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Todays Berita Pasar Saham Analisa amp Real-Time After Hours Berita Pra-Market Flash Kutipan Kutipan Bagan Interaktif Setelan Bawaan Harap diperhatikan bahwa begitu Anda membuat pilihan Anda, ini akan berlaku untuk semua kunjungan masa depan ke NASDAQ. Jika, sewaktu-waktu, Anda tertarik untuk kembali ke setelan default kami, pilih Setelan Default di atas. Jika Anda memiliki pertanyaan atau mengalami masalah dalam mengubah pengaturan default Anda, silahkan email isfeedbacknasdaq. Konfirmasikan pilihan Anda: Anda telah memilih untuk mengubah pengaturan default untuk Pencarian Kutipan. Ini sekarang akan menjadi halaman target default Anda kecuali jika Anda mengubah konfigurasi Anda lagi, atau Anda menghapus cookies Anda. Yakin ingin mengubah setelan Anda Kami mohon untuk meminta Harap nonaktifkan pemblokir iklan Anda (atau perbarui setelan Anda untuk memastikan javascript dan cookie diaktifkan), sehingga kami dapat terus memberi Anda berita pasar tingkat pertama Dan data yang Anda harapkan dari kami. Apa Denda Pajak untuk Menjual Saham Bila Anda menjual saham untuk keuntungan, berikut cara menentukan pajak capital gain Anda. Jika Anda menjual saham lebih dari yang Anda bayarkan sebelumnya, Anda mungkin harus membayar pajak atas keuntungan Anda, yang dianggap sebagai bentuk pendapatan di mata IRS. Secara khusus, keuntungan yang dihasilkan dari penjualan saham dikenal sebagai capital gain dan memiliki implikasi pajak unik mereka sendiri. Heres apa yang perlu Anda ketahui tentang menjual saham dan pajak yang mungkin harus Anda bayar. Bagaimana menghitung keuntungan Anda Bila Anda menjual saham, Anda hanya bertanggung jawab untuk membayar pajak atas keuntungan - bukan jumlah keseluruhan penjualan. Untuk menentukan keuntungan Anda, Anda perlu mengurangi basis biaya Anda (juga dikenal sebagai basis pajak), yang terdiri dari jumlah yang Anda bayarkan untuk membeli saham di tempat pertama ditambah komisi yang Anda bayarkan untuk membeli dan menjual saham. Setelah Anda menentukan keuntungan Anda, pajak yang harus Anda bayar tergantung pada tarif pajak marjinal Anda (pajak braket) dan lamanya Anda memegang saham. Keuntungan jangka pendek dikenai pajak seperti pendapatan Jika Anda memegang saham Anda selama satu tahun atau kurang, maka akan dikenakan pajak sebagai keuntungan modal jangka pendek. Ini sangat mudah untuk menentukan: Tingkat pajak capital gain jangka pendek sama dengan tarif pajak marjinal Anda, atau braket pajak. Tarif pajak marjinal Anda tergantung pada penghasilan kena pajak Anda, dan Anda bisa mendapatkan gagasan tentang apa kemungkinan Anda berada di sini. Keuntungan jangka panjang memiliki tingkat yang lebih rendah IRS mendorong investasi jangka panjang dibandingkan dengan perdagangan, karena tingkat pajak capital gain lebih rendah jika Anda memegang saham Anda lebih dari satu tahun. Tarif pajak capital gain yang tepat yang akan Anda bayar didasarkan pada braket pajak Anda, dan bisa berkisar antara 0 sampai 20. Sumber data: IRS (berlaku untuk tahun pajak 2016). Jadi, untuk menghitung kewajiban pajak Anda untuk menjual saham, tentukan keuntungan Anda dan perbanyak dengan persentase yang sesuai dalam tabel. Bagaimana menghindari membayar pajak saat Anda menjual saham Satu-satunya cara (legal) untuk menghindari kewajiban pajak saat Anda menjual saham, selain menggunakan salah satu dari 0 rongga keuntungan modal jangka panjang, adalah membeli saham dengan pajak tangguhan atau pajak -akun gratis. Akun yang ditangguhkan pajak adalah akun investasi seperti IRA 401 (k), 403 (b), atau tradisional, hanya untuk memberi beberapa contoh. Dalam akun ini, kontribusi Anda dapat dikurangkan dari pajak, namun penarikan yang memenuhi syarat biasanya akan dihitung sebagai pendapatan. Sementara itu, akun Roth bebas pajak, Anda tidak dapat memperoleh potongan pajak untuk kontribusi, namun semua penarikan yang memenuhi syarat tidak akan dihitung sebagai pendapatan dan oleh karena itu tidak akan dikenai pajak. Dengan semua akun ini, Anda tidak akan bertanggung jawab untuk membayar pajak atas keuntungan modal, atau dividen dalam hal ini, asalkan Anda menyimpan uang di akun. Kekurangannya adalah bahwa ini adalah rekening pensiun, dan biasanya Anda harus meninggalkan uang Anda sendiri sampai Anda berusia 59-12 tahun, namun ada pengecualian. Jika Anda tertarik pada opsi investasi yang diuntungkan oleh pajak, berikut adalah beberapa artikel mendalam tentang akun IRA dan 401 (k) untuk membantu Anda menentukan cara terbaik untuk menyimpan dan berinvestasi untuk masa depan Anda. Untuk membandingkan fitur akun investasi standar dan rekening pensiun yang ditawarkan oleh broker yang berbeda, kunjungi alat broker online kami. Artikel ini adalah bagian dari The Motley Fools Knowledge Center, yang dibuat berdasarkan kebijaksanaan yang dikumpulkan dari komunitas investor yang fantastis. Bersahabatlah untuk mendengar pertanyaan, pemikiran, dan pendapat Anda di Knowledge Center pada umumnya atau halaman ini pada khususnya. Masukan Anda akan membantu kami membantu dunia berinvestasi, lebih baik Email kami di knowledgecenterfool. Terima kasih - dan Bodoh dalam Mencoba layanan buletin Foolish kami gratis selama 30 hari. Kami Orang bodoh mungkin tidak semua memiliki pendapat yang sama, tapi kami semua percaya bahwa dengan mempertimbangkan berbagai wawasan membuat kami menjadi investor yang lebih baik. The Motley Fool memiliki kebijakan pengungkapan. ERS 102 makalah umum - Implikasi Pajak Perusahaan Pendahuluan Tujuan makalah ikhtisar ini (selanjutnya disebut kertas) adalah untuk membantu perusahaan yang berpikir untuk memilih atau telah memilih untuk menerapkan FRS 102. Secara khusus, itu Memberikan ikhtisar tentang perubahan akuntansi utama dan pertimbangan pajak utama yang timbul bagi perusahaan-perusahaan yang beralih dari GAAP Inggris ke FRS 102. Makalah ini sama-sama relevan dengan perusahaan kecil yang memilih untuk menerapkan Bagian 1A dari FRS 102. Bagian 1A menyediakan Untuk modifikasi tertentu terhadap persyaratan penuh untuk perusahaan kecil, dan khususnya memberikan pengurangan pengungkapan dan persyaratan presentasi. Untuk memudahkan referensi komentar dalam makalah ini yang mengacu pada FRS 102 juga akan berlaku untuk perusahaan yang menerapkan Bagian 1A dari FRS 102 kecuali dinyatakan lain dalam bagian kertas tersebut. Bagian utama dari makalah ini dibagi menjadi 2 bagian: Bagian A dari makalah ini memberikan perbandingan antara perbedaan akuntansi dan pajak yang timbul antara GAAP Inggris Kuno dan FRS 102 Bagian B dari makalah ini memberikan ringkasan pertimbangan akuntansi dan pajak utama. Yang timbul saat beralih dari GAAP Inggris ke FRS 102 Makalah ini berkonsentrasi pada posisi Pajak Perusahaan. Ini juga dapat membantu individu (dan entitas lainnya) yang bertanggung jawab terhadap pajak penghasilan karena banyak masalah akuntansi dan pajak akan serupa. Namun, ada perbedaan yang signifikan antara 2 rezim pajak yang tidak tercermin dalam makalah ini. Secara khusus, ada peraturan khusus untuk hubungan pinjaman, kontrak derivatif dan aset tetap tidak berwujud yang hanya berlaku untuk tujuan Pajak Perusahaan. Bagi perusahaan yang beralih dari GAAP Inggris ke FRS 101 sebuah kertas terpisah yang memberikan gambaran umum mengenai pertimbangan akuntansi dan pajak utama tersedia. Makalah ini mencerminkan pemikiran saat HM Revenue and Customs (HMRC) dan berdasarkan undang-undang yang berlaku sebagai tanggal publikasi. Yang dimaksudkan agar makalah ini akan diperbarui karena tersedia informasi lebih lanjut dan standar akuntansi baru dan undang-undang perpajakan berkembang. Komentar yang diberikan di atas kertas bersifat umum. Perusahaan tidak boleh bergantung pada komentar secara terpisah dan tidak dimaksudkan sebagai pengganti untuk mengacu pada standar akuntansi dan hukum pajak. Mengubah basis di mana akun disiapkan adalah area yang kompleks dan perusahaan mungkin ingin mempertimbangkan untuk mendiskusikan implikasi transisi dengan penasihatnya dan jika berkonsultasi dengan panduan terperinci dalam manual HMRC. Ini tetap menjadi tanggung jawab entitas atau individu untuk memastikan bahwa ia menyiapkan akun sesuai dengan GAAP yang relevan dan mengajukan penilaian sendiri sesuai dengan undang-undang pajak Inggris. Perhatikan bahwa di mana HMRC menganggap bahwa ada, atau mungkin saja, penghindaran pajak, analisis sebagaimana disajikan tidak perlu diterapkan. Versi yang diperbarui Makalah ini adalah pemutakhiran dari makalah sebelumnya yang diterbitkan pada bulan Januari 2014 dan Oktober 2015. Perubahan utama dari makalah aslinya adalah: komentar tambahan sehubungan dengan pinjaman tanpa bunga diperbaharui yang diperbaharui berdasarkan penerapan Peraturan dan Perubahan yang Disarankan Peraturan Praktikum Akuntansi, yang mencerminkan perubahan yang dibuat pada instrumen undang-undang ini pada bulan Desember 2014 komentar akuntansi diperbarui untuk mencerminkan amandemen terhadap FRS 102 yang dikeluarkan pada bulan Agustus 2014 dan Juli 2015 jika berlaku, hal itu telah diperbaharui untuk setiap komentar yang spesifik untuk bagian 1A dari FRS 102 It doesnt Mencerminkan: perubahan kewajiban kewajiban FRS 102 (Februari 2015) FRS 104 Pelaporan Keuangan Interim mengusulkan perubahan pada peraturan pajak, misalnya perubahan pada hubungan pinjaman dan peraturan kontrak derivatif dan perubahan pada undang-undang tak berwujud yang termasuk dalam Undang-Undang Keuangan (No.2) 2015 Latar belakang Ringkasan perubahan pada standar akuntansi Saat ini ada suite Standar akuntansi di Inggris. Dengan tunduk pada pembatasan tertentu yang dirinci dalam standar masing-masing, perusahaan dapat memilih atau mungkin diminta untuk menyiapkan akun mereka di bawah salah satu dari yang berikut: Uni Eropa mendukung IFRS IAS. Akun tersebut disiapkan sesuai dengan Standar Akuntansi Internasional dalam pengertian s395 dari Companies Act - selanjutnya IAS untuk tujuan makalah ini adalah GAAP UK yang baru. FRS 100, FRS 101 dan FRS 102. Entitas yang menerapkan GAAP Inggris Baru akan, dalam kerangka FRS 100, menerapkan salah satu dari berikut ini: FRS 101 secara efektif merupakan persyaratan pengakuan dan pengukuran IAS yang tunduk pada beberapa penyesuaian untuk memastikan keselarasan dengan Perusahaan Inggris Bertindak dan juga mengurangi persyaratan pengungkapan FRS 102 adalah rangkaian persyaratan akuntansi baru yang selaras, namun tidak sama dengan, Seksi IFRS 1A dari FRS 102, tersedia untuk perusahaan kecil, disesuaikan dengan FRS 102 namun dengan pengungkapan dan presentasi dikurangi Persyaratan FRS 105 didasarkan pada persyaratan pengakuan dan pengukuran FRS102, dengan beberapa penyederhanaan akuntansi dan pengurangan pengungkapan untuk entitas mikro yang memenuhi syarat Selanjutnya, GAAP Inggris Baru untuk tujuan makalah ini: GAAP Inggris Kuno. Secara substantif, prosedur sediaan FRS s, SSAP, UITF dan relevan diterima dan diterapkan sebelum diperkenalkannya GAAP Inggris Baru - untuk tujuan makalah ini, ini digambarkan sebagai GAAP Inggris Kuno - untuk menghindari keraguan makalah ini meliputi FRS 26 (Dan standar terkait) dalam arti GAAP Inggris Kuno kecuali dinyatakan lain FRSSE. Standar Pelaporan Keuangan untuk Entitas yang Lebih Kecil - perusahaan yang memenuhi kriteria kelayakan dapat menyiapkan dan mengajukan akun yang disingkat entitas mikro: perusahaan yang memenuhi kriteria kelayakan dapat menyiapkan dan mengajukan akun ringkasan, yang berlaku untuk periode yang dimulai pada atau setelah 1 Januari 2016 persyaratan ini Terkandung dalam FRS 105 Untuk periode yang dimulai pada atau setelah tanggal 1 Januari 2015, perusahaan menengah dan besar Inggris tidak diperbolehkan untuk menyiapkan akun mereka sesuai dengan GAAP Inggris Kuno. Sebagai gantinya, entitas semacam itu yang menerapkan GAAP Inggris Kuno perlu beralih dari GAAP Inggris ke salah satu alternatifnya. Yang diharapkan bahwa bagi banyak perusahaan yang saat ini menerapkan GAAP Inggris Lama, mereka akan beralih ke salah satu dari FRS 101 atau FRS 102. Untuk periode yang dimulai pada atau setelah 1 Januari 2016 perusahaan kecil tidak diizinkan untuk