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HMRC internal manual

Corporate Finance Manual

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Accounting for corporate finance: International Financial Reporting Standards: relationship between IAS 32/IAS 39 and FRS 25/FRS 26

The relationship between IAS 32/IAS 39 and FRS 25/FRS 26

FRS 25 (‘Financial Instruments: Presentation’) implemented IAS 32, while FRS 26 (Financial Instruments: Measurement) implemented IAS 39, bringing both standards within UK GAAP. IFRS 7 (‘Financial instruments: Disclosures’) was implemented in UK GAAP in FRS 29 for accounting periods commencing on or after 1 January 2007.

For periods commencing on or after 1 January 2007, the UK standards are equivalent to the international standards except for a few minor differences. Prior to that date, however, there were certain more substantial differences between FRS 26 and IAS 39. Staff should consult an HMRC accountant if they require further detail on these differences.

Note that FRS 25 is withdrawn for accounting periods beginning on or after 1 January 2015 (as New UK GAAP is effective). However, whether through FRS 101 (via IAS 32) or FRS 102 (Section 22) the considerations regarding debt and equity remain the same.

FRS 26 is also withdrawn for accounting periods beginning on or after 1 January 2015 (as New UK GAAP is effective), Instead users will need to apply the recognition and measurement requirements of either IAS 39 (through FRS 101 or through the IAS 39 policy choice in FRS 102), the requirements of IAS 39 as amended for IFRS 9 (through the policy choice in FRS 102) or Section 11 and 12 of FRS 102.