Generally accepted accounting practice in the United Kingdom: UK GAAP
Gespeichert in:
| Format: | Buch |
|---|---|
| Sprache: | English |
| Veröffentlicht: |
London
Longman
1990
|
| Ausgabe: | 2. ed. |
| Schlagworte: | |
| Online-Zugang: | Inhaltsverzeichnis |
| Beschreibung: | XLV, 1226 S. |
| ISBN: | 0851216617 |
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Datensatz im Suchindex
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| adam_text | List of chapters
1 The development of UK GAAP 1
2 The quest for a conceptual framework for financial reporting 27
3 Revenue recognition 83
4 Group financial statements 117
5 Foreign currencies 269
6 Fixed assets and depreciation 383
7 Investment properties 457
8 Investments 473
9 Research and development 495
10 Capitalisation of borrowing costs 513
11 Stocks and long term contracts 543
12 Share and loan capital 587
13 Off balance sheet transactions 635
14 Leases and hire purchase contracts 685
15 Government grants 731
16 Segmental reporting 741
17 Pension costs 767
18 Taxation 835
19 Extraordinary items and prior year adjustments 897
20 Earnings per share 939
21 Post balance sheet events 973
22 Contingencies 991
23 Statements of cash and funds flow 1007
24 Related parties 1049
25 Directors and officers loans and transactions 1077
26 Directors remuneration 1109
Appendix
Specimen financial statements 1133
Detailed contents
CHAPTER 1 THE DEVELOPMENT OF UK GAAP 1
1 The development of Accounting Standards 1
1.1 The history of the Accounting Standards Committee 1
1.1.1 The creation of the ASC 1
1.1.2 The objects and terms of reference of the ASC 2
1.1.3 The Watts Report 3
1.1.4 The McKinnon Report 3
1.1.5 The replacement of the ASC 3
1.2 The creation of the Accounting Standards Board 3
1.2.1 The need for a review of the standard setting process 3
1.2.2 The Dearing Committee s recommendations 4
1.2.3 The implementation of the Dearing proposals 7
(2 Accounting standards and the concept of true and fair 7
2.1 The introduction of the true and fair concept 7
2.2 What authority do SSAPs have? 8
2.3 The role of International Accounting Standards 9
2.4 The US experience 10
2.5 The Canadian experience 11
2.6 Germany 12
3 What is UK GAAP? 13
3.1 Principles or practice ? 13
3.2 What is generally accepted ? 14
4 GAAP for small companies 15
4.1 The Big GAAP/Little GAAP debate 15
4.2 Exemptions for small companies 16
4.3 Is this the small company solution? 17
5 Summary financial statements 18
5.1 The required form of a summary financial statement 18
5.2 Commentary 23
[6 jConclusion 24
Generally Accepted Accounting Practice in the United Kingdom
PTER 2 THE QUEST FOR A CONCEPTUAL FRAMEWORK
FOR FINANCIAL REPORTING 27
Toduction 27
hat is a conceptual framework? 28
hy is a conceptual framework necessary? 28
history of the quest for a conceptual framework 29
4.1 Introduction 29
4.2 The Accounting Principles Board of the AICPA 30
4.2.1 Accounting Research Studies 30
4.2.2 APB Statement No. 4 32
4.2.3 The Wheat and Trueblood Committees 32
4.3 The FASB Conceptual Framework Project 33
4.4 The Corporate Report 34
4.5 The Sandilands Report 36
4.5.1 Current Purchasing Power accounting 36
4.5.2 Value accounting 37
4.5.3 Cash flow accounting 40
4.5.4 Current cost accounting (CCA) 41
4.6 The Macve Report 44
4.7 The Stamp Report 46
le FASB conceptual framework 47
5.1 Introduction 47
5.2 The objectives of financial reporting 48
5.3 The qualitative characteristics of accounting information 50
5.3.1 The decision makers 50
5.3.2 The cost/benefit constraint 50
5.3.3 Understandability 50
5.3.4 Relevance and reliability 52
5.3.5 Comparability 54
5.3.6 Materiality 54
5.3.7 Conservatism 54
5.4 The elements of financial statements 55
5.4.1 Assets 55
5.4.2 Liabilities 56
5.4.3 Equity 56
5.4.4 Investments by owners 56
5.4.5 Distributions to owners 56
5.4.6 Comprehensive income 57
5.4.7 Revenues, expenses, gains and losses 57
Detailed contents IX
5.5 Recognition and measurement 58
5.6 Conclusion 59
6 Contemporary conceptual framework projects 60
6.1 Introduction 60
6.2 The ICAS discussion document: Making Corporate Reports Valuable 60
6.2.1 Background to the study 60
6.2.2 Users and their needs 61
6.2.3 Valuation of assets and liabilities 62
6.2.4 The proposed new information package 63
6.2.5 Additional information 64
6.2.6 Conclusion 65
6.3 The IASC conceptual framework 65
6.4 The Solomons Report 67
6.5 The CICA financial statement concepts 71
/7 SSAP 2: Disclosure of accounting policies 72
7.1 Fundamental accounting concepts 72
7.1.1 The going concern concept 72
7.1.2 The accruals (or matching) concept 72
7.1.3 The consistency concept 73
7.1.4 The prudence concept 73
7.2 Accounting bases 73
7.3 Accounting policies 73
7.4 The missing accounting concepts: substance over form and materiality 74
7.4.1 Substance over form 74
7.4.2 Materiality 74
8/ The way ahead 75
CHAPTER 3 REVENUE RECOGNITION 83
1 The nature of re venue 83
2 Realised profits 84
3 The timing of revenue recognition 86
3.1 The critical event approach 87
3.1.1 The recognition of revenue at the completion of production 87
3.1.2 The recognition of revenue at the time of sale 88
3.1.3 The recognition of revenue subsequent to delivery 89
3.2 The accretion approach 91
3.2.1 The use by others of enterprise resources 91
3.2.2 Long term contracts 91
3.2.3 Natural growth 91
Generally Accepted Accounting Practice in the United Kingdom
3.3 The revenue allocation approach 91
ndamental recognition criteria 92
4.1 IAS 18 92
4.1.1 The sale of goods 93
4.1.2 The rendering of services 94
4.1.3 The use by others of enterprise resources 95
4.2 Canada 95
4.3 The US 96
4.3.1 The general rule 96
4.3.2 SFAC No. 5 97
4.3.3 FASB statements 97
4.4 Summary 97
oblem areas 99
5.1 Receipt of initial fees 99
5.1.1 Franchise fees 99
5.1.2 Advance royalty/licence receipts 101
5.1.3 Loan arrangement fees 103
5.1.4 Commitment fees 103
5.1.5 Credit card fees 104
5.2 Goods sold subject to reservation of title 104
5.3 Subscriptions to publications 105
5.4 Advertising revenue 105
5.5 Software revenue recognition 106
5.5.1 Granting the right to use, but not to own, software 106
5.5.2 Products sold with significant vendor obligations 107
5.5.3 Post delivery customer support services 108
5.5.4 Data services 109
