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FRS 102: Financial instruments under UK GAAP

FRS 102 Section 11 Basic Financial Instruments and Section 12 Other Financial Instruments Issues set out the requirements for the recognition, derecognition, measurement and disclosure of financial assets and financial liabilities. Section 12 includes the requirements for derivatives and hedge accounting.

The standard

The requirements regarding financial instruments are set out as part of FRS 102. However, individual sections of the standard should not be looked at in isolation as other parts may be relevant.

FRS 102 is regularly updated and amended by the Financial Reporting Council (FRC). For the full text of FRS 102, guidance on which version of the standard to apply and notes on recent amendments, see our main FRS 102 page.

ICAEW guides and support

Helpsheets and factsheets

2021 IFRS Accounts

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10-08-2021

This factsheet highlights new and modified requirements for preparers of IFRS accounts for accounting periods beginning on or after 1 January 2021, as well as the implications of COVID-19, Brexit and climate change.

Renegotiating loan contracts under FRS 102

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08-06-2021

This guide outlines the accounting requirements under FRS 102 when loan contract terms are renegotiated together with illustrative examples.

Financial instruments: FRS 102 factsheet

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14-10-2020

Summarising the requirements of FRS 102 for basic and other financial instruments, this factsheet includes practical tips and illustrative examples.

FRS 102 Debt for equity swaps

05-06-2018

This factsheet explains how to account for ‘debt for equity swaps’ in accordance with FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. Published 05 June 2018.

FRS 102 - Impairment of assets

07-03-2018

This factsheet is a summary of the basic principles of accounting for impairment with practical guidance to will help with implementation.

FRS 102 Deferred Tax factsheet

15-11-2017

This factsheet provides an overview of the accounting and disclosure requirements for deferred tax in accordance with FRS 102 in response to some frequently asked questions about this challenging topic. Published 15 November 2017 (updated March 2018).

FRS 102 Update: Intercompany loans at non-market rates

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11-07-2017

This FRS 102 Update addresses some of the questions raised by members regarding the accounting treatment of intercompany loans which are provided interest free or at below-market interest rates. Updated July 2017.

FRS 102 Update: How do I account for intercompany loans at non-market rates?

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11-07-2017

FRS 102 Update – Intercompany loans at non-market rates and amend the text below as follows: This FRS 102 Update addresses some of the questions raised by members regarding the accounting treatment of intercompany loans which are provided interest free or at below-market interest rates. Updated July 2017.

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Webinars and recordings

FRS 105 The micro-entities regime - all you need to know

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18-04-2019

This webinar looks at some practical issues that have emerged with FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime.

Financial Instruments under FRS 102 - Topical issues

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31-05-2018

This webinar looked at some of the more challenging aspects of accounting for financial instruments under FRS 102, highlighting practical examples and recent amendments to the standard. Broadcast 31 May 2018.

Audit of bank and cash in light of recent developments

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03-05-2018

This webinar will focus on some of the key areas of difficulty faced by companies, including practical examples of the types of transaction which have typically caused problems.

Bloomsbury Core Accounting and Tax Service

Eligible firms have free access to Bloomsbury Professional's comprehensive online library, comprising more than 60 titles from some of the country's leading tax and accounting subject matter experts. Find out who is eligible and how you can access the Core Accounting and Tax Service.

Complex financial instruments

A detailed, practical guide to financial reporting of complex financial instruments under FRS 102, section 12, containing many examples. This chapter includes sections on determining fair value, derivative financial instruments, hedge accounting and disclosure requirements for complex financial instruments.

Basic financial instruments

A chapter on financial reporting of basic financial instruments under new UK GAAP FRS 102, section 11 and FRS 105, section 9. This detailed guide by Steve Collings has been comprehensively updated to reflect changes issued by the Financial Reporting Council (FRC) since 2019.

