During the year, the directors identified a historic error whereby depreciation had ceased on certain tangible fixed assets that remained in use. The prior year comparatives have been restated to correct this, reducing fixed assets and reserves by £65,166.
In prior periods, part of the freehold property was revalued upward by £85,362, with a corresponding revaluation reserve recognised. The revalued element was subsequently fully depreciated, with the additional depreciation reducing retained earnings over time. As the company prepares its financial statements under FRS 105, which does not permit revaluation accounting, the directors concluded that this treatment was not compliant. The revaluation reserve has therefore been eliminated and the asset restated to historical cost less accumulated depreciation. This has been accounted for as a prior period error, with comparatives restated. There was no net impact on total equity.