5.6 The disposal of land and buildings 110
5.7 Film exhibition rights 113
5.8 Sale and leaseback transactions 114
nclusion 114
PTER 4 GROUP FINANCIAL STATEMENTS 117
e concept of a group 117
1.1 Introduction 117
1.2 What is a subsidiary? .118
1.2.1 The legal definition — pre Companies Act 1989 118
1.2.2 The EC Seventh Directive 120
1.2.3 The legal definition — post Companies Act 1989 120
Detailed contents xi
1.2.4 The approach used in other countries 125
1.3 Consolidating partly owned subsidiaries 127
1.3.1 The entity concept 127
1.3.2 The proprietary concept 127
1.3.3 Comparison between the different concepts of a group 127
1.3.4 ED 50 proposals 129
1.4 Principles of business combinations 130
2 Historical development of rules on group financial statements 130
2.1 Origins of group financial statements 130
2.2 The UK legislative background 131
2.3 Accounting standards in the UK 131
; 3 Consolidation of subsidiaries 132
¦ 3.1 Basic principles 132
3.2 Uniform accounting policies 132
3.3 Coterminous accounting periods 133
3.4 Elimination of unrealised profits/losses on inter company transactions 135
[4 ¦ Exemptions from preparing group financial statements 136
K J 4.1 Intermediate holding companies 137
4.2 Small and medium sized groups 140
4.3 Exemptions contained in ED 50 141
5 Exclusion of subsidiaries from group financial statements 142
5.1 Sources of rules on exclusion of particular subsidiaries 142
5.2 Dissimilar activities 143
5.3 Lack of control 147
5.4 Operating under severe restrictions 149
5.5 Control intended to be temporary 151
5.6 Other Companies Act exclusions 153
5.7 General disclosure requirements in respect of excluded subsidiaries 155
6 Equity accounting 156
v , 6.1 Introduction 156
6.2 The definition of an associate 157
6.2.1 SSAP 1 157
6.2.2 The Companies Act 1985 158
6.2.3 ED 50 159
6.2.4 IAS 28 159
6.3 The accounting treatment of associates 160
6.4 Other particular issues 162
6.4.1 Non coterminous periods 162
6.4.2 Deficiency of assets 163
6.4.3 Investor not preparing group financial statements 164
Generally Accepted Accounting Practice in the United Kingdom
6.4.4 Joint ventures 166
6.4.5 Loss of associate status 168
6.4.6 Elimination of unrealised profits on transactions with
associates 169
6.5 ; Disclosure requirements regarding associates 171
6.5.1 Profit and loss account 171
6.5.2 Balance sheet 171
6.5.3 Notes 172
6.5.4 Acquisitions/Disposals 174
6.5.5 Stock Exchange requirements 174
._ 6.5.6 Proportionately consolidated joint ventures 174
business combinations 175
l. Introduction 175
7.1.1 ED 3 175
7.1.2 Merger relief 176
7.1.3 ED 31 177
7.1.4 SSAP 23 178
7.1.5 Companies Act 1989 179
7.1.6 ED 48 182
7.1.7 IAS 22 184
) 7.2 Acquisitions: basic principles 184
7.3 Acquisitions: measuring the fair value of the consideration 185
13A Securities 185
7.3.2 Monetary items 187
7.3.3 Non monetary items 187
7.3.4 Deferred consideration 188
7.3.5 Contingent consideration 188
7J.6.. Acquisition costs 192
7.3.7 Pre acquisition dividends 192
7.4 Acquisitions: measuring the fair value of the net assets acquired 193
7.4.1 Basic principles 193
7.4.2 The use of hindsight 194
7 1J Proposed requirements for individual assets and liabilities 195
7.4.4 Subsequent amendments to fair value 202
7.4.5 Push down accounting 205
7.5 Acquisitions: accounting for goodwill 205
7.5.1 Introduction 205
7.5.2 Immediate write off: which reserve? 208
7.5.3 Effect on realised profits of writing off goodwill 216
7.5.4 Amortisation 218
7.5.5 Negative goodwill 220
Detailed contents xiii
7.6 Step by step acquisitions 223
7.6.1 Background 223
7.6.2 Example 224
7.6.3 Conclusion 228
7.7 Mergers 229
7.7.1 Basic principles 229
7.7.2 Equity eliminations 229
7.7.3 Expenses of the merger 231
7.7.4 Non coterminous accounting periods 231
7.7.5 Dividends of the subsidiary 233
7.8 Disclosure requirements relating to business combinations 233
7.8.1 General 233
7.8.2 Acquisitions 234
7.8.3 Mergers 240
7.8.4 Transactions involving merger relief 241
7.8.5 Post Companies Act 1989 242
8 Disposals 243
8.1 Basic principles 243
8.2 Effective date of disposal 243
8.3 Partial disposals 245
8.4 Goodwill of subsidiaries disposed of 246
8.5 Deemed disposals 248
8.6 Disclosure requirements relating to disposals 248
9 Group reorganisations 250
9.1 Introduction 250
9.2 Setting up a new top holding company 251
9.3 Changing direct ownership of a company within a group 252
9.3.1 Subsidiary moved up 252
9.3.2 Subsidiary moved along 254
9.3.3 Subsidiary moved down 255
9.4 Divisionalisation of an existing group 256
9.5 Demergers 257
9.6 Capital contributions 259
9 6.1 Treatment in the financial statements of the paying
company 260
9.6.2 Treatment in the financial statements of the receiving
company 260
10 Conclusion 260
xiv Generally Accepted Accounting Practice in the United Kingdom
CHAPTER 5 FOREIGN CURRENCIES 269
1 The development of an accounting standard in the UK 269
1.1 Background 269
1.2 SSAP6 270
1.3 ED 16 270
1.4 ED 21 270
1.5 ED 27 271
1.6 SSAP 20 272
2 Requirements of SSAP 20 272
2.1 Objectives of translation 272
2.2 Definitions of terms 272
2.3 Individual companies 273
2.3.1 Recording of transactions 273
2.3.2 Retranslation of monetary/non monetary assets and
liabilities at balance sheet date 273
2.3.3 Treatment of exchange differences 274
2.3.4 Worked examples 274
2.3.5 Examples of accounting policies 275
2.3.6 Exchange gains where there are doubts as to convertibility
or marketability 275
2.3.7 Foreign equity investments financed by borrowings 275
2.3.8 Forward contracts 277
2.4 Consolidated accounts 278
2.4.1 Scope 278
2.4.2 Choice of method 278
2.4.3 Closing rate/net investment method 278
2.4.4 Temporal method 281
2.4.5 Foreign equity investments financed by borrowings 285
2.4.6 Associated companies 288
2.4.7 Foreign branches 289
2.5 Disclosures 290
2.5.1 Requirements of SSAP 20 290
2.5.2 Examples of disclosures 291
3 Problem areas 293
3.1 Individual companies 293
3.1.1 Date of transaction 293
3.1.2 Use of average rate 294
3.1.3 Dual rates or suspension of rates 295
3.1.4 Monetary or non monetary 295
3.1.5 Treatment of exchange differences 299
Detailed contents XV
3.2 Exchange gains on long term monetary items 301
3.2.1 In what circumstances do doubts as to convertibility or
marketability arise? 301
