FRS 102 LLP Example Financial Statements

FRS 102 LLP – Consolidated Statement of Cashflows For the year ended 30 April 2016( '000)Note20162015Net cash used in financing activitiesxxxxxxxxNet increase in cash and cash equivalentsxxxxxxxxForeign exchange translation adjustmentxxxxxxxxCash and cash equivalents at thebeginning of yearxxxxxxxxCash and cash equivalents at end of yearxxxxxxxx7.13 Cash flows are presented under just three headings (operating, investing and financing), ratherthan the potential nine available under old UK GAAP. Components of cash and cash equivalents to be disclosed and reconciled to the Statement ofFinancial Position. However, the reconciliation is not required if the amount of cash and cashequivalents is identical to the amount similarly described in the Statement of Financial Position. 2016 Grant Thornton UK LLP. All rights reserved.9

FRS 102 LLP – Consolidated Statement of Changes in Equity For the year ended 30 April 2016Members'capitalclassifiedas erinterestsAmountattributableto owners ofthe xxxxxxxxProfit for the financial yearavailable for discretionarydivision among members--xxxxxxxxOther comprehensiveincome------Foreign exchangetranslation difference-xxxx-xxxxxxxxxxxxTotal comprehensiveincome for the xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxProfit for the financial yearavailable for discretionarydivision among members--xxxxxxxxxxxxxxxxOther comprehensiveincome------Foreign exchangetranslation difference-xxxx-xxxxxxxxxxxxTotal comprehensiveincome for the n of profits--xxxxxxxxxxxxxxxxAt 30 April 2016xxxxxxxxxxxxxxxxxxxxxxxx( '000)At 1 May 2014Capital introducedDivision of profitsAt 1 May 2015Capital introduced 2016 Grant Thornton UK LLP. All rights reserved.xxxxxxxx10

FRS 102 LLP – LLP Statement of changes in equity For the year ended 30 April 2016Members' capitalclassified as equityMembers'other interestsTotalxxxxxxxxxxxxProfit for the financial year available fordiscretionary division among members-xxxxxxxxOther comprehensive income---Total comprehensive income for the year-xxxxxxxxxxxx-xxxx-xxxxxxxxxxxxxxxxxxxxProfit for the financial year available fordiscretionary division among members-xxxxxxxxOther comprehensive income---( '000)At 1 May 2014Capital introducedDivision of profitsAt 1 May 2015Total comprehensive income for the year-xxxxxxxxxxxx-xxxxDivision of profits-xxxxxxxxAt 30 April 2016xxxxxxxxxxxxCapital introduced The Companies Act 2006 Section 408 exemption to present an individual profit and loss accountfor an LLP will still be available. This means that the Statement of Comprehensive Income(whether presented as one statement or two) is not required for the LLP's individual accounts.However the exemption does not extend to the parent LLP's Statement of Changes in Equity,which will be required. 2016 Grant Thornton UK LLP. All rights reserved.11

FRS 102 LLP - Notes to the financial statements For the year ended 30 April 20161Entity information[The legal form of the entity, its country of incorporation and the address of its registered office (orprincipal place of business, if different from the registered office) is required to be disclosed in thenotes.][Disclosure of an LLP and its subsidiary undertakings' principal activities and nature of operations isrequired. If this information is disclosed elsewhere, e.g. in the members' report, then it need not berepeated here.]23.24(a)3.24(b)SORP 30Basis of preparation[Accounting policies should be disclosed for all significant items to provide sufficient information toenable users to understand the policies adopted and how they have been implemented.]The financial statements have been prepared in accordance with applicable United Kingdomaccounting standards, including Financial Reporting Standard 102 – 'The Financial ReportingStandard applicable in the United Kingdom and Republic of Ireland' ('FRS 102'), Companies Act2006 as applied by LLPs and the Statement of Recommended Practice (SORP), Accounting byLimited Liability Partnerships, issued in July 2014. The financial statements have been prepared onthe historical cost basis except for the modification to a fair value basis for certain financialinstruments as specified in the accounting policies below.3.38.2(a)This is the first year in which the financial statements have been prepared under FRS 102. Refer tonote 23 for an explanation of the transition.The financial statements are presented in Sterling ( ).3.23(d)30.26The group financial statements consolidate the financial statements of FRS 102 LLP and all itssubsidiary undertakings drawn up to 30 April each year.3.23(b)9.23(a)The LLP has taken advantage of section 408 of the Companies Act 2006 as applied by the LimitedLiability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008and has not included its own Profit and Loss Account in these financial statements. The LLP's profitfor the year was xxxx (2015: xxxx).The individual accounts of FRS 102 LLP have also adopted the following disclosure exemptions: s4081.11(c)(i)the requirement to present a statement of cash flows and related notesfinancial instrument disclosures, including:– categories of financial instruments,– items of income, expenses, gains or losses relating to financial instruments, and– exposure to and management of financial risks.Going concernAfter reviewing the group's forecasts and projections, the members have a reasonable expectationthat the LLP has adequate resources to continue in operational existence for the foreseeable future.The LLP therefore continues to adopt the going concern basis in preparing its consolidated financialstatements. 2016 Grant Thornton UK LLP. All rights reserved.3.8&9FRCGuidance12