menyiapkan akun mereka sesuai dengan FRSSE. Sebagai gantinya, perusahaan semacam itu perlu beralih ke salah satu alternatif GAAP Baru di Inggris. Yang diharapkan bahwa bagi banyak entitas yang saat ini menerapkan FRSSE mereka akan beralih ke Bagian 1A dari FRS 102. Transisi ke GAAP Inggris Baru akan berdampak pada akun dalam 2 cara utama: aset dan kewajiban pada tanggal transisi akuntansi akan diidentifikasi, diakui dan diukur dalam Sesuai dengan persyaratan standar baru setelah itu, keuntungan dan kerugian akan dikenali sesuai dengan standar baru - ini mungkin berbeda dari keuntungan dan kerugian yang telah dilaporkan bahwa GAAP Inggris Lama atau FRSSE telah ditahan Interaksi perubahan ini dengan pajak Undang-undang pajak untuk perusahaan mensyaratkan bahwa keuntungan perdagangan dihitung sesuai dengan praktik akuntansi yang berlaku umum, tergantung pada penyesuaian yang dipersyaratkan atau disahkan oleh undang-undang dalam menghitung laba untuk tujuan Pajak Perusahaan (bagian 46 Undang-Undang Pajak Perusahaan 2009). Aturan serupa ada di bagian lain dari peraturan pajak. Praktik akuntansi yang berlaku umum untuk tujuan Pajak Perusahaan didefinisikan pada bagian 1127 Undang-Undang Pajak Perusahaan tahun 2010 dan adalah: Inggris Umumnya berlaku praktik akuntansi praktik akuntansi yang berlaku umum sehubungan dengan akun perusahaan Inggris (selain akun IAS) yang dimaksudkan untuk memberikan hak dan Fair view Sehubungan dengan perusahaan yang menyiapkan akun IAS berarti praktik akuntansi yang berlaku umum sehubungan dengan akun IAS Seperti disebutkan di atas, perlakuan Pajak Perusahaan untuk perusahaan sangat bergantung pada perlakuan akuntansi yang diterapkan di akun perusahaan. Dengan diperkenalkannya IAS pada tahun 2004 2005, sejumlah perubahan dilakukan terhadap undang-undang perpajakan untuk menangani masalah tertentu yang timbul bagi perusahaan yang beralih ke IAS di akun entitas mereka. Dalam banyak kasus, efek dari peraturan ini adalah untuk memberikan perlakuan pajak yang secara luas setara dengan perusahaan yang terus menggunakan GAAP Inggris sebelumnya. Perubahan yang dilakukan pada undang-undang pajak arent umumnya terbatas pada perusahaan yang memiliki akun IAS. Jadi peraturan juga berlaku untuk perusahaan yang memiliki, misalnya mengadopsi FRS 26 sehingga kontrak derivatif bernilai wajar. Aturan tersebut juga cenderung relevan bagi perusahaan yang mengadopsi FRS 101, FRS 102 atau Section 1A dari FRS 102 dimana mereka menghadapi masalah yang sama dengan yang dihadapi oleh perusahaan yang mengadopsi IAS. Perusahaan yang tidak dimasukkan ke Inggris Mungkin bagi perusahaan yang tergabung di luar Inggris untuk tinggal di Inggris. Selain itu, undang-undang pajak dapat meminta pertimbangan penerapan praktik akuntansi yang berlaku umum kepada perusahaan yang tinggal di Inggris (misalnya, Perusahaan Asing Terkendali). Dalam kebanyakan kasus, definisi undang-undang yang sama berlaku untuk praktik akuntansi yang berlaku umum. Dengan demikian, di mana perusahaan menyiapkan akun IAS, ini akan digunakan untuk menghitung keuntungan dan dalam kasus lain, keuntungan akan dihitung berdasarkan GAAP Inggris (seperti yang berlaku untuk perusahaan semacam itu). BAGIAN A Perbandingan antara GAAP Inggris Kuno dan FRS 102 Bagian dari makalah ini memberikan perbandingan antara perbedaan akuntansi dan pajak yang sedang berlangsung yang timbul antara GAAP Inggris Kuno dan FRS 102. 1. Melaporkan kinerja keuangan Akun GAAP Inggris Kuno yang disiapkan sesuai dengan Old UK GAAP diwajibkan untuk menyajikan, antara lain, akun laba rugi (Pampl), neraca dan jika ada pernyataan mengenai total keuntungan dan kerugian yang diakui (STRGL). Format Pampl dan neraca ditentukan oleh undang-undang perusahaan, sementara format STRGL ditetapkan oleh FRS 3. FRS 102 (tidak termasuk Bagian 1A dari FRS 102) Akun yang disiapkan dalam FRS 102 juga diminta untuk menyajikan neraca ( Atau pernyataan posisi keuangan). Bagian 5 dari FRS 102 memberikan opsi pilihan kepada para pembuat kebijakan untuk menyajikan pendapatan komprehensifnya untuk periode tertentu: satu laporan pendapatan komprehensif, dalam hal ini pernyataan menyajikan semua item pendapatan dan biaya yang diakui dalam periode 2 laporan pendapatan Pernyataan dan pernyataan terpisah dari pendapatan komprehensif Pendekatan pernyataan tunggal serupa dengan gabungan PampL dan STRGL sementara pendekatan pernyataan 2 membuat mereka terpisah. Sementara FRS 102 berbeda dengan GAAP Inggris Kuno, perlu dicatat bahwa bagi perusahaan yang menerapkan FRS 102, persyaratan format Undang-undang Perusahaan masih berlaku. FRS 102 juga mensyaratkan bahwa pernyataan perubahan ekuitas disajikan yang menangkap suatu entitas keuntungan atau kerugian untuk suatu periode pelaporan, pendapatan komprehensif lainnya untuk periode tersebut, dampak perubahan dalam kebijakan akuntansi dan koreksi kesalahan material yang diakui pada periode tersebut, dan Jumlah investasi oleh, dan dividen dan distribusi lainnya ke, investor ekuitas selama periode tersebut. Sementara persyaratan format Companies Act tetap dalam banyak kasus, terminologi yang digunakan dalam FRS 102 berbeda dengan GAAP Inggris Kuno. Akibatnya, kemungkinan item tertentu akan dijelaskan secara berbeda dibandingkan dengan sebelumnya dan dari satu entitas ke entitas lainnya. FRS 102 mengizinkan penggunaan judul yang berbeda dengan yang digunakan dalam standar itu sendiri, dan beberapa perusahaan mungkin menyimpan deskripsi GAAP Inggris Lama. Rekonsiliasi pergerakan dana pemegang saham Pernyataan perubahan ekuitas GAAP Inggris lama mencakup pilihan apakah akan menyajikan rekonsiliasi pergerakan dana pemegang saham sebagai pernyataan utama seperti yang dinyatakan sebelumnya, bagian 5 dari FRS 102, mengizinkan entitas untuk menyiapkan satu Pernyataan kinerja daripada pernyataan pendapatan terpisah dan pernyataan terpisah dari pendapatan komprehensif - pernyataan gabungan ini biasanya disebut pernyataan pendapatan komprehensif atau pernyataan tentang keuntungan atau kerugian dan pendapatan komprehensif lainnya dalam beberapa keadaan FRS 102 mengizinkan entitas menghasilkan pernyataan Pendapatan dan laba ditahan sebagai pengganti laporan pendapatan komprehensif dan pernyataan perubahan ekuitas Lampiran 3 FRS 102 memberikan tabel perbandingan terminologi Perusahaan Act dan terminologi FRS 102 Bagian 1A FRS 102 Entitas yang menyiapkan akun mereka menggunakan Bagian 1A Dari FRS 102 hanya perlu menyajikan neraca, keuntungan dan kerugian Nt dan catatan terbatas Mereka tidak diwajibkan untuk menyampaikan pernyataan utama lainnya namun didorong untuk menyajikan laporan pendapatan komprehensif (kadang-kadang disebut sebagai pernyataan dari total keuntungan dan kerugian yang diakui) dan sebuah pernyataan yang menunjukkan perubahan ekuitas. Mereka juga memiliki pilihan untuk menyajikan akun neraca dan laba rugi yang ringkas. Neraca ringkasan hanya mencakup pos utama (aset tidak berwujud, aset berwujud, investasi, saham, debitur, uang tunai, pembayaran di muka, kreditur, ketentuan, akrual, modal saham, saham premium, selisih penilaian kembali, cadangan lain dan cadangan PampL). Tidak ada analisis lebih lanjut dari judul ini yang diperlukan. Akun keuntungan dan kerugian ringkasan dimulai dengan satu angka untuk laba kotor atau rugi dan pendapatan operasional lainnya. Tidak ada pengungkapan terpisah tentang omzet, biaya penjualan dan pendapatan operasional lainnya. Posisi pajak Sementara referensi dan judul yang digunakan dalam FRS 102 selaras dengan yang digunakan dalam IAS, undang-undang pajak telah diperbarui untuk mencakup kedua perangkat terminologi tersebut. Sebuah referensi dalam undang-undang untuk laporan laba rugi, misalnya, akan mengambil makna akuntansi normalnya. Selanjutnya, persyaratan pengungkapan yang dikurangi yang diizinkan oleh Bagian 1A FRS 102 biasanya tidak berpengaruh pada posisi pajak perusahaan. 2. Laporan keuangan konsolidasian gabungan, investasi pada perusahaan asosiasi dan usaha patungan Baik dengan menggunakan GAAP Inggris Lama atau GAAP Inggris Baru relevansi akun konsolidasi dan akuntansi ekuitas sangat terbatas dalam undang-undang pajak Inggris, dan tidak dipikirkan bahwa FRS 102 mewakili perubahan signifikan Yang mengharuskan peninjauan kembali beberapa wilayah hukum pajak Inggris yang berkaitan dengan akun konsolidasi (seperti aspek pengaturan leasing keuangan (Bab 2 Bagian 21 CTA 2010), peraturan aset tetap tak berwujud (Bagian 8 CTA 2009) dan World Wide Aturan Cap Hutang (Bagian 7 dari TIOPA 2010)). Juga tidak biasanya perlakuan terhadap rekan kerja, misalnya, usaha patungan dalam laporan keuangan terpisah memiliki relevansi untuk pajak berdasarkan undang-undang Inggris saat ini. Namun, akun gabungan dapat informatif dan dapat memberikan informasi bermanfaat yang tidak muncul di akun individu. 3. Kebijakan akuntansi, taksiran dan kesalahan Akuntansi atas perubahan kebijakan akuntansi FRS 3, Pelaporan kinerja keuangan, mewajibkan perubahan kebijakan akuntansi diterapkan secara retrospektif dan bahwa efek kumulatif dari penyesuaian periode sebelumnya disajikan di kaki STRGL. Bagian 10 dari FRS 102 mensyaratkan bahwa perubahan dalam kebijakan akuntansi yang dihasilkan dari perubahan persyaratan abstraksi FRS atau FRS dicatat sesuai dengan persyaratan abstraksi FRS atau FRC yang direvisi. Bila standar tidak mengandung persyaratan khusus, perubahan kebijakan, dengan cara yang serupa dengan GAAP Inggris Kuno. Akan diterapkan secara retrospektif sampai tanggal paling awal yang bisa dilakukan seolah-olah kebijakan baru itu selalu diterapkan. Persyaratan untuk menerapkan kebijakan secara retrospektif serupa antara GAAP Inggris Kuno dan FRS 102, namun ada perbedaan dalam bagaimana hal ini disajikan. Seperti disebutkan di atas, berdasarkan GAAP Inggris Kuno. FRS 3 mensyaratkan bahwa efek kumulatif dari penyesuaian periode sebelumnya dipresentasikan di kaki STRGL. Sebaliknya FRS 102 mensyaratkan bahwa perubahan tersebut diakui dalam laporan perubahan ekuitas. Akuntansi atas perubahan estimasi GAAP Inggris lama mengharuskan perubahan estimasi diterapkan secara prospektif. Misalnya, di mana entitas mengubah taksiran masa manfaat berguna dari aset tetap berwujud, hal itu tidak menyesuaikan penyusutan yang diajukan. Sebaliknya depresiasi disesuaikan secara prospektif untuk mencerminkan masa manfaat ekonomis yang direvisi. FRS 102 konsisten dengan GAAP Inggris Kuno dalam hal ini. Akuntansi kesalahan Dimana kesalahan mendasar diidentifikasi FRS 3 mensyaratkan hal ini diperhitungkan dengan menyatakan kembali angka komparatif periode sebelumnya. Kesalahan yang dianggap penting dicatat pada periode identifikasi mereka. Bagian 10 dari FRS 102 mensyaratkan bahwa, sejauh praktis, entitas harus memperbaiki kesalahan material secara retrospektif dalam laporan keuangan pertama yang diberi wewenang untuk diterbitkan setelah ditemukan kesalahan, melalui penyajian kembali angka-angka komparatif sebelumnya. Kesalahan yang dianggap mewakili kesalahan material dicatat pada periode identifikasi. Perawatan pajak Untuk keuntungan perdagangan Bab 14 Bagian 3 CTA 2009 menetapkan bahwa jika ada perubahan dari satu basis yang valid dimana keuntungan suatu perdagangan dihitung ke basis lain yang valid (misalnya pada perubahan kebijakan akuntansi), penyesuaian harus dilakukan. Dihitung untuk memastikan bahwa penerimaan bisnis akan dikenakan pajak sekali dan sekali hanya dan deduksi akan diberikan sekali dan sekali saja. Untuk tujuan Pajak Perusahaan, penyesuaian diperlakukan sebagai kuitansi atau pengurangan dalam menghitung keuntungan perdagangan. Pendekatan tersebut akan terus berlaku untuk penyesuaian periode sebelumnya yang timbul sesuai dengan Bagian 10 FRS 102. Hal di atas berlaku untuk perubahan dari satu basis yang valid ke yang lain. Bila perubahan itu berasal dari basis yang tidak benar (seperti yang mungkin terjadi bila kesalahan material diidentifikasi dalam akun), undang-undang pajak Inggris mewajibkan dasar yang tidak benar untuk dikoreksi untuk tujuan perpajakan dalam periode yang pertama kali terjadi pada periode berikutnya dan juga dikoreksi untuk pajak Tujuan. Apakah pajak dapat dikumpulkan atau pembayaran yang diklaim untuk periode sebelumnya bergantung pada batas waktu untuk membuat atau mengubah penilaian sendiri. Aturan pajak serupa berlaku untuk perubahan dalam kebijakan akuntansi atau kesalahan pada item non-perdagangan, seperti hubungan pinjaman, kontrak derivatif dan aset tidak berwujud. 