3.2.2 Past exchange losses 302
3.2.3 Settled or unsettled transactions 302
3.2.4 Current portion of long term item 302
3.2.5 Restriction of gain 303
3.3 Forward contracts, currency swaps and currency options 303
3.3.1 Forward contracts 303
3.3.2 Currency swaps 312
3.3.3 Currency options 313
3.4 Consolidated accounts — closing rate/net investment method 314
3.4.1 Subsidiary with non coterminous year end 314
3.4.2 Dual rates or suspension of rates 316
3.4.3 Calculation of average rate 316
3.4.4 Change from closing rate to average rate or vice versa 319
3.4.5 Which reserve should exchange differences be taken to? 321
3.4.6 Post acquisition capital or revaluation reserves 322
3.4.7 Treatment of exchange differences on disposal of subsidiary 325
3.4.8 Change from closing rate/net investment method to
temporal method or vice versa 328
3.4.9 Hyperinflation 328
3.4.10 Goodwill on consolidation 331
3.4.11 Inter period comparisons 332
3.4.12 Branches 334
3.5 Cover method 335
3.5.1 What are foreign currency borrowings ? 335
3.5.2 Borrowings taken out before or after the investment 335
3.5.3 Repayment of borrowings 339
3.5.4 Goodwill on consolidation 341
3.5.5 All investments/borrowings? 342
3.5.6 Must currencies be the same? 343
3.5.7 Pooled basis? 346
3.5.8 What is meant by condition (b) of paragraph 51 and
condition (c) of paragraph 57? 348
3.5.9 What should happen in the year of change of the above
conditions not being met? 350
3.6 Intra group long term loans and deferred trading balances 353
3.6.1 General requirement 353
3.6.2 Paragraphs 20 and 43 354
3.6.3 How permanent is permanent? 354
3.6.4 What happens in year of change? 355
xvi Generally Accepted Accounting Practice in the United Kingdom
3.6.5 Is such a treatment allowed in the company financial
statements? 357
3.6.6 If so, how should loans be translated? 358
3.6.7 UK subsidiary with loan from overseas parent company 359
3.7 Other intra group transactions 359
3.7.1 Dividends 359
3.7.2 Unrealised profits 361
4 Main criticisms of SSAP 20 and suggested solutions 362
4.1 Forward contracts and similar hedging contracts 362
4.1.1 Criticisms 362
4.1.2 Solution 363
4.2 Cover method 363
4.2.1 Criticisms 363
4.2.2 Solution 363
4.3 Reserve accounting 364
4.3.1 Criticism 364
4.3.2 Solution 364
4.4 Conclusion 365
5 Related Companies Act 1985 requirements 365
5.1 Realised profits 365
5.1.1 Schedule 4, paragraph 12 365
5.1.2 Section 262(3) 365
5.1.3 Settled transactions 366
5.1.4 Short term monetary items 366
5.1.5 Long term monetary items 366
5.2 Distributable profits 368
5.2.1 Section 263(3) 368
5.2.2 Long term monetary items 368
5.2.3 Section 275 and Schedule 4, paragraph 89 368
5.2.4 Cover method 369
5.2.5 Branch accounting 370
5.3 Disclosure 371
5.3.1 Basis of translation 371
5.3.2 Treatment of exchange differences in profit and loss
account 372
5.3.3 Reserve movements 372
5.3.4 Movements on provisions for liabilities and charges 372
5.3.5 Movements on fixed assets 372
5.4 Alternative accounting rules 373
5.4.1 Schedule 4, Part II, section C 373
5.4.2 SSAP 20, paragraph 66 373
Detailed contents Xvii
6 Comparison with US and IASC pronouncements 374
6.1 US 374
6.1.1 General comment 374
6.1.2 Main differences 374
6.2 IASC 376
6.2.1 Cover method 376
6.2.2 Forward exchange contracts 376
6.2.3 Disclosure 376
6.2.4 IAS E32 377
CHAPTER 6 FIXED ASSETS AND DEPRECIATION 383
1 Introduction 383
1.1 The meaning of fixed assets 383
1.2 Background 384
1.3 Criteria for recognition of fixed assets 384
1.3.1 General criteria 384
1.3.2 Criteria for intangible fixed assets 384
1.3.3 The brands debate: which intangible assets are capable of
being accounted for? 389
2 Cost 392
2.1 Basic requirement 392
2.2 Purchase price 392
2.3 Production cost 393
2.4 Directly and indirectly attributable costs 393
2.5 The period of production 394
2.6 Abnormal costs and cost inefficiencies 395
2.7 Improvements and repairs 396
3 Depreciation 397
3.1 Introduction 397
3.2 The requirements of the Companies Act 398
3.3 The development of an accounting standard in the UK 398
3.4 The requirements of SSAP 12 399
3.4.1 Scope 399
3.4.2 Definitions 399
3.4.3 Accounting treatment 399
3.4.4 Asset lives 400
3.4.5 Permanent diminutions 400
3.4.6 Change in method 400
3.4.7 Depreciation on revalued assets 400
xviii Generally Accepted AccountingJ^ractice_jn_ the United Kingdom
3.4.8 Depreciation on land and buildings 400
3.5 Useful economic life 400
3.6 Residual values 401
3.7 Depreciation methods 402
3.7.1 Straight line method 402
3.7.2 Reducing balance method 402
3.7.3 Other reducing balance methods 403
3.7.4 Annuity method 404
3.7.5 Unit of production method 404
3.7.6 Choice of depreciation method 404
3.8 Changes in method of providing depreciation 405
3.9 Changes in estimated life 405
3.10 Treatment of minor items 406
3.11 Non depreciation of property 408
3.11.1 Reasons for not depreciating buildings 408
3.11.2 High standards of maintenance as a reason for not
providing depreciation 408
3.12 Non depreciation of other fixed assets 410
4 Permanent diminutions 410
4.1 Introduction 410
4.2 Companies Act requirements 411
4.3_ SSAP 12 and permanent diminutions 411
4.4 The estimation of recoverable amount 411
4.5 Diminutions in value of individual assets or portfolio of assets 413
5 Revaluations 413
5.1 Introduction 413
5.1.1 Background 413
5.1.2 ED 51 415
5.2 Bases of valuation 416
5.2.1 General principles 416
5.2.2 Open market value of land and buildings 420
5.2.3 Depreciated replacement cost of land and buildings 425
5.2.4 Valuations of other assets 426
5.2.5 The comparability of valuations 426
5.3 Accounting for revaluations 426
5.3.1 Accounting for revaluation surpluses 427
5.3.2 Depreciation of revalued assets 429
5.3.3 Disposal of revalued assets 430
5.3.4 Downward valuations and provisions for permanent
impairment 432
5.3.5 Other uses of the revaluation reserve 435
Detailed contents xix
5.3.6 Distributable profits and revaluations of fixed assets 436
6 Disclosure 437
6.1 Introduction 437
6.2 Directors report 437
6.3 Balance sheet and profit and loss account 439
6.4 Accounting policies 440
6.5 Notes to the financial statements 441
6.6 Additional disclosures for items carried at valuation 444
7 Comparison with US and IASC 448
7.1 US 448
7.2 IASC 449
