For the year ended , 31st August 2024 the company has transitioned from the Financial Reporting Standard applicable to the Micro-entities Regime (FRS 105) to FRS 102 Section 1A: The Financial Reporting Standard applicable in the UK and Republic of Ireland. This change in framework has been applied retrospectively from the 1 September 2022, and the comparative figures for the year ended 31st August 2023 have been restated where necessary.
FRS 102 Section 1A provides a more comprehensive accounting and disclosure framework than FRS 105, and permits the use of fair value accounting for certain assets, including investment property.
Impact of Transition
Under FRS 105, investment property was held at historical cost less depreciation and impairment. On transition to FRS 102 Section 1A, investment property is measured at fair value, with changes in fair value recognised in profit or loss.
As a result of this change in accounting policy, the company has recognised a fair value gain of £916,200 on its investment property as at 1 September 2022, which has been credited to retained earnings on transition. The carrying value of the investment property increased from £39,875 to £980,000 as at the date of transition. Deferred tax of £217,151 has been recognised in accordance with FRS102 1A on transition also. This adjustment has no impact on cash flows but affects reported profit and net assets.