests. Acquisitions accounting applies if there is a clearly acquired company. It involves the determination of goodwill on acquisition using fair values on the cost of acquisition (purchase price, assets acquired).

FRS 7 Fair values in acquisition accounting
When one entity acquires another, the standard regulates the allocation of far values. It states ‘Fair values should be based on the value at which an asset or liability could be exchanged in an arms length transaction.’ FRS 7 needs to be considered along side FRS 6.

FRS 8 Related party discloses
Ensures that financial statements contain the disclosures necessary to identify related parties and material transactions with them. It requires disclosure of all material related party transactions, and the name of the party controlling the reporting entity.

FRS 9 Associates and joint ventures:
Defines ‘participating interest’ and classifies associates. The AAT’s guidance states that accounting for joint ventures is not assessed.

FRS 10 Goodwill and intangible assets:
This was the result of lengthy debate. It states that purchased goodwill and intangibles should be capitalised and amortised over their useful economic life. There is a presumption that this does not normally exceed 20 years. It recommends an annual impairment review where an indefinite useful life is assumed.

FRS 11 Impairment of fixed assets and goodwill:
Such a review is based on a comparison of the carrying value of an asset (book value) with its recoverable amount. Impairment loss must be recognised in the p&l account.

FRS 12 Provisions, contingent liabilities and contingent assets:
Identifies these concepts, which represent uncertainties that may have an effect on future financial statements. Provisions must be recognised; contingent liabilities and contingent assets need not be recognised in statement but must be disclosed by a note.

FRS 14 Earnings per share
This replaced SSAP 13 and resembles IAS 33. it specifies the main method of calculating EPS as the ‘basic method’ and states that EPS is disclosed as a note to the accounts in the published statements of public companies.

FRS 15 Tangible fixed assets
The result of lengthy debate and consultation, this represents a comprehensive Standard on fixed assets. It covers concepts such as measurement valuation and depreciation issues.

FRS 16 Current Tax
Says that the current tax, the estimated tax liability on profits in a given period, are recognised in the p&l account.

FRS 17 Retirement benefits
Aims to ensure that the financial statements reflect the assets and liabilities of an employer’s retirement benefit obligation. Operating costs are recognised in the period in which benefits are paid; changes in the value of assets and liabilities are recognised in the accounting period in which the change occurs.

FRS 18 Accounting polices – replaced ssap 2
It defines accounting polices as ‘principles, bases, conventions, rules and practises applied by an entity that specify how the effects of transactions and other events are to be reflected in its financial statements…’ it cover such concepts as relevance, reliability, comparability and understandably.

FRS 19 Deferred tax
Defines deferred tax as ‘estimated future tax consequences of transactions and events recognised in financial statements of current and previous periods.

System

Re:SSAP's & FRS's

Financial statements are prepared presuming that four fundamental accounting concepts apply:
Going concern
Accruals
Consistency
Prudence

System

Re:SSAP's & FRS's

are you serious, do we need to know all of those SSAPs and FRSs you have listed for Intermediate? my book i have used all year for studying shows just 5 or 6

System

Re:SSAP's & FRS's

All you need to know are FRS 15 & 18, SSAP 5,9 & 21

Chris