The future of UK GAAP?

The Accounting Standards Board (ASB) in the UK has published financial reporting exposure drafts (FREDs) setting out revised proposals for the future of financial reporting in the UK and Republic of Ireland. Which of the following areas do the FRED's not deal with?

Revision of IFRS for SMEs

A reduced disclosure framework

The financial reporting standard applicable in the UK and Republic of Ireland

The application of financial reporting requirements

What do the proposals recommend as the way forward for UK GAAP?

Introducing an enhanced disclosure framework

Replacing all standards with a single FRS

Withdrawing the Financial Reporting Standard for Smaller Entities (FRSSE)

Adopting a tiered approach for reporting

FRED 46 'Application of financial reporting requirements' outlines the revised framework. Which of the following is not a requirement of the FRED?

Entities that are not small and are not required to apply EU-adopted IFRS ,apply the draft Financial Reporting Standard 102 applicable in the UK and Republic of Ireland

Qualifying entities must apply the Reduced Disclosure Framework

Entities required by company law to apply EU-adopted IFRS must do so

Small entities may apply the FRSSE

The ASB has looked at the principles for amending the IFRS for SMEs for application in the UK and this has resulted in the allowance of certain accounting practices. Which of the following accounting practices are not allowed by FRED 48?

The option to revalue land and buildings

Capitalisation of borrowing costs

Hedge accounting for net investments in foreign operations

Temporary differences approach to accounting for tax

There are numerous changes outlined in the proposed approach with the aim of reducing the administrative burden for entities. Which of the following changes is not outlined in the proposed framework?

The replacement of the primary statements based on IFRS for SMEs with formats based on UK company law

The revisions to IAS 19, Employee benefits regarding the change in the method of calculating net interest for defined benefit pension schemes

The definition of a finance lease based upon substantially all the risks and rewards of ownership of an asset being transferred to the lessee

Changing the presumed useful life for goodwill and intangible assets when an entity is otherwise unable to make a reliable estimate to five rather than 10 years

All entities reporting under UK GAAP will be affected, by the new framework and qualifying entities will need to consider whether they wish to use the reduced disclosure framework. Why might this reduced disclosure be attractive to entities?

It may be attractive to subsidiaries in IFRS groups that wish to have statutory accounts prepared on a consistent basis with the IFRS consolidation, but with reduced disclosures

It may result in non disclosure of material items that could affect the share price of the entity adversely

It may be attractive in helping entities reduce their tax burden

It may be attractive to subsidiaries in groups that wish to have statutory accounts prepared on a consistent basis with the local GAAP, but with reduced disclosures

Although the ASB is pushing ahead with moving UK GAAP onto an IFRS-based framework, it has decided to defer the mandatory effective date of the revised framework to 1 January 2015. Why has the ASB decided to defer the mandatory effective date of the framework to 2015?

To allow entities to take advantage of transitional provisions in IFRS

The revised date effectively does not allow entities a choice to either undertake the accounting changes in a single period, or to adopt a more gradual approach over a longer period if early adoption is chosen

Because of the interaction with the potential effective dates of new IFRSs, which could have resulted in companies making several accounting changes in the short term

In order to allow companies to determine which accounting policies to use

The ASB's drive towards an IFRS framework is likely to be supported by the majority of finance leaders. Why might finance leaders support the move towards an IFRS framework?

IFRS are underpinned by corporate law

IFRS are rules based

IFRS provide benefits in global consistency of accounting and reporting

IFRS mirror US GAAP

Lease accounting changes could result in potential significant changes. For example, both current UK accounting standards and FRED 48 require an entity to classify each of its leases as either a finance lease or an operating lease. Which of the following accounting practices is likely to cause a significant change under the proposals?

A finance lease is defined as one that transfers substantially all the risks and rewards of ownership of an asset to the lessee

Leased assets that are of such a specialised nature that only the lessee can use them without major modifications are finance leases

All operating leases should come on to the balance sheet

If the present value of the minimum lease payments amounts to 90 percent or more of the fair value of the leased asset, the lease is a finance lease

Under UK GAAP and FRED 48 there is an option to revalue items of property, plant and equipment. However, the new proposals may create an issue with the application of this model. Which of the following practices may cause an issue with the accounting for property,plant and equipment?

Depreciation on revalued items in FRED 48 may be applied to individual items whereas UK GAAP requires application to an entire class of assets

Depreciation on revalued items in UK GAAP may be applied to individual items whereas FRED 48 requires application to an entire class of assets

The revaluation model in FRED 48 may be applied to individual items whereas UK GAAP requires application to an entire class of assets

The revaluation model in UK GAAP may be applied to individual items whereas FRED 48 requires application to an entire class of assets

The future of UK GAAP?

The Accounting Standards Board (ASB) in the UK has published financial reporting exposure drafts (FREDs) setting out revised proposals for the future of financial reporting in the UK and Republic of Ireland. Which of the following areas do the FRED's not deal with?

What do the proposals recommend as the way forward for UK GAAP?

FRED 46 'Application of financial reporting requirements' outlines the revised framework. Which of the following is not a requirement of the FRED?

The ASB has looked at the principles for amending the IFRS for SMEs for application in the UK and this has resulted in the allowance of certain accounting practices. Which of the following accounting practices are not allowed by FRED 48?

There are numerous changes outlined in the proposed approach with the aim of reducing the administrative burden for entities. Which of the following changes is not outlined in the proposed framework?

All entities reporting under UK GAAP will be affected, by the new framework and qualifying entities will need to consider whether they wish to use the reduced disclosure framework. Why might this reduced disclosure be attractive to entities?

Although the ASB is pushing ahead with moving UK GAAP onto an IFRS-based framework, it has decided to defer the mandatory effective date of the revised framework to 1 January 2015. Why has the ASB decided to defer the mandatory effective date of the framework to 2015?

The ASB's drive towards an IFRS framework is likely to be supported by the majority of finance leaders. Why might finance leaders support the move towards an IFRS framework?

Under UK GAAP and FRED 48 there is an option to revalue items of property, plant and equipment. However, the new proposals may create an issue with the application of this model. Which of the following practices may cause an issue with the accounting for property,plant and equipment?

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