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
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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.
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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.
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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.
21-08-2020
ICAEW's Financial Services Faculty highlights 10 questions to inform the critical areas of accounting and financial disclosure that are being impacted by LIBOR transition.
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10-07-2018
Technical helpsheet to help ICAEW members understand which accounting standards apply to sole traders and partnerships and why.
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.
07-03-2018
This factsheet is a summary of the basic principles of accounting for impairment with practical guidance to will help with implementation.
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).
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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.
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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.
Webinars and recordings
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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.
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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.
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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
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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.
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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
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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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