FRS 102 LLP - Notes to the financial statements For the year ended 30 April 20163Significant judgements and estimatesPreparation of the financial statements requires management to make significant judgements andestimates. The items in the financial statements where these judgments and estimates have beenmade include:[An entity shall disclose the judgements, apart from those involving estimations, that managementhas made in the process of applying the entity’s accounting policies and that have the mostsignificant effect on the amounts recognised in the financial statements.]8.6[An entity shall disclose in the notes information about the key assumptions concerning the future,and other key sources of estimation uncertainty at the reporting date, that have a significant risk ofcausing a material adjustment to the carrying amounts of assets and liabilities within the nextfinancial year. In respect of those assets and liabilities, the notes shall include details of:8.7 4their nature; andtheir carrying amount as at the end of the reporting period.]Principal accounting policies4.1 Business combinationsAcquisitions of subsidiaries and businesses are accounted for using the purchase method. The costof the business combination is measured at the aggregate of the fair values (at the date ofexchange) of assets given, liabilities incurred or assumed, and equity instruments issued by thegroup in exchange for control of the acquire plus costs directly attributable to the businesscombination.Any excess of the cost of the business combination over the acquirer's interest in the net fair value ofthe identifiable assets and liabilities is recognised as goodwill. If the net fair value of the identifiableassets and liabilities exceeds the cost of the business combination the excess is recognisedseparately on the face of the consolidated statement of financial position immediately below goodwill.4.2 Investment in subsidiariesThe consolidated financial statements incorporate the financial statements of the LLP and entities(including special purpose entities) controlled by the group (its subsidiaries). Control is achievedwhere the group has the power to govern the financial and operating policies of an entity so as toobtain benefits from its activities.The results of subsidiaries acquired or disposed of during the year are included in totalcomprehensive income from the effective date of acquisition and up to the effective date of disposal,as appropriate using accounting policies consistent with those of the parent. All intra-grouptransactions, balances, income and expenses are eliminated in full on consolidation.Investments in subsidiaries are accounted for at cost less impairment in the individual financialstatements.9.27(b)4.3 Investments in associatesInvestments in associates are recognised initially in the consolidated statement of financial positionat the transaction price and subsequently adjusted to reflect the group's share of totalcomprehensive income and equity of the associate, less any impairment.Any excess of the cost of acquisition over the group's share of the net fair value of the identifiableassets, liabilities and contingent liabilities of the associate recognised at the date of acquisition,although treated as goodwill, is presented as part of the investment in the associate. Amortisation ischarged so as to allocate the cost of goodwill over its estimated useful life, using the straight-linemethod. Losses in excess of the carrying amount of an investment in an associate are recorded as aprovision only when the company has incurred legal or constructive obligations or has madepayments on behalf of the associate.Investments in associates are accounted for at cost less impairment in the individual financialstatements.14.12(a)9.27(b) 2016 Grant Thornton UK LLP. All rights reserved.13

FRS 102 LLP - Notes to the financial statements For the year ended 30 April 20164.4 Intangible assetsIntangible assets are measured at cost less accumulated amortisation and any accumulatedimpairment losses.Software development costs are recognised as an intangible asset when all of the following criteriaare demonstrated: The technical feasibility of completing the software so that it will be available for use or sale. The ability to measure reliably the expenditure attributable to the software during itsdevelopment.The intention to complete the software and use or sell it.The ability to use the software or to sell it.How the software will generate probable future economic benefits.The availability of adequate technical, financial and other resources to complete thedevelopment and to use or sell the software.Amortisation is charged so as to allocate the cost of intangibles less their residual values over theirestimated useful lives, using the straight-line method. The intangible assets are amortised over thefollowing useful economic lives: Software development costs18.27(a)&(b)5 yearsGoodwill7 yearsIf there is an indication that there has been a significant change in amortisation rate or residual valueof an asset, the amortisation of that asset is revised prospectively to reflect the new expectations.If the net fair value of the identifiable assets and liabilities acquired exceeds the cost of a businesscombination, the excess up to the fair value of non-monetary assets acquired is recognised in profitor loss in the periods in which the non-monetary assets are recovered. Any excess exceeding thefair value of non-monetary assets acquired is recognised in the income statement in the periodsexpected to be benefitted.4.5 Tangible assetsTangible fixed assets are measured at cost less accumulated depreciation and any accumulatedimpairment losses.Depreciation is calculated to write down the cost less estimated residual value of all tangible fixedassets, other than freehold land, over their expected useful lives, using the straight-line method. Therates applicable are: Freehold buildingsLeasehold improvementsComputer equipmentFurniture and equipmentMotor vehicles17.31(a)-(c)45 yearsPeriod of lease5 years10 years4 years4.6 Impairment of assetsAt each reporting date fixed assets are reviewed to determine whether there is any indication thatthose assets have suffered an impairment loss. If there is an indication of possible impairment, therecoverable amount of any affected asset is estimated and compared with its carrying amount. If theestimated recoverable amount is lower, the carrying amount is reduced to its estimated recoverableamount, and an impairment loss is recognised immediately in the income statement.If an impairment loss subsequently reverses, the carrying amount of the asset is increased to therevised estimate of its recoverable amount, but not in excess of the amount that would have beendetermined had no impairment loss been recognised for the asset in prior years. A reversal of animpairment loss is recognised immediately in the income statement. 2016 Grant Thornton UK LLP. All rights reserved.14