4. Instrumen Keuangan 4.1 Pendahuluan Dalam istilah akuntansi, instrumen keuangan adalah kontrak yang menimbulkan aset keuangan dari satu entitas dan kewajiban keuangan atau instrumen ekuitas lainnya. Contoh instrumen keuangan umum termasuk kas, debitur perdagangan, kreditur dagang, obligasi, instrumen hutang dan derivatif. Perusahaan yang menerapkan GAAP Inggris Kuno jatuh ke dalam 2 kamp utama yang menerapkan FRS 26 dan yang tidak. Perusahaan yang belum mengadopsi FRS 26 cenderung melihat perubahan terbesar sebagai akibat penerapan FRS 102. Selanjutnya, di bawah FRS 102, sebuah perusahaan secara efektif memiliki 3 opsi untuk akuntansi instrumen keuangan: (i) Bagian 1112 dari FRS 102 (ii) IAS 39 atau (iii) IFRS 9. Ini berarti bahwa ada 6 kemungkinan untuk beralih dari GAAP Inggris ke FRS 102. Bab ini berkonsentrasi pada perusahaan-perusahaan yang saat ini tidak menerapkan FRS 26 karena kemungkinan perusahaan-perusahaan ini akan melihat Perubahan terbesar Makalah ini mencakup baik Bagian 1112 dan opsi IAS 39 di bawah FRS 102. Makalah ini tidak mempertimbangkan interaksi akuntansi dan pajak dimana opsi ketiga, IFRS 9, diadopsi. Bagian dari makalah ini berlaku untuk periode akuntansi yang dimulai sebelum 1 Januari 2016. Untuk periode akuntansi yang dimulai pada atau setelah tanggal 1 Januari 2016 terdapat perubahan dalam hubungan pinjaman dan peraturan kontrak derivatif yang dapat mempengaruhi perlakuan perpajakan. Secara khusus, perlakuan pajak sekarang mengikuti jumlah yang diakui dalam laporan laba rugi. Mengingat bahwa banyak perusahaan Inggris akan mengadopsi FRS 102 untuk pertama kalinya pada tahun 2015, makalah ini belum diperbarui untuk perubahan ini. Perhatikan bahwa makalah ini membahas biaya pinjaman di Bab 14, penerjemahan mata uang asing di Bab 17 dan kewajiban dan ekuitas di Bab 18. 4.2 Persyaratan umum GAAP Inggris Kuno Seperti disebutkan di atas, bagi perusahaan yang menerapkan GAAP Inggris Lama, akuntansi untuk instrumen keuangan dapat dipisahkan Menjadi 2 kamp yang menerapkan FRS 26 dan yang tidak. FRS 26 sesuai dengan IAS 39 dan wajib bagi perusahaan yang memiliki hutang atau ekuitas terdaftar yang tidak menggunakan IAS. Pilihannya untuk semua entitas lain, dan mereka dapat memanfaatkan opsi untuk menggunakan akuntansi nilai wajar yang merupakan bagian dari undang-undang perusahaan Inggris. Bagi perusahaan yang tidak menerapkan FRS 26 tidak ada standar komprehensif yang komprehensif untuk instrumen keuangan di UKAP Inggris Kuno. Sebagai gantinya, perhitungan instrumen keuangan terutama ditentukan oleh persyaratan FRS 4 (penerbit instrumen modal), SSAP 20 (transaksi mata uang asing), FRS 5 (substansi over form, termasuk beberapa masalah penghentian pengakuan). Jika tidak, bagi perusahaan yang tidak menerapkan FRS 26, akuntansi untuk instrumen keuangan sebagian besar didasarkan pada prinsip umum dalam FRS 18, terutama konsep akrual, dan ketentuan hukum perusahaan yang relevan. Undang-undang Perusahaan menetapkan bahwa aset lancar (seperti debitur tunai dan perdagangan) diakui pada pricecost pembelian sedangkan konsep akrual diterapkan dalam menentukan, misalnya, pengakuan dan pengukuran pendapatan bunga pada kreditur. Berbeda dengan GAAP Inggris Lama (di mana FRS 26 tidak digunakan) FRS 102 memberi panduan khusus tentang akuntansi untuk semua instrumen keuangan. Dalam Bagian 11 ini memberikan tiga pilihan akuntansi: penerapan Seksi 11 dan Bagian 12 dari FRS 102 penerapan kriteria pengakuan dan pengukuran penerapan kriteria pengakuan dan pengukuran IAS 39 dari IFRS 9 (dan IAS 39 sebagaimana telah diubah untuk IFRS 9) Bagian 11 dan Bagian 12 pilihan Bagian 11 dan 12 dalam FRS 102 memberikan panduan khusus mengenai akuntansi untuk instrumen keuangan. Bagian 11 membahas instrumen keuangan dasar sementara Bagian 12 mempertimbangkan semua instrumen keuangan lainnya. Sementara bagian 11 dan 12 menangani akuntansi untuk instrumen keuangan, ada beberapa pengecualian untuk cakupannya termasuk kontrak asuransi, investasi pada anak perusahaan, perusahaan asosiasi dan usaha patungan dan sewa. Bagian 12 bagaimanapun berlaku, misalnya untuk semua instrumen keuangan derivatif. Instrumen keuangan dasar adalah yang dianggap memiliki persyaratan langsung - contoh yang diberikan di Bagian 11 meliputi kas, debitur perdagangan, kreditur dagang dan pinjaman bank sederhana dengan persyaratan pelunasan standar. Instrumen tersebut biasanya diakui pada harga transaksi dan diukur berdasarkan biaya perolehan diamortisasi. Hal ini sebagian besar konsisten dengan GAAP Inggris Kuno. Instrumen keuangan lain atau non-dasar mengacu pada semua instrumen keuangan lainnya. Berbeda dengan instrumen keuangan dasar, instrumen keuangan lainnya biasanya diakui dan kemudian diukur pada nilai wajar di Pampl. Khususnya, contoh instrumen yang sekarang akan dipegang pada nilai wajar sesuai dengan Bagian 12 dari FRS 102: semua derivatif (termasuk swap suku bunga, komitmen ke depan untuk membeli komoditas yang dapat dilunasi, dan Opsi dan kontrak berjangka) pinjaman yang berhutang vanili polos dimana, misalnya, jumlah yang dapat dibayarkan dapat bervariasi atau bila suku bunga non-standar digunakan dalam investasi dalam bentuk hutang konversi dimana pengembalian ke pemegangnya dapat berbeda dengan harga saham emiten. Bukan hanya dengan tingkat suku bunga pasar 3 Persyaratan Bagian 12 FRS 102 merupakan perubahan signifikan dari GAAP Inggris Lama (keduanya mana FRS 26 telah dan belum diadopsi). Kemungkinannya bahwa lebih banyak instrumen keuangan akan diminta untuk dinilai adil berdasarkan FRS 102 daripada yang saat ini terjadi di bawah GAAP Inggris Kuno. Pilihan IAS 39 Seperti disebutkan di atas, FRS 102 juga mengizinkan pengguna membuat keputusan kebijakan untuk menerapkan kriteria pengakuan dan pengukuran IAS 39. Meskipun IAS 39 tidak membedakan antara instrumen keuangan dasar dan instrumen lainnya dengan cara yang sama, ia berbagi beberapa kesamaan dengan Bagian 12 dari FRS 102 misalnya dalam kedua kasus, perusahaan biasanya diminta untuk memperhitungkan semua instrumen keuangan secara terpisah sedangkan instrumen sintetis atau komposit relatif umum di bawah GAAP yang lama (di mana FRS 26 tidak digunakan). Berikut adalah karakteristik yang akan menghasilkan instrumen keuangan yang diukur pada nilai wajar berdasarkan IAS 39: aset dan kewajiban yang dimiliki untuk tujuan diperdagangkan atau aset dan kewajiban spekulatif yang ditetapkan pada awalnya oleh perusahaan pada nilai wajar melalui laporan laba rugi semua instrumen derivatif Catatan bahwa berdasarkan opsi IAS 39, instrumen hutang yang ditetapkan sebagai Tersedia untuk Dijual (AFS) akan diukur sebesar nilai wajar dengan keuntungan dan kerugian dari nilai wajar yang diakui secara langsung dalam Pendapatan Komprehensif Lainnya (OCBC) sementara pendapatan bunga, kerugian selisih kurs dan kerugian Terus diakui dalam keuntungan atau kerugian. Sekali lagi ini merupakan perubahan signifikan dari GAAP Inggris Kuno (di mana FRS 26 tidak diterapkan). Perawatan pajak Bagi perusahaan, sebagian besar instrumen keuangan akan jatuh ke dalam hubungan pinjaman (di bawah Bagian 5 CTA 2009), hutang uang non-pinjaman (diperlakukan sebagai hubungan pinjaman di bawah Bab 2 dari Bagian 6 CTA 2009) atau kontrak derivatif (berdasarkan Bagian 7 CTA 2009) . Hukum perpajakan Inggris secara umum menjelaskan bahwa perlakuan akuntansi terhadap jenis instrumen ini diikuti untuk tujuan perpajakan. Makalah ini tidak mencakup instrumen keuangan yang berada di luar kategori ini misalnya, instrumen ekuitas dalam bentuk saham dan jaminan. Aspek tertentu dari perpajakan hubungan pinjaman dan kontrak derivatif adalah bahwa ia berangkat dari prinsip normal hanya melihat akun laba rugi (atau laporan laba rugi). Perundang-undangan memastikan bahwa sebagian besar barang yang dibawa ke cadangan diperhitungkan. Ini termasuk jumlah yang diakui di STRGL berdasarkan GAAP Inggris Kuno dan jumlah yang diakui sebagai item OCI berdasarkan FRS102 atau IAS. Aturan lebih lanjut memastikan bahwa jika keuntungan atau kerugian dari hubungan pinjaman atau kontrak derivatif diakui secara langsung terhadap ekuitas, maka hal ini akan diperhitungkan dengan cara yang sama seperti jika dikenai keuntungan atau kerugian atau melalui cadangan. Akibatnya, di mana akun tersebut mengukur instrumen pada nilai wajar, baik dengan keuntungan menghasilkan keuntungan atau kerugian, atau sebagai item dari pendapatan komprehensif lainnya, pergerakan nilai wajar ini biasanya akan diperhitungkan untuk pajak. Namun ada pengecualian tertentu dimana undang-undang pajak menentukan perlakuan akuntansi tertentu. Contoh yang paling umum adalah di mana ada hubungan pinjaman antara perusahaan yang terhubung. Dalam kasus ini, bagian 349 CTA 2009 mensyaratkan keuntungan yang akan dihitung untuk tujuan perpajakan berdasarkan biaya perolehan diamortisasi. Juga ada aturan khusus yang berhubungan dengan kontrak derivatif yang merupakan bagian dari hubungan lindung nilai (dijelaskan lebih rinci di bawah). Selain itu, berdasarkan opsi IAS 39, aset keuangan diperlakukan sebagai dimiliki hingga jatuh tempo (HTM) ada harapan bahwa aset tersebut dimiliki hingga jatuh tempo. Ini diukur dengan biaya perolehan diamortisasi. Namun, penjualan sejumlah kecil aset semacam itu sebelum jatuh tempo dapat mengakibatkan semua aset HTM menjadi tercemar, sehingga aset tersebut harus dipertanggungjawabkan sebagai AFS. Aturan pajak khusus berlaku dalam skenario ini - lihat CFM 33150 untuk keterangan lebih lanjut. Penyesuaian transisi Bila instrumen keuangan diukur berdasarkan basis yang berbeda di bawah FRS 102 dibandingkan dengan GAAP Inggris Kuno, kemungkinan penyesuaian transisi mengenai adopsi FRS 102 akan muncul. Untuk panduan lebih lanjut mengenai ketentuan transisi yang berlaku untuk instrumen keuangan, lihat Bagian B dari makalah ini. Rincian lebih lanjut mengenai transaksi spesifik yang melibatkan instrumen keuangan dimana persyaratan FRS 102 berbeda dengan persyaratan GAAP Inggris Kuno di bawah ini. 4.3 Debt-equity swap Dimana hutang dipadamkan melalui penerbitan ekuitas entitas, akuntansi yang diterapkan sesuai dengan GAAP Inggris Kuno mungkin berbeda dari yang dipersyaratkan oleh FRS 102. GAAP Inggris Kuno. Dimana FRS 26 belum diadopsi, memungkinkan pilihan kebijakan akuntansi sehubungan dengan pengakuan keuntungan atau kerugian. Dalam situasi tertentu, mungkin tepat untuk menerapkan kebijakan kerugian tanpa kerugian, sehingga nilai ekuitas yang dikeluarkan diperlakukan sama dengan nilai tercatat dari hutang yang diberikan. Namun, perusahaan diizinkan untuk mengadopsi kebijakan untuk mengakui keuntungan atau kerugian dari transaksi tersebut. Dalam kedua pendekatan tersebut, perlu mempertimbangkan interaksi dengan persyaratan hukum perusahaan mengenai jumlah premi saham yang akan dicatat dan persyaratan mengenai keuntungan yang direalisasikan. 