How will New GAAP change my financial statements?

How will New GAAP change my financial statements?

Adopting New GAAP will bring key changes in the requirements applicable to your financial reporting.

Adopting New GAAP will bring key changes to your financial reporting.

Depending on the nature of your operations and the choices you elect to make, adopting New GAAP will bring key changes in the requirements applicable to your financial reporting.

The most challenging issues are likely to be:

  • Financial Instruments & foreign currency
  • Business combinations & goodwill
  • Leases and transactions containing embedded leases
  • Deferred tax
  • Investment properties
  • Defined benefit pension schemes.

It is also important not to forget the challenges which new disclosure requirements will bring.

The following is a high level assessment of some of areas of potential change:

 

Top of Form

Key differences

Bottom of Form



Current Irish and UK GAAP


FRS 102


IFRS/FRS 101

“Look and feel” Layout of financial statements
Traditional company law, P&L and balance sheet Broadly as per current GAAP Standard IFRS layout is significantly different
Disclosures Smallest volume Marginally more than current GAAP Significantly more than FRS 102 for full IFRS. Reduced disclosures apply under FRS 101
GAAP Overview of GAAP framework Redundant Approximately 300 pages (but more judgement involved).
Updated every 3 years
2,000+ pages. Updated annually.


Accounting Standards
Functional currency
Determination of functional currency
requires limited analysis
Detailed analysis required
Detailed analysis required
Derivatives (e.g. FX contracts,
interest rate swaps)
Off balance sheet
On balance sheet at fair value
On balance sheet at fair value.
Significant disclosure requirements under full IFRS
Financial assets and liabilities
No specific standards for financial assets
Classification and measurement may differ
Classification and measurement may differ. Significant disclosure requirements under full IFRS
Deferred tax
Not complex
Similar model to current GAAP
Different model to current GAAP
Goodwill – amortisation period
Up to 20 years
Presumed 5 years or less
No amortisation. Annual impairment test required.
Investment property
Fair value – FV movements in reserves
(unless impairment)
Fair value if reliably measurable – FV movements in profit or loss
Cost or fair value – FV movements in
profit or loss
Borrowing cost capitalisation
Policy choice
Policy choice
Must capitalise if criteria met
Development cost capitalisation
Policy choice
Policy choice
Must capitalise if criteria met
Intercompany balances
Held at face value
May need to fair value if long-term and below market interest rate
May need to fair value if long-term and below market interest rate

Connect with us

 

Request for proposal

 

Submit

Contact us

New GAAP

KPMG professionals can help your business adhere to the new Irish & UK GAAP framework.

 
Read more