FRS 102 LLP - Notes to the financial statements For the year ended 30 April 20164.7 InvestmentsInvestments comprise investments in unquoted equity instruments which are measured at fair value.Changes in fair value are recognised in the income statement. Fair value is estimated by using a1valuation technique.11.40&434.8 DebtorsShort term debtors are measured at transaction price, less any impairment. Loans receivable aremeasured initially at fair value, net of transaction costs, and are measured subsequently at amortisedcost using the effective interest method, less any impairment.11.404.9 CreditorsShort term trade creditors are measured at the transaction price. Other financial liabilities, includingbank loans, are measured initially at fair value, net of transaction costs, and are measuredsubsequently at amortised cost using the effective interest method.11.404.10 LeasesLeases are classified as finance leases whenever the terms of the lease transfer substantially all therisks and rewards of ownership of the leased asset to the group. All other leases are classified asoperating leases.Assets held under finance leases are recognised initially at the fair value of the leased asset (or, iflower, the present value of minimum lease payments) at the inception of the lease. Thecorresponding liability to the lessor is included in the statement of financial position as a financelease obligation. Lease payments are apportioned between finance charges and reduction of thelease obligation using the effective interest method so as to achieve a constant rate of interest on theremaining balance of the liability. Finance charges are deducted in measuring profit or loss. Assetsheld under finance leases are included in tangible fixed assets and depreciated and assessed forimpairment losses in the same way as owned assets.Rentals payable under operating leases are charged to profit or loss on a straight-line basis over thelease term, unless the rental payments are structured to increase in line with expected generalinflation, in which case the group recognises annual rent expense equal to amounts owed to the2lessor.The aggregate benefit of lease incentives are recognised as a reduction to the expense recognised3over the lease term on a straight line basis.20.15(b)20.15A1Investments in shares (other than shares of a subsidiary, associate or joint venture) are required to be carried at fair value throughprofit or loss, provided that they are publicly traded, or fair value can be measured reliably, for example by using a valuationtechnique. Where fair value cannot be measured reliably, then the investment is carried at cost less impairment. However, given thata valuation model of some sort can very often be applied, FRS 102 would appear to allow little scope for this method.2Under previous UK GAAP, lease incentives were spread over the period until a market rental applies. This is usually the date of thefirst rent review, and thus shorter than the lease term. There is a transitional relief available for lease incentives, such that where alease commenced before date of transition, the remaining benefit of the lease incentive may continue to be recognised inaccordance with previous UK GAAP.3Where a lease includes pre-set increases in the rent payable to reflect expected inflation, then the annual expense is recognised inline with this stepped schedule (rather than spreading the total cost over the period of the lease, as under previous UK GAAP). 2016 Grant Thornton UK LLP. All rights reserved.15

FRS 102 LLP - Notes to the financial statements For the year ended 30 April 20164.11 Derivative financial instrumentsDerivative financial instruments are recognised at fair value using a valuation technique with anygains or losses being reported in profit or loss. Outstanding derivatives at reporting date are included4under the appropriate format heading depending on the nature of the derivative.11.40&434.12 Provisions for liabilitiesProvisions are recognised when the group has a present obligation (legal or constructive) as a resultof a past event, it is probable that the group will be required to settle the obligation, and a reliableestimate can be made of the amount of the obligation.The amount recognised as a provision is the best estimate of the consideration required to settle thepresent obligation at the end of the reporting period, taking into account the risks and uncertaintiessurrounding the obligation.Where the effect of the time value of money is material, the amount expected to be required to settlethe obligation is recognised at present value using a pre-tax discount rate. The unwinding of thediscount is recognised as a finance cost in the income statement in the period it arises.Provisions for annual leaveThe group recognises a provision for annual leave accrued by employees as a result of servicesrendered in the current period, and which employees are entitled to carry forward and use within thenext 12 months. The provision is measured at the salary cost payable for the period of absence.5Provisions for retirement benefitsA provision in respect of annuities

Income Statement, or continue to use the LLP regulations format titles, i.e. Balance Sheet and Profit and Loss Account. An entity may present a separate Income Statement and Statement of Comprehensive Income (see page 2), or combine the two into a single Statement of Comprehensive Income (see appendix for illustration of one-statement approach).