4. FRS 102 tidak memberikan panduan khusus mengenai debt-equity swaps. Bagian 11 dari FRS 102 5 mensyaratkan bahwa selisih antara jumlah tercatat kewajiban keuangan yang dipadamkan dan pertimbangan yang dibayarkan diakui dalam laporan laba rugi. Selain itu Bagian 22 mensyaratkan bahwa instrumen ekuitas diakui pada nilai wajar dari kas atau sumber lain yang diterima. Namun, perusahaan perlu mempertimbangkan fakta dan sifat spesifik dari transaksi yang dilakukan. Misalnya, pertimbangan hukum perusahaan mengenai laba yang direalisasikan dan akun premium saham perlu dipertimbangkan dan mungkin berdampak pada perlakuan akuntansi. Perawatan pajak Di bawah prinsip-prinsip umum dari rezim hubungan pinjaman, sejumlah keuntungan yang diakui ke akun laba rugi, atau cadangan, akan diperhitungkan. Namun, bagian 322 CTA 2009 biasanya akan mengecualikan keuntungan yang timbul dimana hutang dilepaskan dengan mempertimbangkan saham biasa. Lihat CFM 33200 dan seterusnya untuk rincian lebih lanjut tentang pengecualian ini. 4.4 Penghapusan hutang restrukturisasi Hutang dapat direstrukturisasi atau dimodifikasi penggunaannya sehingga sesuai dengan FRS 5 dan GAAP Inggris Lama (di mana FRS 26 tidak digunakan), tidak ada keuntungan atau kerugian yang akan diakui dalam akun. Sebaliknya, FRS 102 mensyaratkan bahwa, di mana modifikasi atau restrukturisasi hutang dianggap substansial, instrumen hutang asli akan dihentikan pengakuannya dan instrumen hutang baru yang diakui pada nilai wajarnya. Sejauh nilai wajar instrumen baru tersebut berbeda dengan nilai tercatat dari instrumen hutang asli, keuntungan atau kerugian biasanya akan diakui sebagai item keuntungan atau kerugian. Keuntungan atau kerugian ini harus membalikkan sisa umur instrumen. Perawatan pajak Hubungan pinjaman biasanya akan dikenakan pajak sesuai dengan jumlah yang diakui dalam rekening. Dengan demikian, keuntungan atau kerugian dari rerekognisi penghentian pengakuan biasanya akan diperhitungkan. Perhatikan bahwa pemerintah telah memasukkan dalam Undang-Undang Keuangan (No.2) tahun 2015 yang dibebaskan untuk menutupi hutang yang tertekan, yang akan berlaku dalam kasus-kasus tertentu dimana pinjaman tersebut dimodifikasi atau diganti. The proposal is that the exclusion would apply to modifications and releases from 1 January 2015. Transition On transition Section 35 of FRS 102 provides that financial assets and liabilities derecognised under the previous accounting framework shall not be recognised on adoption of FRS 102. Section 35 also provides that where a financial asset or liability would have been derecognised under FRS 102 but under the companys previous accounting framework hadnt been derecognised a company may, on transition, either (i) derecognise the financial asset or liability on adoption of FRS 102 or (ii) continue to recognise until disposed of or settled. However, no exclusions apply where the derecognition occurs after the accounting transition date for example, after the start of the prior period comparatives. As a result, the company may be required to derecognise recognise the debt. The Change of Accounting Practice Regulations were amended in December 2014 to address this issue in certain instances of distressed debt. For further guidance on the transitional provisions applying to financial instruments see Part B. 4.5 Initial recognition - non-market instruments Old UK GAAP. where FRS 26 isnt applied, typically requires that financial instruments are initially recognised at cost. This cost may or may not equate to the fair value of the financial instrument. In contrast under FRS 102, whether through the application of Section 11 and 12 or through the IAS 39 option, financial instruments are typically measured on initial recognition at (i) transaction price (ii) present value (of there is a financing element) or (iii) at fair value. The transaction price (or cost) will typically, but may not always, equate to the present value fair value of the instrument. Where the transaction cost differs from the present value fair value of the instrument its possible that a day-one gain or loss could arise. For example, this can be an issue with non-interest bearing debts which arent repayable on demand. Tax treatment The loan relationship would normally be taxed in line with the accounts. As such, any day-one gain or loss will typically be brought into account. However, consideration should be given to the facts which led to the transaction price differing from fair value. In particular, there are 2 sets of provisions which may alter this position. Provision 1 Where the loan arises between connected companies, the amounts to be brought into account on the basis of an amortised cost basis of accounting as required by sections 313 and 349 CTA 2009 - in particular this requires the tax treatment to be based on the loan shown in the accounts at cost and adjusted for amortisation and impairments What constitutes cost will depend on the particular facts in question. HMRC would normally accept that this equates to the cost of the loan under Old UK GAAP (where FRS 26 has not been applied), such that in this case the tax treatment under FRS 102 will largely follow the Old UK GAAP position (where FRS 26 has not been applied). See CFM35190 for further details of the rules for taxing loan between connected companies. Provision 2 Secondly, if the loan did not arise as a result of a transaction between persons acting at arms length it may be necessary to apply the transfer pricing rules in Part 4 of TIOPA 2010. Where any tax advantage is already negated by the connected companies then the transfer pricing rules are unlikely to apply See the International Manual for further details of the transfer pricing rules. HMRC has published draft guidance on this issue. Transition Potentially this could result in a transitional adjustment. For further guidance on the transitional provisions applying to financial instruments see Part B of this paper. 4.6 Hedging relationshipssynthetic instuments Old GAAP. where FRS 26 has not been adopted, requires derivatives that are entered into as part of a companys hedging strategy to be accounted for on an historic cost basis equivalent to that used for the underlying asset, liability, position or cash flow. In contrast, both Section 12 of FRS 102 and the IAS 39 option typically require all derivatives to be accounted for separately and to be measured at fair value. Section 12 of FRS 102 and IAS 39 both then provide certain hedge accounting rules. Under both Section 12 of FRS 102 and the IAS 39 option, hedge accounting is only permitted where certain criterion are met. However as part of the amendments made to FRS 102 in July 2014 the criteria was changed making hedge accounting more readily available to entities where its consistent with their risk management processes. The mechanics of hedge accounting, whether applying Section 12 of FRS 102 or under the IAS 39 option are thereafter comparable. Whether applying Section 12 of FRS 102 or under the IAS 39 option, the mechanics for hedge accounting are significantly different to the accounting for synthetic instruments under Old UK GAAP (where FRS 26 isnt applied). Tax treatment Without special rules, hedge relationships would not typically be effective for tax purposes, whether or not they were designated as a hedge for accounting purposes. The Disregard Regulations (SI 2004 3256) were introduced to address this issue. Broadly speaking, where a derivative is part of a hedging relationship the rules operate to restore the Old UK GAAP position (for example, where FRS 26 isnt applied). In particular, there are specific regulations for derivatives dealing with currency, commodities, debt and interest rates. The rules apply in a number of different circumstances and they also contain particular elections that may be made. For periods of account commencing on or after 1 January 2015, the default setting is for the tax treatment of derivative contracts to follow the profit and loss account. Companies have the option of electing into computational provisions in the Disregard Regulations. Previously, companies had the ability to elect out from the Regulations. For companies that already apply fair value accounting in respect of derivatives which potentially fall within the scope of the Disregard Regulations, they will continue with their existing treatment. These company can, if they so wish, change their status in the future on a prospective basis. Companies that will be applying fair value accounting for the first time in a period of account commencing on or after 1 January 2015 will need to decide whether to elect-in to regulations 7, 8 and 9. There are strict deadlines for making these elections. Its also likely that transitional issues could arise in such cases. For further guidance on the transitional provisions applying to financial instruments and the interaction with the Disregard Regulations see Part B of this paper. Further information HMRC has published additional guidance to help companies with hedging instruments making the transition to new accounting standards. This is available at: Corporation Tax: Disregard Regulations for derivative contracts . Further information is available in the Corporate Finance Manual (CFM ) as follows: derivative contracts are explained at CFM13010 onwards hedge accounting is explained at CFM27000 onwards the tax treatment of derivatives is explained at CFM57000 onwards 4.7 Hybrid instrumentsembedded derivatives This paper doesnt address in detail the position of hybrid instruments and the embedded derivatives. This is a complex area and affected companies will need to consider the accounting and tax treatment carefully. In overview, FRS 26 and IAS 39 require companies to separate out (bifurcate) embedded derivatives from host contracts. However, bifurcation isnt typically permitted under Old UK GAAP (where FRS 26 isnt applied) or under Sections 11 12 of FRS 102 (although in both cases the issuer of compound instruments will still separate out the equity component in accordance with FRS 25 or Section 22 respectively). Links to the relevant guidance is set out in chapter 18 (liabilities and equity) of this paper. 4.8 Companies that currently apply FRS 26 The above commentary focuses on companies that dont currently apply FRS 26. Companies that have adopted FRS 26 and choose to apply the IAS 39 option under FRS 102 are likely to see no change in the accounting of financial instruments. For those that choose to apply the Section 11 12 option certain elements wont change but the basicother distinction has the potential to result in significant changes. For example, such companies could see the following differences: as noted above, financial instruments are required to be fair valued under Section 12 for all but basic instruments - loans previously recognised on an amortised cost basis may therefore be measured at fair value in accordance with Section 12 as noted above, Sections 11 and 12 dont permit the bifurcation of embedded derivatives (although the issuer of compound instruments will still separate out the equity component under Section 22) - for example the holder of a hybrid financial instrument is required under FRS 26 to bifurcate the instrument into its host debt and embedded derivative - the host debt is then measured on an amortised cost basis and the embedded derivative at fair value - in contrast FRS 102 Section 12 there is no equivalent requirement to split the instrument for accounting purposes, and the whole instrument would typically be fair valued As such, transition adjustment may arise - see Part B of this paper. 5 Inventoriesstock Section 13 of FRS 102 differs from SSAP 9 insofar as it specifically excludes from its scope WIP in the course of construction contracts (covered in section 23 of FRS 102), agricultural produce and biological assets (covered in section 34 of FRS 102) and financial instruments (section 11 and 12 of FRS 102). For many entities these differences will have no impact on the recognition or measurement of stock. However entities operating in the agriculture sector, for example, may, in accordance with FRS 102, apply either a cost model or a fair value model. The use of the fair value model is likely to represent a significant change in the measurement basis of stock and hence the timing of profitslosses on such stock. For tax purposes there are 2 acceptable valuation bases for stock, either the lower of cost and net realisable value, or mark to market (fair value). If either of these methods are used no ongoing adjustment is required for tax purposes. Where mark to market is used there is no tax law that requires the profits or losses disclosed by the accounts to be adjusted for tax purposes. Note there are particular tax rules, the herd basis, that can be applied to particular farm animals. Guidance on this and the valuation of farming stock is in the Business Income Manual. 