CHAPTER 7 INVESTMENT PROPERTIES 457
1 The development of an accounting standard in the UK 457
2 The requirements of SSAP 19 458
2.1 Definition of investment property 458
2.2 Balance sheet valuation 459
2.3 Revaluation reserve 459
2.4 Disclosure 459
3 Issues arising from SSAP 19 459
3.1 Relevant Companies Act requirements 459
3.1.1 Disclosure on use of true and fair override 459
3.1.2 Diminutions in value 460
3.1.3 Revaluation reserve 461
3.1.4 Balance sheet classification 461
3.2 Frequency of independent valuation 462
4 Comparison with US and IASC pronouncements 462
4.1 US 462
4.2 IASC 4A2
5 Issues specific to property companies 464
5.1 Profit and loss account presentation 464
5.2 Reclassifications from investment property to trading property 466
5.3 Reclassifications from trading property to investment property 467
5.4 Turnover definition 468
5.5 Revenue recognition 469
5.6 Lessee accounting 469
6 Conclusion
XX Generally Accepted Accounting Practice in the United Kingdom
CHAPTER 8 INVESTMENTS 473
1 Introduction 473
2 The requirements of the Companies Act 475
2.1 Classification 475
2.2 Accounting rules 476
2.2.1 Fixed asset investments 476
2.2.2 Current asset investments 477
2.2.3 Assigning purchase price to particular investments 477
2.3 Disclosure requirements 478
3 The proposed requirements of ED 55 484
3.1 Classification 484
3.2 Accounting requirements 485
3.2.1 Fixed asset investments 485
3.2.2 Current asset investments 486
3.2.3 Requirements for all investments 487
3.2.4 Income recognition 488
3.2.5 Redeemable interest bearing securities 488
3.2.6 Investments held for hedging purposes 489
3.2.7 Summary of main measurement rules 489
3.3 Disclosure requirements 490
4 Comparison with US and IASC pronouncements 491
4.1 US 491
4.2 IASC 491
4.2.1 IAS 25 491
4.2.2 E32 491
CHAPTER 9 RESEARCH AND DEVELOPMENT 495
1 Introduction 495
1.1 Possible accounting treatments of research and development expenditure 495
1.1.1 Charge all costs to expense when incurred 495
1.1.2 Capitalise all costs when incurred 496
1.1.3 Capitalise costs when incurred if certain conditions are met 496
1.1.4 Accumulation of costs in a special category 497
1.1.5 Which treatment should be adopted? 497
1.2 Development of accounting standards in the UK 497
1.2.1 ED 14 497
1.2.2 ED 17 497
1.2.3 SSAP 13 498
Detailed contents
1.2.4 ED 41 1.2.5 SSAP 13 (Revised) 498
2 Requirements of SSAP 13 2.1 Definitions . . . . . . . . . . . . . . . . . . 4
2.2 Accounting 4
2.2.1 Fixed assets.
SOD
2.2.2 Pure and applied research 2.2.3 Development expenditure
2.3 Disclosure 500
2.4 Current reporting practice 3 Requirements of the Companies Act 1985 3.1 Accounting 3.2 Disclosure 504
, , , „. .¦¦¦ 505
3.2.1 Financial statements 3.2.2 Directors report 3.3 Distributable profits...
F 505
4 Problem areas 4.1 What activities should be included within research and development? ....... 506
4.2 What costs should be included within the category of research and
development? v 507
4.3 Availability of choice between immediate write off and capitalisation
of development expenditure 4.4 Elimination of uncertainty in respect of development expenditure 508
4.4.1 Expenditure previously not capitalised 5()X
4.4.2 Deferred expenditure previously capitalised and subsequently
written down 5 Comparison with US and IASC pronouncements... ,.„
5.1 US ^
50X
IASC 50M
CHAPTER 10 CAPITALISATION OF BORROWING COSTS 51}
,1
1 Introduction 1.1 The development of the practice of capitalisation r,,
1.2 Arguments for and against capitalisation S1
1.3 The accounting alternatives .
1.3.1 Account for interest on debt as an expense of the period
in which it is incurred C1,
Jio
1.3.2 Capitalise interest on debt as part of the cost of an asset
when prescribed conditions are met r, .
xxii Generally Accepted Accounting Practice in the United_JUngdom_
1.3.3 Capitalise interest on debt and imputed interest on owners
equity in respect of qualifying assets during their
production period 517
2 A comparison between the UK, US and IASC 518
2.1 The current UK position 518
2.1.1 ED 51 519
2.2 US 520
2.2.1 Qualifying and non qualifying assets 520
2.2.2 Capitalisation rate 521
2.2.3 Capitalisation period 522
2.2.4 Disclosure 522
2.3 IASC 522
3 Issues arising in practice 524
3.1 Qualifying assets 52f__
3.2 Period of production 525
3.2.1 Commencement of capitalisation period 525
3.2.2 End of capitalisation period 526
3.2.3 Interruptions and delays during development 527
3.3 Determination of amount to be capitalised 527
3.3.1 Borrowings and capitalisation rate 527
3.3.2 Limitation on interest capitalised 531
3.3.3 Gross or net of tax relief 532
3.3.4 Compounding 533
3.3.5 Accrued costs 534
3.3.6 Asset not previously held at cost 534
3.4 Group financial statements 534
3.4.1 Borrowings in one company and development in another 534
3.4.2 Qualifying assets held by investments accounted for
using the equity method 534
3.5 Other issues 536
3.5.1 Provisions for diminution in value 536
3.5.2 Change of policy to capitalise interest 536
3.5.3 Exchange differences as a borrowing cost 536
3.5.4 Assets produced by others 537
3.5.5 Depreciation 537
4 Disclosure 537
4.1 Balance sheet and related notes 537
4.2 Profit and loss account and related notes 538
4.3 Accounting policy 539
5 Conclusion 540
Detailed contents
~ xxjiL
^PIERliiI°^^DLONG:TERMCONTRACTS ~
1 Introduction L1 s^;™^^^ 543
1 2 What are stocks and long term contracts? 543
1 3 Objectives of stock measurement 543
2 Determining the cost of stock 544
2 1 Direct costing vs. full absorption costing. . . . . . . 545
3 Determining the cost of sales M6
3.1 Cost flow assumptions based on the physical flow o f goodZ 547
3 1.1 Specific identification/actual cost..
3.1.2 FIFO (first in, first out) 547
3 2 Cost flow assumptions which disregard the physical flow of goods Ill
3.2.1 Weighted average 3.2.2 UFO (last in, first out) 548
3.2.3 Base stock 548
3 3 Illustration of the effect of different cost flow assumptionsZZZZ. 550
4 The development of SSAP 9 (revised) 4.1 The original SSAP 9 553
4.2 The need for revision 4.3 SSAP 9 (Revised) 553
c T. 554
• Ihe requirements of the Companies Act 1985 5.1 Lower of cost and net realisable value 5.2 Stock included at a fixed amount 5.3 Determination of purchase price or production cost sss
