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HMRC internal manual

Corporate Finance Manual

Accounting for corporate finance: Old UK GAAP excluding FRS 26: lenders: accrual accounting

The following guidance covers Old UK GAAP (applied before 2015) where FRS 26 was not applied.

Accruals basis

The accruals basis of accounting requires income and expenditure to be accounted for in the period to which it relates, rather than when cash is received or paid. Whilst there is no specific standard setting out how to do this for lenders, the requirement will be achieved by reflecting the accounting requirements for borrowers as set out in FRS 4.

FRS 4 requires the finance costs of a debt to be allocated to periods over the term of the debt at a constant rate of return of the carrying amount.