6. Investment property Old UK GAAP (SSAP 19) requires an entity to carry investment property at their open market value with movements in value recognised each period in the STRGL unless they represent a permanent diminution in value in which case they are recognised in the PampL. Where investment properties are let to and occupied by another group entity for its own purpose, SSAP 19 contains an exemption which excludes such properties from its scope (hence they would be included as part of fixed assets). FRS 102 requires that investment property is initially recognised at cost 6 and subsequently measured at fair value. However in contrast to SSAP 19, FRS 102 section 16 requires those fair value movements to be recognised in the PampL. In addition FRS 102 section 16 doesnt contain an exemption comparable to that present in SSAP 19 for property let to and occupied by group entities. Hence certain properties treated as fixed assets under Old UK GAAP may now be classified as investment property under Section 16 of FRS 102. Note that FRS 102 section 16 does permit the use of the cost model where the fair value cannot be reliably measured without undue cost or effort. The accounting treatment of investment properties doesnt determine, for tax purposes, whether the property is held as an investment property (giving a capital receipt on disposal) or whether its part of a trading transaction (and so is on revenue account and forms part of the companys trading profits). Assuming the property is held, for tax purposes, as an investment, the income arising on the property is bought into tax as its recognised in the accounts (for example rental income would be bought into tax as recognised in profit or loss). In this case, movements in fair value of investment properties arent taxable. The disposal of the investment properties will typically give rise to a chargeable gain. In certain circumstances a company holding investment property as a lessee under an operating lease may, under section 16 for FRS 102, account for it as an investment property. Where it does so, the property is initially recognised at the lower of its fair value and the present value of the minimum lease payments. The corresponding creditor is accounted for as a finance lease (see Section 20 of FRS 102). Where this happens the tax rules applying to finance leases will apply. 7. Property, plant and equipment Section 17 of FRS 102 and FRS 15 are primarily about Property, plant and equipment (PPE ) or fixed assets to use the Companies Act and FRS 15 terminology. Both standards are broadly consistent in principle. However differences are present in particular Section 17 of FRS 102 requires that major spare parts are included in PPE Section 17 of FRS 102 requires that cost is measured by reference to the present value of all future payments where the asset is acquired under terms beyond normal credit terms Section 17 of FRS 102 doesnt permit the use of Renewals Accounting Section 17 requires that residual values are based on current prices rather than historic prices While such differences for accounting purposes are present, UK tax law departs from the accounting standards by disallowing depreciation and revaluations in respect of capital assets, and instead granting capital allowances (on some assets). Hence accounting changes arent expected to have a significant tax impact. In some cases where revenue expenditure is added to the cost of an asset, tax law follows the accounts by recognising for tax purposes amounts reflected in profit and loss account by way of depreciation charge to the extent that they are a write off of revenue expenditure. In those cases where depreciation under Section 17 of FRS 102 differs from that under FRS 15 (for example, because of revaluation of residual values) tax will follow the amount as per Section 17 of FRS 102. As noted above there is no equivalent to Renewals accounting (FRS 15 paragraph 97-99) under Section 17 of FRS 102 so there may be an adjustment for tax purposes made under the change of basis legislation see part B of this paper. 8. Intangible assets including goodwill Intangible assets and goodwill arising on business combinations The definition of an intangible asset in Old UK GAAP (FRS 10) states that intangible asset are Non-financial fixed assets that dont have physical substance but are identifiable and are controlled by the entity through custody or legal rights. FRS 102 defines an intangible asset (other than goodwill) as an identifiable non-monetary asset without physical substance where identifiable is an asset that is separable or arises from a legal contract or other legal right. This definition is different from that present in Old UK GAAP in so far as the intangible asset need not be separable from the business. Consequently either on transition (where the exemption to retain previous GAAP figures isnt used) or on subsequent business combinations, more intangible assets may be recognised under FRS 102 than would have been recognised under Old UK GAAP . For tax purposes Sections 871-879 of Part 8 CTA 2009 provide a comprehensive set of rules for changes in accounting for intangibles and especially for cases where what is included entirely as goodwill under Old UK GAAP is disaggregated into different types of intangible property with different amortisation rates or impairment factors under FRS 102. Intangible assets and goodwill - Useful Economic Life (UEL ) FRS 10 states that goodwill and intangibles should be amortised over their UEL. It also states that there is a rebuttable presumption that the UEL wont exceed 20 years. FRS 10 does permit the use of an indefinite UEL in which case its not amortised but is instead subject to annual impairment reviews. FRS 102 differs from Old UK GAAP in respect of UEL. Firstly FRS 102 doesnt permit an indefinite life. All intangibles and goodwill are presumed to have a finite life and the period over which they are subject to amortisation should reflect this. Where the useful life of the intangible asset can be reliably estimated this life is used as the UEL. Where a reliable estimate of the UEL cannot be made, FRS 102 states that the UEL must not exceed 5 years (note however, that effective periods commencing on or after 1 January 2016 this is changed to 10 years). In general tax relief is provided on either the amortisationimpairment of goodwill and intangibles recognised in the accounts. Sections 871 to 873 of CTA 2009 ensure that any write up on the transition from Old UK GAAP to FRS 102 will be a taxable credit for Part 8, and section 872 ensures that any such credit is limited to the net amount of relief already given. Any impairment from written up cost will be deductible. Tax relief is unlikely to be affected if an entity has elected for a fixed rate of 4. Note that a fixed rate election must be made within 2 years of the end of the accounting period in which the expenditure was incurred and cannot be reversed. Software costs FRS 10 requires that software costs which are directly attributable to bringing an item of IT into use within the business are recognised as part of tangible fixed assets. Where such costs did not relate to bringing an item of IT into use they would typically have been written off direct to the PampL. In addition UITF 29 provides that, where certain criteria are met, website development costs are recognised as part of tangible fixed assets. FRS 102 doesnt specify how such costs should be treated. Hence the nature of the item should be considered in determining its treatment. Its possible that having considered the nature of the software that its recognised as an intangible asset. For companies where costs on expenditure such as software have been previously written off to profit and loss account and claimed as a deduction in a Case I computation in respect of expenditure on a tangible asset, the following tax consequences will apply in respect of the change of accounting policy. First the adjustment in respect of the change of accounting basis will be taxed under Chapter 14 Part 3 CTA 2009. For example, a positive adjustment is brought into account as a taxable receipt. Second, capitalised expenditure in respect of an intangible asset will be relieved under the rules in Part 8 CTA 2009 as its written down in the accounts (subject to the normal exclusions, including the pre-FA 2002 rule). Guidance on many of these issues is in HMRC s CIRD Manual (in particular see CIRD12300 which address changes in accounting policies for intangible assets within Part 8 CTA 2009). 9. Business combinations Section 19 of FRS 102 is broadly comparable to FRS 6 and FRS 7. However particular differences are present: because of the difference in the definition of an intangible asset an acquisition under FRS 102 may result in a different balancing figure being assigned to goodwill on a business combination there is a change in the measurement of the consideration given where that consideration is contingent the look back period in which provisional fair values can be amended is different (FRS 102 look back period is 12 months since acquisition date) a change in step acquisitions in some circumstances FRS 6 and 7 of Old UK GAAP are relevant in UK tax law only where the carrying value of an asset or liability acquired in a business combination is relevant for tax purposes, for example, for loan relationships. This also applies where a company is applying FRS 102. Tax law determines the value of trading stock for the business ceasing and its value for the successor business see Chapter 11 Part 3 CTA 2009. In respect of goodwill on business combinations please see chapter 8 of this paper. 10. Leases Entities that apply Old UK GAAP will use SSAP 21, UITF 28 and FRS 5 in determining the accounting treatment of leases. Entities that adopt FRS 102 will apply the recognition and measurement requirements of Section 20. Both Old UK GAAP and FRS 102 consider whether a lease transfers substantively the risks and rewards of the leased asset. However it should be noted that SSAP 21 includes a presumption that if the present value of the minimum lease payments is 90 or more of the fair value of the leased asset that it would typically be classified as a finance lease. Section 20 of FRS 102 doesnt contain this presumption. Nevertheless the emphasis on the transfer of risk and rewards is such that in most cases the classification of leases will be consistent between Old UK GAAP and FRS 102. Once the lease has been classified the accounting treatment thereafter is also, generally, comparable. However differences, even where the classification is the same, do exist and the interaction with tax is noted below. UITF 28 requires that operating lease incentives in the lessee are spread over the period ending on the date from which its expected that the prevailing market rent will be payable (if this period is shorter than the lease term, otherwise over the lease term). Section 20 of FRS 102 requires that lease incentives are spread over the term of the lease unless another way would better reflect the reality. Consequently there may be differences in respect of the period over which such incentives are recognised. Since the accounting is followed where the incentive isnt capital (for example, a rent free period) the difference may alter the timing of income recognition for tax purposes. UK tax law isnt entirely consistent with SSAP 21 (see Statement of Practice 391). But accounts figures (including where appropriate consolidated accounts) are recognised for the purposes of Chapter 2 Part 9 CTA 2010 and Chapter 2 Part 21 CTA 2010 which deal with leasing and finance leases with return in a capital form. For lessors, FRS 102 Section 20 requires use of the net investment method for finance leases, whilst SSAP 21 requires the net cash investment method. There may be differences in the timing of income recognition under the 2 bases. In some cases these affect the timing of income for tax purposes, for example, where Schedule 12 Finance Act 1997 applies. Legislation in sections 228B to 228F Capital Allowances Act 2001, and Chapter 5A Part 12 ICTA (inserted by FA 2006) brings the tax treatment of both lessors and lessees of finance leases of plant amp machinery into line with the accounting basis in FRS 102 Section 20 or SSAP 21 as appropriate. Note that its not envisaged that s.53 FA11 will apply to entities on transition to Section 20 of FRS 102 by virtue of subsection 3 of s.53 FA11. 