CFM92410 - Debt cap: the available amount: definition of the available amount
This guidance applies to worldwide group periods of account ending before or straddling 1 April 2017.
The amounts to include in the available amount
The definition of the ‘available amount’ is in TIOPA10/S332, and it is the sum of certain amounts disclosed in the financial statements of the group for the period of account of the worldwide group. See CFM92430 for the amounts included in the available amount.
These will be amounts in the consolidated financial statements of the worldwide group. So, in accordance with IFRS 10: Consolidated Financial Statements, under the consolidation procedures:
- intra-group balances;
- intra-group transactions; and
- intra group income and expenses
will be eliminated in full. This means that the available amount should not take account of any of the intra-group financing amounts paid or due to other members of the worldwide group.
The accounting group may contain partnerships or members of the worldwide group may be members of partnerships. This could lead to the amounts taken into account in computing the available amount differing from the amounts disclosed in financial statements. The treatment of partnerships is dealt with at CFM92459.
Therefore the available amount represents, essentially, the external financing costs of the worldwide group.
TIOPA10/S 336 confirms that expressions, such as ‘disclosed’, have the meaning given by IAS.
Deriving amounts from consolidated accounts
In most cases, it will be necessary for a group to subject the figures on the face of consolidated financial statements to some analysis in order to compute the available amount. TIOPA10/S349(1) explicitly extends references to ‘amounts disclosed in financial statements’ to include particular sums comprised within those amounts. There is further guidance on this at CFM90470.
As regards consolidated accounts prepared other than under IAS, see CFM 90440. This sets out the conditions to be satisfied if consolidated accounts prepared under other accounting standards may be accepted as the starting point for determining the available amount.
In relation to accounts drawn up under IFRS by parents that are investment entities (IFRS 10.27), the parent’s investment in some or all subsidiaries may be disclosed as investments at fair value, rather than being consolidated (IFRS10.31). Where a parent’s accounts are drawn up under UK GAAP, FRS102-9.9 may require certain subsidiaries not to be consolidated. In these cases the computation of the available amount is modified to take into account financing costs of unconsolidated subsidiaries – see CFM92457.
In other cases case where no consolidated financial statements are prepared or where the financing statements prepared are not acceptable, the available amount must be computed by reference to amounts that would have appeared in IAS financial statements, had they been prepared - see CFM90450+.