5.4 Costing method 5.5 Current cost , 557
6 Stocks ^ ^
6.1 The accounting and disclosure requirements of SSAP 9 (Revised). ^
6.1.1 Suitable analysis of stocks „„
6.1.2 Accounting policies s,
6.2 Comparison with US and IASC pronouncements ^..
62A us ~Z~^
6 2 2 IASC 560
6.3 Problem areas ct ¦
5ol
6.3.1 Constituents of cost ^1
6.3.2 Net realisable value ^4
6.3.3 The valuation of high volumes of similar items of stock 566
r* 4 A ft n fir * n r» #¦ *~ rv^ f w s t
xxiv Generally Accepted Accounting Practice jn_Jhe_JJni^d_Kingdom__
7 Long term contracts 568
7.1 The accounting and disclosure requirements of SSAP 9 (Revised) 568
7.1.1 Definition 568
7.1.2 Turnover, related costs and attributable profit 569
7.1.3 Accounting policies 570
7.1.4 The financial statement presentation of long term contracts 571
7.1.5 Illustrative examples of the disclosure of long term contracts 572
7.2 Comparison with US and IASC pronouncements 578
7.2.1 US 578
7.2.2 IASC 578
7.3 Problem areas 579
7.3.1 How much profit? 579
7.3.2 How much turnover? 581
7.3.3 Approved variations and claims 582
7.3.4 Should profits be accrued on short term contracts? 583
7.3.5 Inclusion of interest 583
CHAPTER 12 SHARE AND LOAN CAPITAL 587
1 Introduction 587
2 Present requirements 588
2.1 The measurement of share and loan capital 588
2.1.1 Share capital 588
2.1.2 Loan capital 589
2.2 Disclosure requirements 590
2.2.1 Share capital 590
2.2.2 Loan capital 594
2.3 The purchase of a company s own shares 597
2.4 Scrip dividends 603
3 TR677 608
4 Accounting for particular types of instrument 609
4.1 Bonds with no rights to conversion 609
4.1.1 Stepped bonds 609
4.1.2 Deep discounted bonds 610
4.1.3 Bonds with variable interest rates or redemption payments 612
4.2 Share options and warrants 612
4.3 Convertible bonds 613
4.3.1 Traditional convertible bonds 613
4.3.2 Bonds with share warrants attached 614
4.3.3 Convertible bonds with premium puts 615
Detailed contents XXV
4.3.4 Convertible capital bonds 618
4.4 Preference shares 621
4.4.1 Redeemable preference shares 621
4.4.2 Convertible preference shares 622
4.5 Interest rate swaps 625
5 Comparison with US and IASC pronouncements 628
5.1 US 628
5.1.1 Share capital 628
5.1.2 Redeemable shares 628
5.1.3 Treasury stocks 629
5.1.4 Additional paid in capital 629
5TT5 Dividends 630
5.1.6 Debt 630
5.1.7 Convertible debt and debt issued with warrants 632
5.1.8 Convertible bonds with a Premium Put 632
5.1.9 Financial instruments project 632
5.2 I4SC 632
6 Conclusion 633
CHAPTER 13 OFF BALANCE SHEET TRANSACTIONS 635
/ . Introduction 635
1.1 What are off balance sheet transactions ? 635
1.2 Justifications for entering into off balance sheet transactions 635
1.3 Why the concern with off balance sheet transactions? 636
2 The development of an accounting standard 641
2.1 ICAEW Technical Release 641
2.2 ED 42 642
2.3 ED 49 644
0/ Common forms of off balance sheet finance 647
;3 1 / Quasi subsidiaries 647
3.1.1 Off balance sheet transactions involving quasi subsidiaries 647
3.1.2 The old Companies Act definition 654
3.1.3 Problems with the old definition of subsidiary 655
3.1.4 The new definition of a subsidiary undertaking 657
3.1.5 ED 49 658
( 3.2/ Consignment stocks 659
3.3 Sale and repurchase agreements 661
3.4 Factoring of debts 665
3.5 Securitised mortgages 668
Xxvi Generally Accepted Accounting Practice^jn_theJJnited^ingdom_
3J5 Loan transfers 673
4 Current disclosure requirements affecting off balance sheet transactions 674
5 ] Comparison with US and IASC pronouncements 678
V 5.1 US 678
5.1.1 General 678
5.1.2 Quasi subsidiaries 678
5.1.3 Sale of assets 678
5.1.4 Project financing 679
5.1.5 Transfers of receivables with recourse 679
5.1.6 Financial instruments 680
5.2 IASC 682
6 Conclusion 682
CHAPTER 14 LEASES AND HIRE PURCHASE CONTRACTS 685
1 Introduction 685
1.1 Historical development 685
1.2 What are leases and hire purchase contracts? 685
1.3 The tax position 685
1.4 SSAP 21 686
1.5 Accounting requirements of SSAP 21 687
2 Determining the lease type 687
2.1 The 90% test 687
2.1.1 The fair value 688
2.1.2 The implicit interest rate 688
2.1.3 The minimum lease payments 688
2.1.4 An unguaranteed residual value 689
2.1.5 The lease term 689
2.2 90% test example 690
2.3 Determining the lease type — other factors 690
3 Accounting by lessees 691
3.1 Introduction 691
3.2 Capitalised fixed asset 691
3.3 Finance lease obligation 692
3.4 Methods of allocating finance charges to accounting periods 693
3.5 Carrying values 694
3.6 Operating leases 695
4 Disclosure by lessees 695
4.1 SSAP 21 requirements 695
4.2 Related Companies Act requirements 696
Detailed contents XXvii
4.3 Disclosure in practice 697
5 Accounting by lessors 703
5.1 Introduction 703
5.2 Operating leases 703
5.3 Finance leases 704
5.4 Choice and disclosure of methods 704
5.5 Allocation of gross earnings — finance leases 704
5.5.1 Introduction 704
5.5.2 Methodology 705
5.5.3 Assumptions 708
5.5.4 Other methods 708
5.5.5 Net investment or net cash investment 709
5.6 Allocation of gross earnings — hire purchase contracts 709
5.6.1 Introduction 709
5.6.2 Methodology 710
5.6.3 Choice of method 710
6 Disclosure by lessors 710
6.1 SSAP21 requirements 710
6.2 Related Companies Act requirements 711
6.3 Disclosure in practice 711
7 Problem areas 714
7.1 Classification of leases 714
7.1.1 Current practice 714
7.1.2 SSAP 21 714
7.1.3 Technical Release 664 715
7.1.4 Leasing as an off balance sheet transaction 715
7.2 Termination of leases 717
7.2.1 Lease classification 717
7.2.2 Operating leases 718
7.2.3 Finance leases — lessee 718
7.2.4 Finance leases — lessor 718
7.3 Tax variation clauses 719
7.3.1 Introduction 719
7.3.2 Adjustments 719
7.3.3 Lessee 719
7.3.4 Lessor 720
7.4 Sale and leaseback transactions 720
7.4.1 Introduction 720
7.4.2 Purchaser/lessor 720
7.4.3 Vendor/lessee 720
7.4.4 Leaseback under a finance lease 720
xxviii Generally Accepted Accounting Practice iiijhe_ United Kingdom
7.4.5 Leaseback under an operating lease 722
7.5 Manufacturers/dealers 724
7.5.1 Introduction 724
7.5.2 Allocating the total profit of the manufacturer/dealer 724
7.6 Sub leases and back to back leases 725
7.6.1 Introduction 725
7.6.2 The original lessor and the ultimate lessee 725
7.6.3 The intermediate party 725
8 Comparison with US and IASC pronouncements 726
8.1 US 726
8.2 IASC 727
CHAPTER 15 GOVERNMENT GRANTS 731
1 Introduction 731
2 The development of SSAP 4 (Revised) 731
2.1 The original SSAP 4 731
2.2 ED 43 732
2.3 SSAP 4 (Revised) 732
3 The requirements of SSAP 4 (Revised) 732
3.1 Accounting 732
3.1.1 Treatment of capital grants 732
3.1.2 Treatment of revenue based grants 733
3.1.3 Accounting for receipt and repayment of grants 734
3.1.4 Matching grants against related expenditure 735
3.2 Disclosure 735
4 Problem areas 738
4.1 Achieving the most appropriate matching 738
4.2 Guidelines 739
4.2.1 Should the grant be split into its elements? 739
4.2.2 What was the purpose of the grant? 739
4.2.3 What is the period to be benefited by the grant? 739
4.2.4 Is a grant capital or revenue? 740
5 Comparison with the IASC pronouncement 740