11. Provisions There are no significant differences between Section 21 of FRS 102 and FRS 12. For tax purposes the recognition and measurement of provisions in the accounts forms the basis for the quantum and timing of tax relief (subject to adjustment where the expenditure is capital for tax purposes or otherwise disallowable). Consequently, for most companies its not expected that FRS 102 will have a significant tax impact in this area. 12. Revenue recognition In general, reporting of revenue in accounts is followed for tax purposes. There is no specific standard for revenue recognition in Old UK GAAP. However, Application note G of FRS 5 provides revenue recognition guidance in respect of the sale of goods and services as well as other specific revenue recognition scenarios, SSAP 9 provides guidance in respect of long term contracts and UITF 40 addresses service contracts. The general principles of revenue recognition within FRS 5 Application note G are that revenue is recognised when the seller obtains the right to consideration in exchange for the goods, services, or work performed. The right to consideration typically derives from the performance of its obligations under the terms of the exchange with the customer. FRS 5 application note G requires that, on recognition, revenue is measured at the fair value of the consideration received or receivable. Revenue recognition under FRS 102 will primarily be determined by Section 23 of FRS 102. The recognition criteria within Section 23 are broadly aligned with Old UK GAAP. In addition, where the respective recognition criteria are met, Section 23 also requires that revenue is recognised at the fair value of the consideration received or receivable. Hence while there are a few differences between Old UK GAAP and FRS 102 (for example the latter expressively addresses and defines construction contracts in Section 23), for many entities there will be no change following adoption of FRS 102. Consequently for many companies there will be no accounting or tax impact. 13. Government grants SSAP 4 requires that grants are recognised when there is reasonable assurance that related conditions, if any, will be met. Where reasonable assurance is present grants are then recognised in the accounts based on the relationship between the grant and the related expenditure. FRS 102 Section 24 states that the grant wont be recognised until the entity has reasonable assurance that it will or has complied with the grant conditions and that the grants will be received. It requires that an entity adopts either the accruals or performance model to determine the subsequent accounting for the grant. Under the accruals model grants relating to revenue are recognised in income on a systematic basis over the periods in which the entity recognises the relevant grant costs. Under the performance model Section 24 of FRS 102 states: a grant that doesnt impose specified future performance-related conditions on the recipient is recognised in income when the grant proceeds are received or receivable a grant that imposes specified future performance-related conditions on the recipient is recognised in income only when the performance-related conditions are met grants received before the revenue recognition criteria are satisfied are recognised as a liability Whether the accruals model or the performance model is adopted in overall terms the differences, if there are any, are limited to timing differences on recognition. For tax purposes grants which meet revenue expenditure, such as interest payable, are normally trading receipts, and this will continue where Section 24 of FRS 102 applies. 14. Borrowing costs FRS 102 Section 25 and FRS 15 on capitalising borrowing costs are similar both permit such treatment where relevant criteria are met. For companies section 320 CTA 2009 provides specific rules which allow relief for capitalised borrowing costs but only where they relate to a fixed capital asset or project. However, relief isnt available where the costs are capitalised in the carrying value of an intangible fixed asset which falls within Part 8 CTA 2009. The same approach will continue where Section 25 of FRS 102 is applied. See CFM 33160 for further details. 15. Share based payments Accounting for share based payments under Old UK GAAP (FRS 20) and FRS 102 (Section 26) are aligned with few differences. Tax deductions in respect of share based payments are governed by specific legislation in Part 12 CTA 2009. 16. Employee benefits Pension schemes In respect of accounting for pension schemes Section 28 of FRS 102 differs to FRS 17 in particular: it removes the multi employer exemption on defined benefit schemes such that the scheme position is reported in the solus accounts of the entity contractually or legally responsible for the plan the calculation of the net interest on defined benefit schemes is different. Under Section 28 of FRS 102 the net interest comprises the expected interest income on plan assets excluding the effect of any surplus that isnt recoverable and the interest cost on the scheme obligation. These changes, and others, arent expected to have an impact for tax. Under current UK tax law, sections 196, and 246 FA 2004 and sections 1290-6 CTA 2009 provide relief on a contributions paid basis. Holiday pay accural Under Old UK GAAP many entities did not accrue or provide for holiday pay. FRS 102 requires that when an employee has rendered services to an entity during a period any related holiday pay or similar is accrued for. For tax purposes this accrual would be treated in line with the treatment of unpaid remuneration which is dealt with at Part 20 Chapter 1 CTA 2009. Employee benefit trusts Under Old UK GAAP. UITF 32 provides guidance on how to account for Employee benefit trusts. The requirements of FRS 102 (Section 9) are comparable. FRS 102 states that there is a rebuttable presumption that contributions to an intermediate payment arrangement where the employer is a sponsoring entity are made in exchange for another asset and dont represent an immediate expense. In addition the assets and liabilities of the intermediary will be accounted for by the sponsoring entity as an extension of its own business. The above treatment doesnt apply where it can be demonstrated that the sponsoring entity wont obtain future economic benefit from the amounts transferred or it doesnt have control of the right or other access to the future economic benefit. For tax purposes the treatment of employee benefit contributions is dealt with at Part 20 Chapter 1 CTA 2010. 17. Foreign currency translation Under Old UK GAAP a company accounts for its currency exchange transactions in line with either SSAP 20 (where FRS 26 isnt applied) or FRS 23 (where FRS 26 is applied). For companies which have adopted FRS 23 (and FRS 26) the transition to FRS 102 and Section 30 isnt expected to result in any significant changes. For companies that applied SSAP 20 many wont encounter differences but when they do they may be significant. 5 main areas of difference are set out below. 17.1 Functionalpresentational currency Determination of functional currency under FRS 102 requires consideration of the currency of the primary economic environment in which the entity operates. Key factors in determining this are the currency that mainly influences the sales prices for goods and services and the currency of the country whose competitive forces and regulations mainly determine the sales prices of its goods and services. Consideration is also given to the currency in which funds from financing activities are generated and the currency in which receipts from operating activities are usually retained. This is in line with the accounting adopted by companies which currently apply SSAP 20. However, in contrast to SSAP 20, FRS 102 also specifically requires consideration of the influence of the parent on the companys operations and activities. It may be that when these factors are taken into account this will result in a different assessment of the companys functional currency. This could have a significant impact on the calculation of the profits recognised in the companys accounts. In particular, this can create exchange rate volatility where the companys assets and liabilities are denominated in a different currency to that of its functional currency. In addition, FRS 102 allows an entity to have a presentation currency which isnt necessarily the same as the functional currency. This typically has less impact on the calculation of the companys profit for a period (just that its expressed presented in a different currency). Chapter 4 of Part 2 CTA 2010 provides detailed rules as to how the companys profits are to be calculated for tax. CFM64000 explains the operation of these rules. It should be noted, though, that where an investment company changes its functional currency, exchange gains and losses arising on loan relationships and derivative contracts are excluded from tax if they arise as a result of a change in functional currency in the period of account in which the gains or losses arise and a period of account ending in the 12 months preceding that period. See CFM64120 for details. Where a company is a UK investment company it may be eligible to make a designated currency election. This must be made in advance of the date its to take effective. See CFM64500 onwards for further details. 17.2 Foreign operations (including branches) Income and expenditure of foreign operations (including branches) are translated from the functional currency of the foreign operation into the companys functional currency at actual or average rates not at closing. Exchange movements arising on retranslating the companys net investment in the foreign operation recognised in other comprehensive income. Note that where the company disposes of the foreign operation, the exchange movements previously recognised to other comprehensive income arent recycled to profit or loss. For tax purposes, the calculation of the companys profits from a trade or business undertaken through a foreign operation will typically be based on the amounts of profit or loss translated into the companys function currency in accordance with GAAP. Exchange differences arising from the retranslation of the net investment arent typically brought into account for Corporation Tax purposes. 