Financial instruments

A chapter on accounting for financial instruments under FRS 102, in this accessible introduction to the accounting rules relevant to tax computations in the UK. Written for tax practitioners who wish to gain a better understanding of accounting rules in the UK.

Financial instruments

Chapter on financial instruments - part of a one-stop-shop guide by Steve Collings on all aspects of UK auditing standards and new UK GAAP accounting standards. The chapter shows how to put the standards into practice, covering both accounting and auditing of financial instruments.

Terms of use: You are permitted to access, download, copy, or print out content from eBooks for your own research or study only, subject to the Acceptable usage terms.

eBooks

The Library provides full text access to a selection of key business and reference eBooks from leading publishers. eBooks are available to logged-in ICAEW members, ACA students and other entitled users. If you are unable to access an eBook, please see our Help and support advice or contact library@icaew.com.

Financial liabilities and equity

Fully updated guide focusing on each area of the financial statement in detail with illustrative examples. This chapter gives a comparison of FRS 102 Section 22 and IFRS, discusses contingent settlement provisions, recognition and measurement of issued equity instruments, and highlights provisions for other specific instruments and transactions.

Financial instruments

Fully updated guide focusing on each area of the financial statement in detail with illustrative examples. This chapter gives a comparison of FRS 102 Sections 11, 12, 22 and IFRS, and looks at recognition and measurement accounting policy choice, financial liabilities and equity, classification, initial recognition and measurement, subsequent measurement, derecognition, hedge accounting, presentation and disclosures.

Financial instruments

A practical manual for preparing new UK GAAP-compliant disclosures. This chapter discusses types of basic financial instruments, presentation under UK GAAP, Companies Act disclosure requirements, hedge accounting, and micro-entities.

Terms of use: You are permitted to access, download, copy, or print out content from eBooks for your own research or study only, subject to the terms of use set by our suppliers and any restrictions imposed by individual publishers. Please see individual supplier pages for full terms of use.

Example accounts

Model accounts and disclosure checklists for UK GAAP
The ICAEW Library can provide model accounts and disclosure checklists for FRS 101, FRS 102, FRS 102 Section 1A, FRS 103 and FRS 105. The examples and checklists cover a broad range of entities, including small companies, charities, groups, LLPs and micro-companies.


External resources

Some guides and comparisons that we link to may pre-date the latest amendments to this standard. While these resources contain useful information, please treat them with appropriate caution. 

Fact Sheet 4 – FRS 102: Financial Instruments
FRC, December 2018
Staff factsheet providing a summary of key FRS 102 requirements relating to financial instruments. It deals with accounting policy choice and scope, classification, initial and subsequent measurement, detailed guidance on financing transactions, impairment, derecognition, and disclosures. 


Further reading

Manuals and handbooks

The ICAEW Library stocks the latest UK GAAP handbooks and manuals. You can browse all our books on FRS 102 and financial instruments or request any of the following popular titles by contacting us on +44 (0)20 7920 8620, by web chat, or at library@icaew.com

GAAP 2019: UK reporting – FRS 102 (Volume B)
Deloitte, Croner-i, 2019
Comprehensive manual explaining how to apply FRS 102, with worked examples and extensive interpretation and guidance. The chapter on financial instruments cover initial recognition, initial and subsequent measurement, derecognition of financial assets and financial liabilities, fair value, impairment of financial instruments measured at cost, hedge accounting, presentation, and disclosure.

Manual of accounting: UK GAAP
PwC, Lexis Nexis, 2019
Practical guide with worked examples throughout, dealing with day-to-day issues as well as complex questions. The chapter on financial instruments explain identification of basic and other financial instruments, subsequent measurement, amortised cost and the effective interest method, intra-group or shareholder loans, derecognition, presentation and disclosure, and hedge accounting. 

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Ask ICAEW Technical Advisory Service

Get an opinion from the experts. Our experienced technical advisors can help you with your UK GAAP questions and offer practical advice. Call the advisory helpline on +44 (0)1908 248 250.

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