To mark this momentous year for UK GAAP, I'm embarking on a mission to work my way through FRS 102, reading a portion on each working day of 2015 and writing a short blog entry on my thoughts and musings (be they few or many).
Day 30 (27 Feb)
Another quick post today before the weekend starts. It's our first dress-down Friday and I'm away from the office, so I'm unable to confirm whether any colleagues are wearing t shirts made from the redundant pages of their old UK GAAP books, as I'd suggested...
Yesterday I ran through a couple of payment tables to illustrate how the effective interest rate method works.
Financing transactions that are arm's length should normally lead to an effective rate that is at least approximately the market rate.
In reality, some of these cashflows may be variable and their timing or amount unknown. So FRS 102 requires a re-evaluation at each period end and an update to the application of amortised cost where needed.
Section 11 also covers impairment losses on financial instruments measured at amortised cost in paras 21-26, which is all pretty straightforward.
Next week - time for section 11's most significant contribution to the standard as a whole - fair value and how to calculate it. Have a great weekend. I'll spend most of mine skydiving and reading the works of Omar Khayyam...
P.S. If you missed yesterday's instalment please click here.