17.3 Contract rate accounting Where a company enters into a contract to settle a transaction at a particular rate of exchange, SSAP 20 stated that the exchange rate fixed by the contract may be used to record the transaction. The position is different under FRS 102. The use of a contracted rate of exchange to translate monetary items isnt permitted. The closing rate as at the balance sheet date should be used instead. The contract would typically represent a derivative financial instrument which would then be separately recognised and measured at fair value in the accounts. This is a further example of a hedging relationship where under FRS 102 the hedged item and the hedging instrument need to be recognised separately in the accounts. The accountancy and tax treatment of hedging relationships is discussed above (see chapter 4.6). The Disregard Regulations (regulations 7 and 10) may apply to restore the Old UK GAAP position (where FRS 26 has not been adopted). Guidance on the application of this is available at CFM 57000 onwards. Note that where the forward contract is taken out as a hedge of qualifying expenditure, the amount of capital allowances is based on the amount of actual qualifying expenditure incurred (for example, translated at the spot rate at the date of that the expenditure is incurred) - see CA11750 Transitional adjustments may also arise - see Part B of this paper for commentary on this. 17.4 Net investment hedging (also known as the Cover method or SSAP 20 matching) Where an equity investment denominated in a foreign currency is hedged by a loan, SSAP 20 allows a company to re-translate the investment at the balance sheet date as if it were a monetary item. Exchange differences on the shares are taken to reserves. Exchange differences on the hedging loan are also taken to reserves, and offset against the gain or loss on the shares. Any excess on the loan that cannot be offset is taken to profit and loss account. This method of accounting is sometimes called the cover method or net investment hedging. S328 and S606 CTA 2009 ensure that exchange movements taken to reserves arent immediately brought into account. Potentially an adjustment would be made to any chargeable gain calculation where the shares are subsequently disposed of. There is no equivalent in Section 30 of FRS 102 for the cover method of hedging non-monetary assets. Hedge accounting is instead dealt with by Section 12 of FRS 102 (or IAS 39 where this option is taken) see chapter 4.6 above. However, under either Section 12 of FRS 102 or IAS 39, net investment hedging in respect of a shareholding in a subsidiary company is only permitted at consolidation. Where a company has a loan liability or a derivative to act as a hedge of the exchange risk from holding an investment in shares, regulations 3 and 4 of the Disregard Regulations (SI 20043256) would typically mean that the exchange gain or loss on the loan or derivative would be disregarded for tax. Potentially an adjustment would be made to any chargeable gain calculation where the shares are subsequently disposed of. For further details of net investment hedging see CFM 62000 onwards. 17.5 Permenent-as-equity debt The following commentary concerns permanent-as-equity loans, for example made by a parent to a subsidiary undertaking, which represent an arms length provision. Where the loan isnt undertaken on at arms length terms, then special rules apply for calculating the amount of exchange gains and losses to be taxed. See CFM38500 for further details. For companies that apply SSAP 20 its possible for permanent as equity loans to be treated as non-monetary items and be carried at historic rates on the balance sheet rather than be retranslated as at each period end. In such cases, the cumulative exchange movement would be reflected in any gain or loss on eventual disposal of the instrument. Tax would typically follow the accounting in this case. Alternatively, its possible that the permanent as equity loan is retranslated at the year end, but with exchange movements recognised through reserves. This might arise in respect of a standalone loan investment, or it may arise where the company has applied the cover method in respect of borrowings or a currency contract matching the loan investment. S328 and S606 CTA 2009 ensure that exchange movements taken to reserves arent immediately brought into account. The cumulative exchange gain or loss would typically be brought into account when the loan investment is subsequently disposed of. In both cases, accounting for such exchange differences is only possible where companies have adopted SSAP 20 (and not FRS 23) and isnt permitted for companies applying FRS 102. As a result, under FRS 102 such instruments will need to be retranslated at the year end, with exchange movements being recognised in profit or loss. In most cases such amounts will be brought into account for tax. There is a specific rule to deal with cases where a loan asset or derivative contract matches the companys own share capital see CFM62850 for further details. In addition, in December 2014 the Disregard Regulations were extended so to exclude exchange movements on certain instruments that were previously accounted for as permanent as equity debt under SSAP20. These exchange amounts are disregarded and brought back into account on disposal of the loan instrument (in line with the treatment under the old accounting). Transitional adjustments may arise where the debt was not previously retranslated at the year end, although the amendment to the Disregard Regulations may also apply to this transitional amount. See Part B of this paper for commentary on this. 18. Liabilities and Equity Accounts prepared in accordance with Old UK GAAP will apply the presentation and disclosure requirements of FRS 25 in respect of financial instruments and in particular liabilities and equity. FRS 102 contains comparable requirements in Section 22, Liabilities and Equity. Consequently on transition from Old UK GAAP to FRS 102 no changes are expected in respect of the classification or presentation of liabilities and equity that currently fall within the scope of FRS 25. However, while the classification and presentation may not change the subsequent measurement of such items may change on adoption of FRS 102. For example the accounting on issue of a compound financial instrument is comparable across Old UK GAAP (FRS 25) and FRS 102 (section 22). In all cases the issuer will be required to account for the debt and the equity components separately (see CFM21260 ). However, the issuer of such an instrument will need to consider the measurement requirements of Section 11 and 12 (or IAS 39) in respect of subsequent measurement of the debt component. Guidance on the taxation of hybrid and compound instruments in both issuer and holder is available in the HMRC Corporate Finance Manual. In particular, see: CFM37600 (Bifurcated instruments under the loan relationship rules) CFM50410. CFM50420. CFM50430 and CFM52500 (Bifurcated instruments under the derivative contract rules) CFM55200 (Holder of convertible or share-linked securities) CFM55400 (Issuer of convertible or share-linked securities) For further guidance on the transitional provisions applying to hybrid instruments see Part B of this paper. 19. Specialised activities FRS 102 section 34 includes specific guidance on a number of specialised activities such as service concession arrangements, agriculture and extractive industries. Such specialised activities arent addressed within this paper. PART B - Transitional adjustments (Old UK GAAP to FRS 102) This part of the paper provides a summary of the key accounting and tax considerations that arise on transition from Old UK GAAP to FRS 102. 20. Accounting In accounting terms transition to FRS 102 is addressed in Section 35 of FRS 102. On transition FRS 102 section 35 requires that the balance sheet presented in respect of the accounting transition date: recognises all assets and liabilities whose recognition is required by FRS 102 doesnt recognise assets and liabilities if FRS 102 doesnt permit such recognition reclassifies assets, liabilities and components of equity to ensure presentation is consistent with FRS 102 measures all recognised assets and liabilities in accordance with FRS 102 The transition date, for accounting purposes, is the first day of the earliest accounting period presented in the accounts. For example for entities preparing their accounts at 31 December 2015 the transition date will be 1 January 2014. FRS 102 contains certain transitional exceptions and exemptions to the above requirements. These arent repeated here in detail but cover areas such as business combinations, estimates, intangibles, investment property and service concession arrangements. However, even with such exceptions and exemptions its expected that on transition there may be a significant number of adjustments both to the carrying value of assets and liabilities recognised previously under Old UK GAAP and in terms of newly recognised assets and liabilities. For accounting purposes these adjustments will be made to the assets and liabilities as at the accounting transition date with a corresponding adjustment made directly to the opening PampL reserves. For trading profit Chapter 14 Part 3 CTA 2009 provide that where there is a change from one valid basis on which the profits of a trade are calculated to another valid basis (for example on a change of accounting policy), an adjustment must be calculated to ensure that business receipts will be taxed once and once only and deductions will be given once and once only. For Corporation Tax purposes, adjustments are treated as receipts or deductions in computing the trade profits. Details of the calculation are set out at BIM 34130 . 21. General trading The relevant legislation for companies is in CTA 2009 Chapter 14 Part 3. Section 180(4) reads: (4) A change of accounting policy includes, in particular (a) a change from using UK generally accepted accounting practice to using generally accepted accounting practice with respect to accounts prepared in accordance with international accounting standards, and (b) a change from using generally accepted accounting practice with respect to accounts prepared in accordance with international accounting standards to using UK generally accepted accounting practice. So while it details UK GAAP to IAS and vice versa, the key phrase is that a change of accounting policy includes in particular those 2 cases. While the change from Old UK GAAP to FRS 102 isnt listed its still included within the scope of this provision. For companies with property income sections 261-2 CTA 2009 deal with adjustment income or expenditure where the basis on which the profits are calculated changes. 22. Intangibles The relevant legislation is in CTA 2009 at Part 8, Chapter 15. Where there is a change of accounting policy in drawing up a companys accounts from one period of account to the next, and both those accounts are drawn up in accordance with GAAP in relation to those periods then the provisions of Chapter 15 will apply. No taxable credit or allowable debit is to be brought into account under Chapter 15 to the extent that its already brought into account by section 723 (revaluations), section 725 (reversal of accounting loss) or section 732 (reversal of accounting gain). See section 878 CTA 2009 Change in accounting value When there is a change of accounting policy its possible that there will be a difference between the accounting values recognised at the end of the earlier period and the opening balance in the later period for certain intangible fixed assets. Where such a difference arises and no section 730 election has been made section 872 treats an increase as a taxable credit, and a decrease as an allowable debit, arising at the start of the later accounting period. The amount of the debit or credit is the difference multiplied by the fraction tax written-down valueaccounting value, where both these values are those at the end of the earlier period. Section 872(5) caps the amount of any credit to the net amount of previous debits on the asset less previous credits on the asset. Chapter 15 also contains different rules to deal with a change of policy involving disaggregation or where the asset is subject to a fixed-rate writing down election under section 730. Primacy of other parts of Part 8 Section 878 contains provisions to ensure that where all or part of the difference is brought into account under other sections of Part 8 that part isnt brought into account again. The relevant other paragraphs are section 723 (gain on revaluation CIRD 13050 ), section 725 (reversal of accounting loss CIRD 13090 ) and section 732 (reversal of accounting gain CIRD 12560 ). Section 872 doesnt apply to a chargeable intangible asset in respect of which a fixed rate election has been made under section 720 (see CIRD 12905 ). 