Detailed contents xxix
CHAPTER 16 SEGMENTAL REPORTING 741
1 Introduction 741
1.1 Historical background 741
1.2 The objectives of segmental reporting 742
1.2.1 Introduction 742
1.2.2 The shareholder group 742
1.2.3 The investment analyst group 742
1.2.4 The lender/creditor group 743
1.2.5 Government 743
2 The UK position 743
2.1 Legislative requirements 743
2.2 Stock Exchange requirements 744
2.3 Accounting standards 745
2.4 SSAP25 746
2.4.1 ED 45 746
2.4.2 General principle 746
2.4.3 Scope 746
2.4.4 What is a reportable segment? 747
2.4.5 What is to be reported? 749
2.4.6 Disclosure in practice 751
2.4.7 Associated undertakings 754
2.4.8 Common costs 755
2.4.9 Methods of presentation 755
3 Problem areas 757
3.1 How to define a class of business 757
3.2 Changes in definition of segments 757
3.3 Inter segment sales 758
3.4 Common costs 758
3.5 Allocation of interest income and interest expense 758
3.6 How to define net assets 759
4 Comparison with US and IASC pronouncements 759
4.1 US 759
4.1.1 SFAS 14 760
4.2 IASC 762
4.2.1 Introduction 762
4.2.2 IAS 14 762
5 Conclusion 763
xxx Generally Accepted Accounting Fracticejmth^ United Kin^doni^
CHAPTER 17 PENSION COSTS 767
1 Introduction
1.1 Background 767
1.2 The development of an accounting standard in the UK 768
1.2.1 Napier interim report 768
1.2.2 ED 32 769
1.2.3 Statement of Intent 771
1.2.4 ED 39 771
1.2.5 SSAP24 772
2 Requirements of SSAP 24 772
2.1 Scope 772
2.2 Accounting objective 772
2.3 Definition of terms 773
2.4 Defined contribution schemes , 775
2.4.1 Accounting 775
2.4.2 Disclosure 775
2.5 Defined benefit schemes 776
2.5.1 Regular pension cost 776
2.5.2 Variations from regular cost 777
2.5.3 Discretionary and ex gratia pension increases and ex gratia
pensions 785
2.5.4 Balance sheet 785
2.5.5 Disclosure 789
3 The actuarial aspects of SSAP 24 796
3.1 Actuarial valuation methods 796
3.1.1 Background 796
3.1.2 The approach taken by the standard 797
3.1.3 Possible actuarial methods — accrued benefits methods 798
3.1.4 Possible actuarial methods — projected benefits methods 800
3.1.5 Actuarial valuation of assets 803
3.1.6 Conclusion 804
3.2 Actuarial assumptions and best estimates 804
3.3 The role of the actuary 805
4 Problem areas 806
4.1 The treatment of interest 806
4.2 Variations from regular cost 812
4.2.1 Calculation of remaining service lives 812
4.2.2 How should variations be amortised? 812
4.2.3 What is a significant reduction in employees? 815
4.2.4 Allocation of experience differences to funding consequences 815
Detailed contents XXxi
4.2.5 How to account for the unamortised difference remaining in
the year of the next actuarial valuation 816
4.2.6 How to treat a balance sheet asset which is shown to have
been eroded by a subsequent valuation 818
4.3 Negative pension cost 819
4.4 Hybrid schemes 821
4.5 Foreign schemes 821
4.6 Unfunded schemes 822
4.7 Deferred tax 822
4.8 Transitional provisions 823
4.8.1 Prior year adjustment or spread over remaining service lives....823
4.8.2 Restrictions on the choice of transitional method 825
4.8.3 Comparative figures in the year of implementation 826
4.9 Accounting for the pension schemes of an acquired subsidiary 826
4.10 Group schemes 827
5 Related Companies Act requirements 828
5.1 Pension commitments 828
5.2 Pension costs 828
5.3 Directors emoluments 829
6 Comparison with IASC and US pronouncements 829
6.1 IASC 829
6.1.1 IAS 19 829
6.1.2 E32 829
6.2 US 830
6.2.1 Background 830
6.2.2 SFAS 87 830
6.2.3 SFAS 88 831
7 Conclusion 832
CHAPTER 18 TAXATION 835
| 1 General principles 835
1.1 The nature of taxation 835
1.2 Allocation between periods 836
1.2.1 Background 836
1.2.2 Permanent differences 836
1.2.3 Timing differences 837
1.2.4 The deferral method 839
1.2.5 The liability method (with full provision/comprehensive
allocation) 841
1.2.6 The liability method (with partial provision) 843
XXXii Generally Accepted Accounting Practi^_jn_Jhe__United_Kin^dom_
1.2.7 The hybrid method 848
1.2.8 Discounting the liability 849
1.2.9 The net of tax method 849
1.3 Allocation within periods 850
2 The development of accounting for taxation in the UK 850
2.1 Accounting for tax payable 850
2.1.1 ED 12 850
2.1.2 SSAP 8 851
2.2 Accounting for deferred tax 851
2.2.1 ED 11 851
2.2.2 SSAP 11 851
2.2.3 ED 19 852
2.2.4 SSAP 15 852
2.2.5 ED 33 853
2.2.6 SSAP 15 (Revised) 854
2.3 Other ASC pronouncements 854
2.3.1 SSAP 5 854
2.3.2 ED 28 854
3 The requirements of the relevant accounting standards and company law 855
3.1 SSAP 8 855
3.1.1 Outgoing dividends and the related ACT 855
3.1.2 Recoverable ACT 855
3.1.3 Incoming dividends 857
3.1.4 Disclosure of the tax charge in the profit and loss account 857
3.2 SSAP 15 859
3.2.1 General approach 859
3.2.2 Definitions 860
3.2.3 Detailed accounting requirements 860
3.2.4 Disclosure 863
3.3 Companies Act 1985 868
4 Problem areas 869
4.1 Combining different categories of timing difference 869
4.2 Tax losses and deferred tax 872
4.2.1 Tax losses which have been incurred 872
4.2.2 Tax losses which have yet to be incurred 873
4.3 Tax losses and group relief 874
4.3.1 Background 874
4.3.2 The financial statements of the profitable company 874
4.3.3 The financial statements of the loss making company 875
4.4 Tax in the financial statements of a group 875
4.4.1 Offsetting consolidated tax balances 875
Detailed contents XXxiii
4.4.2 Tax effects of consolidation adjustments 877
4.5 ACT 878
4.5.1 ACT carried forward as an asset 878
4.5.2 ACT set against the deferred tax liability 878
4.6 Deferred tax and government grants 883
4.7 Changes in tax rates and allowances 884
4.7.1 Changes in the rates of tax 884
4.7.2 Changes in tax allowances 885
4.8 Revaluations of fixed assets 887
4.9 Overseas earnings 888
4.10 Deferred tax on fair value adjustments 889
i.5 Comparison with US and IASC pronouncements 889
5.1 IASC 889
5.2 US 890
5.2.1 APB 11 890
5.2.2 SFAS 96 890
5.2.3 Main differences between US and UK requirements 891
(T Conclusion 893
CHAPTER 19 EXTRAORDINARY ITEMS AND PRIOR YEAR
ADJUSTMENTS 897
1 The need for a standard 897
1.1 Income measurement 897
1.1.1 The all inclusive concept 898
1.1.2 The current operating performance concept 898
1.1.3 Which concept? 899
1.2 The development of UK standards 899
1.2.1 The original SSAP 6 900
1.2.2 The revision of SSAP 6 900
2 The requirements of SSAP 6 (Revised) 902
2.1 Identification of extraordinary and exceptional items M02
2.1.1 Definitions 902
2.1.2 Examples of exceptional and extraordinary items 903
2.2 Terminated activities 904
2.2.1 Identification of a business segment 904
2.2.2 Items to be taken into account in evaluating the effect of
discontinuing a business segment 904
2.2.3 Decision date and implementation date 905
2.3 Tax attributable to extraordinary items 907
2.4 Statement of movements on reserves 908
Xxxiv Generally Accepted Accounting Practice in the United Kingdom
2.5 Prior year adjustments 908
2.5.1 Definition 908
2.5.2 Identification of prior year adjustments 908
2.5.3 Changes in accounting policy 909
2.5.4 Correction of fundamental errors 909
2.5.5 Accounting treatment 910
