Week 1, Introduction to the Key Changes
The Financial Reporting Council (FRC) recently published significant amendments to FRS 102 as part of its periodic review, aligning UK GAAP more closely with International Financial Reporting Standards (IFRS).
These amendments introduce significant transformations to the accounting landscape for entities in the Channel Islands, as well as for entities across the UK and the Republic of Ireland. Key areas affected include revenue recognition, lease accounting and fair value measurement, among others.
Are you ready for the upcoming changes to FRS 102? Join our weekly series as our team at Baker Tilly Channel Islands breaks down each major amendment, focusing on practical implications tailored for your business.
Here's a snapshot of the key amendments we will cover in more detail over the coming weeks.
Area of Change | Nature of Amendment | Effective Date | Old Approach | New Approach |
Revenue Recognition (Section 23) | New five-step IFRS 15-aligned model focused on the transfer of control. | 1 Jan 2026 | Transfer of risks/rewards | Five-step model (transfer of control) |
Lease Accounting (Section 20) | Lessees must now recognise leases on the balance sheet, except for short-term leases and low-value assets, in alignment with IFRS 16. Lessor accounting remains largely unchanged. | 1 Jan 2026 | Off-balance sheet for operating leases | On-balance sheet for most leases |
Fair Value Measurement (Section 2A) | Comprehensive guidance on fair value aligning with IFRS 13. | 1 Jan 2026 | Appendix to Section 2 | New Section 2A, IFRS 13 aligned |
Business Combinations (Section 19) | Clarifications on identifying acquirer, treatment of contingent considerations, contingent liabilities and intangible assets. | 1 Jan 2026 | Less specification and guidance
| Clear criteria guide more consistent accounting for business combinations. |
Income Tax (Section 29) | New guidance on accounting for uncertain tax positions. | 1 Jan 2026 | Limited
| Assess uncertain tax treatments based on likelihood of acceptance by the tax authority.
|
Supplier Finance Disclosures (Section 7)
| New disclosure obligations for supplier finance arrangements. | 1 Jan 2025 | Limited | New mandatory disclosures |
The primary effective date is for accounting periods beginning on or after 1 January 2026, with early adoption permitted only if all amendments are applied simultaneously. The full amended standard can be accessed here on the FRC website: FRC FRS102
Over the coming weeks we will take a closer look at each of the changes and discuss the impact and what you should be doing to prepare.
Interested in discussing how these changes could impact your business? Reach out for a coffee and a chat - our team are here to help.
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