23. Financial instruments Transitional adjustments - general Adjustments on loan relationships as a result of changes in accounting policy can arise under 2 separate parts of the regime. Prior period adjustments In cases where a company stays within the same accounting framework, or otherwise doesnt restate its opening figures, the accounts will normally show a prior period adjustment (PPA ) either in reserves or in equity. For loan relationships section 308 ensures that this amount is brought into account for tax purposes where its taken to the statement on total recognised gains and losses (in Old UK GAAP ) or statement of changes in equity (in FRS 101, FRS 102 or IAS ). A transitional adjustment which takes the form of a PPA will also be adjusted for tax purposes by any relevant provision. For example, if the company changes the accounting treatment of a loan to a connected company so that its in future accounted in its accounts on a fair value basis, there will be a PPA reflecting the difference between the carrying value under an accrual method and fair value. However, s349 CTA 2009 requires the profits and losses on the asset continue to be brought into account for tax purposes as if the change to fair value accounting has not been made. Therefore the PPA is in this example ignored. No prior period adjustment In some cases there may be no PPA even though there is a change in accounting measurement for a particular instrument. For example, no PPA will be recognised where there is a change to the overall accounting framework and the opening figures have been restated. This will often be the case where a company adopts IAS. FRS 101 or FRS 102 for the first time. In these cases sections 315 to 319 CTA 2009 will apply. These calculate the transitional adjustment by comparing the opening accounting value in the current accounting period with the closing accounting value for the previous accounting period. Accounting carrying value is defined to mean the carrying value of the asset or liability as shown in the balance sheet of the company subject to adjustments for specific tax provisions which have the effect of changing the carrying value for tax purposes (for example, s349 CTA 2009 for connect party debt). The derivative contract regime has equivalent rules in sections 597 and 613 to 615 CTA 2009. The overall effect in either case is to ensure that no amount should fall out of account as a result of a change in accounting policy. Change of Accounting Practice Regulations In 2004 and 2005, the Government considered various representations about the impact of the transitional rules when a company moves from Old UK GAAP to either IAS or FRS 26. In view of the size of some of the known impacts, and the fact that many of the impacts could not be determined until companies made the calculations after the year end, the Government decided to defer the tax impact of all transitional adjustments. This deferral was given effect in Change of Accounting Practice (COAP ) Regulations (SI 20043271), which have been the subject of subsequent amendments. The COAP Regulations apply to most transitional adjustments arising in respect of loan relationships or derivative contracts from change in accounting practice. As such, the Regulations are applicable to transitions to FRS 101 and FRS 102 in the same way as they applied to transitions to IAS or FRS 26. In most cases, the effect of the Regulations is to spread the transitional adjustment over 10 years, starting with the first period in which the new accounting policy applies. A company has a loan with non-vanilla terms in an unconnected company which is due to be repaid in 5 years. Under Old UK GAAP it measures the loan on a historic cost basis. Under FRS 102 its required to measure the loan at fair value. On transition, the difference between the closing value for the previous period and opening value in the current period is to be brought into account, with the amount spread over a period of ten years. There are certain exclusions from the COAP Regulations. In these cases the COAP Regulations dont apply at all. This is likely to mean that the transitional adjustment will be brought into account in full on transition (ie subject to the normal rules). The main exclusions are for transitional adjustments in respect of: a loan relationship which comes to a natural end in the accounting period that the transition takes place because its repaid or redeemed on the date which is the latest date on which, under its terms, it falls to be repaid or redeemed an embedded derivative that is bifurcated out of a loan asset or liability described in the first bullet a derivative contract which hedges a loan asset or liability described in the first bullet A company has a designated a financial instrument as AFS with maturity in 6 months. Under Old UK GAAP it measures the loan and derivative on an historic cost basis. Under FRS 101 its required to measure the derivative at fair value. On transition, the difference between the closing value for the previous period and opening value in the current period is to be brought into account in full in the current period. The COAP Regulations also include provision for some further cases where transitional adjustments will never be brought into account. These specific issues are explained below, but are intended to ensure that the correct amounts are brought into account overall for loan relationships and derivative contracts. Transitional adjustment - specific issues (1) Convertible loans and asset-linked instruments (pre-2005) There are rules which grandfather the previous tax treatment for most convertible debt and asset-linked instruments issued before the companys first period of account beginning on or after 1 January 2005 (see CFM 37680 to 37710 for further details). The COAP Regulations (reg 3C(2)(a), reg 3C(2)(aa) and reg 3C(2)(f)) require that amounts that arise on transition in respect of such contracts are never brought into account. This ensures that there is continuity of treatment. (2) Embedded derivatives where the host instrument isnt a loan relationship Going forwards under FRS 102 (with the IAS 39 option) embedded derivatives in a contract are typically required to be bifurcated in the accounts. However, where section 616 CTA 2009 applies, the embedded derivative is treated as if it were closely related to the host contract and therefore not separated out. The COAP Regulations (reg 3C(2)(b)) requires that amounts that arise on the transition to FRS 102 on such contracts are never brought into account. This ensures that there is continuity of treatment. (3) Interest rate contracts in a hedging relationship (Reg 9 contracts) Under IAS. FRS 101 and FRS 102, derivative contracts will typically be measured at fair value in the companys accounts. Regulation 9 of the Disregard Regulations deals with interest rate contracts used for hedging. Amounts on such contracts are brought into account on an appropriate accruals basis. In effect, the tax treatment of such contracts under Old UK GAAP continues where regulation 9 of the Disregard Regulations applies. The COAP Regulations (reg 3C(2)(c)) means that no transitional adjustments arising on such contracts are to be brought into account under these Regulations. This ensures that there is continuity of treatment. The amounts will be brought into account under the Disregard Regulations in priority to the COAP Regulations. (4) Currency, commodity and debt contracts in a hedging relationship (Regs 7 or 8 contracts) Under IAS. FRS 101 and FRS 102, derivative contracts will typically be measured at fair value in the companys accounts. Regulations 7 and 8 of the Disregard Regulations deals with currency, commodity and debt contracts used to hedge a forecast transaction or firm commitment. Amounts on such contracts are brought into account under regulation 10. Generally, the effect of these regulations is that the tax treatment of such contracts follows the Old UK GAAP accounting treatment. The Disregard Regulations (regs 7(1) and 8(1)) provide that no transitional adjustments arising on such contracts are to be brought into account these amounts are disregarded. This ensures that there is continuity of treatment the amounts will subsequently be brought into account under the Disregard Regulations in priority to the COAP Regulations. (5) Designated cashflow hedges (Reg 9A contracts) Under IAS. FRS 101 and FRS 102, derivative contracts will typically be measured at fair value in the companys accounts. Under a designated cash flow hedge, the company will recognise certain movements in the fair value through other comprehensive income, and maintained as part of a cash flow hedging reserve. Regulation 9A will apply in respect of designated cash flow hedges, unless the instrument is within regulation 7, 8 or 9 of the Disregard Regulations. The effect of this regulation is to disregard for tax purposes the amounts recognised in the statement of equity (as items of other comprehensive income) until they are recycled to the income statement. The COAP Regulations (reg 3C(2)(e)) exempts the spreading on transition amounts to the extent that they hedge future cashflows. Its aimed at the opening adjustments to the cashflow hedge element of shareholders equity reserves. These amounts will subsequently be recycled through the income statement and so ensures continuity of treatment. (6) Contract rate accounting Under Old UK GAAP where FRS 23 (and FRS 26) doesnt apply, a company can translate a foreign currency amount on a monetary item (typically a money debt or a loan relationship) using the rate implicit in a contract (typically a derivative contract). This isnt permitted under IAS. FRS 101 or FRS 102 which all require the foreign currency amount to be translated using the spot exchange rate. Typically the derivative contract will be required to be recognised separately and measured at fair value. Potentially the company may apply hedge accounting in respect of the hedging relationship in its accounts. Where regulation 9 of the Disregard Regulations applies, any adjustment to the derivative contract is effectively ignored see (3) above. Where this happens, the COAP Regulations (reg 3C(2)(d)) disregards any loan relationship adjustment as well. (7) Reversal of previous exchange gains and losses Very occasionally an issue can arise where transitional adjustments represent the reversal of previous exchange gains and losses, typically where the company treats the loan as an equity instrument. The COAP Regulations (reg 3C(2)(ca) and reg 3C(2)(da)) provide that such transitional adjustments arent to be brought into account to the extent that those previous exchange gains or losses had been disregarded for tax. (8) Permanent as equity debt Under Old UK GAAP where FRS 23 (and FRS 26) doesnt apply, a company can translate permanent as equity debt at its historic cost. This isnt permitted under IAS. FRS 101 or FRS 102 which all require the foreign currency amount to be translated using the spot exchange rate. In certain cases, regulation 12A of the Disregard Regulation can apply to exclude the transitional adjustments on permanent as equity debt. (9) Modification and replacement of distress debt Under Old UK GAAP where FRS 26 doesnt apply, where debt is restructured or have its terms modified, no gain or loss would be recognised in the accounts. In contrast, FRS 102 requires that where modification is considered substantial the original debt instrument will be derecognised and the new instrument recognised at its fair value. In certain cases where the company is in financial distress, the COAP Regulations (reg 3C(2)(g)) exempts the credits arising on transition, together with any debits representing the reversal of these amounts. For further details of the treatment of transitional adjustments for loan relationships and derivative contracts see CFM76000 onwards. Defined, for purposes of this paper only, on page 3 See FRS102 11.7 and 12.3 for comprehensive list Note that where the convertible debt is a compound financial instrument the accounting in the issuer will also be determined by reference to Section 22 of FRS 102 The appendix to UITF Abstract 47 provides some further explanation of these points IAS 39 has a similar requirement for companies that have chosen the IAS 39 option If payment terms are deferred beyond normal credit terms, the cost is determined by reference to the present value of the future payments
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