2.6 Historical summaries, half yearly reports and preliminary profit
statements 913
2.7 Exceptions from SSAP 6 913
2.7.1 Reserve movements permitted or required by other
accounting standards 913
2.7.2 Reserve movements permitted or required by law 914
2.7.3 Value based companies 914
3 Disclosure requirements 915
3.1 Profit and loss account format 915
3.2 Extraordinary items 916
3.3 Exceptional items 917
3.4 Prior year adjustments 919
3.5 Statement of movements on reserves 920
4 Problem areas 922
4.1 Definition of extraordinary items 922
4.2 Terminated activities 924
4.2.1 Definition of business segment 924
4.2.2 Identification of decision date and implementation date 926
4.3 Disclosure requirements relating to exceptional and extraordinary items 928
4.4 Historical summaries, half yearly reports and preliminary profits
statements 929
5 Comparison with US, IASC and Canadian pronouncements 929
5.1 US 929
5.1.1 Extraordinary items 929
5.1.2 Terminated activities (discontinued operations) 931
5.1.3 Prior year adjustments 931
5.2 IASC 932
5.3 Canada 933
5.3.1 Infrequency of occurrence 933
5.3.2 Normal business activities 934
5.3.3 Decisions by management 934
6 Conclusion 934
Detailed contents XXXV
CHAPTER 20 EARNINGS PER SHARE 939
1 Introduction 939
2 Scope of SSAP 3 940
3 The basic EPS 940
3.1 Definition of EPS 940
3.2 Disclosure 941
4 Changes in equity share capital 942
4.1 Issue for cash at full market price 942
4.2 Bonus issue and share split 942
4.3 Rights issue 943
4.4 Options exercised during the year 946
4.5 Issue for cash at less than full market price 946
4.6 Purchase and redemption of own shares 946
4.7 Post balance sheet changes in capital 946
4.8 Issue to acquire another business 947
4.9 Group reconstructions 948
4.10 Adjustments to EPS in five year summaries 949
5 Matters affecting the EPS calculation 949
5.1 Earnings 949
5.2 Preference dividends 949
5.3 Losses 950
5.4 Prior year adjustments 950
5.5 Different classes of equity shares 950
5.6 Net and nil bases 951
5.6.1 Should EPS be calculated net or nil ? 952
5.6.2 Calculation of nil basis EPS 953
5.7 Other bases 955
6 Fully diluted earnings per share 958
6.1 The need for fully diluted EPS 95S
6.2 Disclosure of fully diluted EPS 959
6.3 Calculation of fully diluted EPS 960
6.3.1 Equity shares with future dividend entitlement 960
6.3.2 Convertible securities 961
6.3.3 Options or warrants to subscribe for equity shares 964
6.3.4 Fully diluted EPS calculations involving more than one
type of potentially dilutive security 965
6.3.5 Deferred consideration agreements 966
xxxvi Generally Acarpted^A^cmm^^
7 Comparison with US pronouncements 968
7.1 The primary EPS 968
7.2 Fully diluted EPS 969
7.3 Disclosure 969
CHAPTER 21 POST BALANCE SHEET EVENTS 973
1 The development of accounting for post balance sheet events 973
1.1 Introduction 973
1.2 Companies Act 1948 974
1.3 ICAEW Recommendation N17 974
1.4 ED 22 974
1.5 SSAP 17 975
2 Requirements of SSAP 17 975
2.1 Definitions 975
2.2 Events requiring adjustment 977
2.3 Events not requiring adjustment but requiring disclosure 977
2.4 Disclosure requirements 980
3 Problem areas 982
3.1 Reclassification of a non adjusting event as adjusting in exceptional
circumstances 982
3.2 The valuation of stock realised after the balance sheet date 983
3.3 Long term contracts 984
3.4 Acquisitions and disposals of fixed assets 984
3.5 Window dressing 986
3.6 Valuations of property 987
3.7 Insolvency of a debtor 987
^4, Comparison with US and IASC pronouncements 987
4.1 US 987
4.2 IASC 988
, 5 Conclusion 988
CHAPTER 22 CONTINGENCIES 991
1 The development of accounting for contingencies 991
1.1 Introduction 991
1.2 The historical background 991
2 Requirements of SSAP 18 992
2.) Definition of contingency 992
Detailed contents XXXVii
%.Z Contingent gains 992
£.3 Contingent losses 993
2.4 Offsets 994
£.5 Groupings 994
(2.6 Disclosure requirements 995
3 Problem areas 995
3.1 Probable, possible or remote 995
3.2 Estimating the amount of a contingency 996
3.3 Disclosure of the financial effect of a contingency 997
3.4 Litigation and disclosure of potentially prejudicial information 998
3.5 Disclosure of remote contingencies 999
3.6 Other problem areas 1000
3.6.1 Guarantees — year end or maximum liability 1000
3.6.2 Discounted bills of exchange 1001
3.6.3 VAT groups 1001
3.6.4 Performance bonds 1002
i Comparison with US and IASC pronouncements 1003
4.1 US 1003
4.2 IASC 1004
CHAPTER 23 STATEMENTS OF CASH AND FUNDS FLOW 1007
1 Introduction 1007
1.1 What is a funds statement? 1007
1.2 The form and content of the funds statement 1008
1.3 The objectives of the funds statement 1009
1.3.1 The funds statement and cash flows 1009
1.3.2 SSAP 10 and the objectives of the funds statement 1010
2 The requirements of SSAP 10 1011
3 The meaning of funds 1012
3.1 Net liquid funds 1013
3.2 Working capital 1015
3.3 Net borrowings 1016
3.4 Total external financing 1018
3.5 Other formats 1020
4 Problem areas 1020
4.1 The starting point — before or after taxation? 1020
4.2 Funds absorbed by operations 1023
4.3 Extraordinary items 1024
4.4 Netting off of transactions 1025
XXXviii Generally Accepted Accounting^Pmctic£jn_JJK_United^in^doi^
4.5 Prior year adjustments 1025
4.6 Foreign currency differences 1025
4.6.1 Exchange differences in individual companies 1025
4.6.2 Exchange differences on consolidation 1026
4.6.3 Cover method 1028
4.7 Group financial statements 1028
4.7.1 Minority interests 1028
4.7.2 Investments in associated undertakings 1029
4.7.3 Acquisitions and disposals of subsidiaries 1030
5 Comparison with US and IASC requirements 1032
5.1 US 1032
5.1.1 Introduction 1032
5^12. Focus of SFAS 95 1033
5.1.3 Cash equivalents 1033
5.1.4 Form and content of the statement of cash flows 1034
5.1.5 Investing activities 1034
5.1.6 Financing activities 1035
5.1.7 Operating activities 1035
5.1.8 Receipts and payments are presented gross 1036
5.1.9 Non cash activities are disclosed separately 1036
5.1.10 Choice of using the direct or indirect methods 1037
5.1.11 Illustrative examples 1037
5.2 IASC 1041
6 Proposed replacement of SSAP 10: ED 54 1042
6.1 Introduction 1042
2_ Classes and elements of cash flows 1043
6.2.1 Dividends and interest paid 1043
6.2.2 Taxation 1043
6.2.3 Foreign currency differences 1044
6.3 The direct or the indirect method? 1044
CHAPTER 24 RELATED PARTIES 1049
~ 1 Introduction 1049
1.1 The related party issue 1049
1.2 Possible solutions 1050
1.2.1 Remeasurement of transactions at fair values 1050
1.2.2 Disclosure of transactions 1050
1.3 Position in the UK 1050
Detailed contents XXXix
2 ED 46 1051
2.1 Introduction 1051
2.2 Identification of related parties 1051
2.3 Types of transactions and arrangements 1052
2.4 Information to be disclosed 1053
2.4.1 Abnormal transactions 1053
2.4.2 Controlling relationship 1054
2.4.3 Economic dependence 1054
2.4.4 Specific exemptions from disclosure 1054
2.4.5 Disclosure in practice 1055
3 Problem areas 1056
3.1 Identification of related parties 1056
3.1.1 Control or significant influence 1056
3.1.2 Controlled or significantly influenced parties 1056
3.1.3 Controlling or significantly influencing parties 1057
3.1.4 Enterprises under common control or significant influence 1060
3.1.5 Economic dependence 1061
3.1.6 Conclusion 1062
3.2 Types of transactions and arrangements 1062
3.2.1 Introduction 1062
3.2.2 Normal/abnormal transactions 1063
4 Other requirements in the UK 1064
4.1 Legislative requirements 1064
4.1.1 Directors 1064
4.1.2 Non director officers 1065
4.1.3 Related undertakings 1065
4.2 UK accounting standards 1069
4.3 Stock Exchange requirements 1070
4.3.1 Directors 1070
4.3.2 Shareholders 1071
5 Comparison with US and IASC pronouncements 1072
5.1 IASC 1072
5.1.1 IAS 24 1072
5.2 US H)73
5.2.1 SFAS 57 1073
x] Generally Accepted McourVtingJc^
CHAPTER 25 DIRECTORS AND OFFICERS LOANS AND
TRANSACTIONS 1077
1 Introduction 1077
1.1 Outline of historical development in the UK 1077
2 Definitions 1077
2.1 Director 1078
2.2 Shadow director 1078
2.3 Alternate director 1078
2.4 Connected person 1078
2.5 Officer 1080
2.6 Loan 1080
2.7 Quasi loan 1080
2.8 Credit transaction 1081
3 Disclosure requirements 1082
3.1 Introduction 1082
3.2 Scope 1082
3.3 Transactions requiring disclosure 1083
3.4 Section 330 transactions 1084
3.4.1 Introduction 1084
3.4.2 Disclosure requirements 1085
3.5 Material interest transactions 1088
3.5.1 Introduction 1088
3.5.2 Definition of material interest 1088
3.5.3 Disclosure requirements 1089
3.6 Exemptions from disclosure 1091
3.6.1 General 1091
3.6.2 Section 330 transactions 1091
3.6.3 Material interest transactions 1092
4 Banking companies under the Banking Act 1987 1093
4.1 Disclosure of transactions by banking companies 1093
5 Requirements of The Stock Exchange 1094
5.1 Listed companies 1094
5.2 USM companies 1095
6 Transactions involving officers 1095
6.1 Introduction 1095
6.2 Disclosure requirements 1095
6.3 Banking companies under the Banking Act 1987 1096
7 Conclusion 1096
Detailed contents xli
APPENDIX: LEGAL REQUIREMENTS 1098
A Introduction 1098
B Prohibited transactions 1098
B.I Loans 1098
B.2 Quasi loans and credit transactions 1098
B.3 Assignment/assumption of rights, obligations or liabilities 1098
B .4 Arrangements 1099
C Exempted transactions 1099
C.I Loans of small amounts 1099
C.2 Short term quasi loans 1099
C.3 Minor or business credit transactions 1099
C. 4 Inter company transactions 1099
C.5 Directors business expenditure 1100
C.6 Money lending companies 1100
C.7 Companies registered overseas 1101
D Sanctions 1101
D.I Civil remedies 1 101
D.2 Criminal penalties 1101
E Interests in contracts 1 102
F Substantial property transactions 1102
G Transactions involving officers 1103
CHAPTER 26 DIRECTORS REMUNERATION 1 ]()9
1 Introduction 1109
1.1 Remuneration 1109
1.2 Pensions 1109
1.3 Compensation for loss of office 1110
1.4 Service contracts I 1 10
2 Disclosure of remuneration 11 1 I
2.1 Introduction 1111
2.2 Disclosure of aggregate emoluments I I I I
2.2.1 Legal requirements 1 I I I
2.2.2 Problem areas 1113
2.3 Definition of emoluments 1114
2.3.1 Legal requirements 1114
2.3.2 Problem areas 1114
xlii Generally Accepted Accounting Practice in the United Kingdom
2.4 Computing aggregate emoluments 1118
2.4.1 Legal requirements 1118
2.4.2 Problem areas 1120
2.5 Bandings 1122
2.6 Emoluments waived 1125
2.7 Pensions of directors and past directors 1125
2.8 Compensation for loss of office 1127
2.8.1 Legal requirements 1127
2.8.2 Problem areas 1128
2.9 Payments to third parties 1129
3 Employee disclosures 1129
3.1 Director as an employee 1129
APPENDIX SPECIMEN FINANCIAL STATEMENTS 1133
INDEX OF EXTRACTS FROM ACCOUNTS 1195
INDEX 1199
|
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| dewey-full | 657.0941 |
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| dewey-search | 657.0941 |
| dewey-sort | 3657.0941 |
| dewey-tens | 650 - Management and auxiliary services |
| discipline | Wirtschaftswissenschaften |
| edition | 2. ed. |
| format | Book |
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| geographic_facet | Großbritannien |
| id | DE-604.BV005980359 |
| illustrated | Not Illustrated |
| indexdate | 2024-07-09T16:37:59Z |
| institution | BVB |
| institution_GND | (DE-588)2115206-8 |
| isbn | 0851216617 |
| language | English |
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| owner_facet | DE-19 DE-BY-UBM DE-703 DE-20 |
| physical | XLV, 1226 S. |
| publishDate | 1990 |
| publishDateSearch | 1990 |
| publishDateSort | 1990 |
| publisher | Longman |
| record_format | marc |
| spelling | Generally accepted accounting practice in the United Kingdom UK GAAP principal authors and ed.: Mike Davies ... UK GAAP 2. ed. London Longman 1990 XLV, 1226 S. txt rdacontent n rdamedia nc rdacarrier Financiële verslaglegging gtt Accounting Great Britain Rechnungslegung (DE-588)4128343-0 gnd rswk-swf Buchführungsgrundsätze (DE-588)4069703-4 gnd rswk-swf Richtlinie (DE-588)4137814-3 gnd rswk-swf Großbritannien Großbritannien (DE-588)4022153-2 gnd rswk-swf Rechnungslegung (DE-588)4128343-0 s Richtlinie (DE-588)4137814-3 s Großbritannien (DE-588)4022153-2 g DE-604 Buchführungsgrundsätze (DE-588)4069703-4 s 1\p DE-604 Davies, Mike Sonstige oth Ernst & Young (London) Sonstige (DE-588)2115206-8 oth HBZ Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=003755176&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis 1\p cgwrk 20201028 DE-101 https://d-nb.info/provenance/plan#cgwrk |
| spellingShingle | Generally accepted accounting practice in the United Kingdom UK GAAP Financiële verslaglegging gtt Accounting Great Britain Rechnungslegung (DE-588)4128343-0 gnd Buchführungsgrundsätze (DE-588)4069703-4 gnd Richtlinie (DE-588)4137814-3 gnd |
| subject_GND | (DE-588)4128343-0 (DE-588)4069703-4 (DE-588)4137814-3 (DE-588)4022153-2 |
| title | Generally accepted accounting practice in the United Kingdom UK GAAP |
| title_alt | UK GAAP |
| title_auth | Generally accepted accounting practice in the United Kingdom UK GAAP |
| title_exact_search | Generally accepted accounting practice in the United Kingdom UK GAAP |
| title_full | Generally accepted accounting practice in the United Kingdom UK GAAP principal authors and ed.: Mike Davies ... |
| title_fullStr | Generally accepted accounting practice in the United Kingdom UK GAAP principal authors and ed.: Mike Davies ... |
| title_full_unstemmed | Generally accepted accounting practice in the United Kingdom UK GAAP principal authors and ed.: Mike Davies ... |
| title_short | Generally accepted accounting practice in the United Kingdom |
| title_sort | generally accepted accounting practice in the united kingdom uk gaap |
| title_sub | UK GAAP |
| topic | Financiële verslaglegging gtt Accounting Great Britain Rechnungslegung (DE-588)4128343-0 gnd Buchführungsgrundsätze (DE-588)4069703-4 gnd Richtlinie (DE-588)4137814-3 gnd |
| topic_facet | Financiële verslaglegging Accounting Great Britain Rechnungslegung Buchführungsgrundsätze Richtlinie Großbritannien |
| url | http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=003755176&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA |
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