FRS 102 ― consolidated tax disclosures

Produced by Tolley in association with

Corporation Tax

Guidance

Introduction

There are additional tax issues to consider when preparing the tax workings for consolidated financial statements, other than the fair value adjustments required when there is a business combination (see the FRS 102 ― specific deferred tax issues guidance note). These issues are explained below.

Consistent accounting policies

It is possible that some subsidiaries in the group prepare individual financial statements using different accounting policies to the parent company. This is most common, but not restricted to, cases where those subsidiaries operate in foreign jurisdictions.

The financial statements of the subsidiary will need to be adjusted for these different accounting policies prior to consolidation into the parent company's financial statements, so that the accounting policies applied are consistent.

Some examples that arise in practice are different methods of inventory (stock) valuation and leases. For instance, some countries do not use the equivalent of finance lease accounting unless the lessee becomes the owner of the asset at the end of the lease. So, if a

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Malcolm Greenbaum

Director and Principal Trainer at Greenbaum Training and Consultancy Limited

Malcolm is a UK Chartered Accountant and Chartered Tax Advisor winning the John Wood Medal in the November 1995 CIOT sitting for the best paper on business taxation. He was previously Director of Finance and Taxation Programmes at BPP Professional Education and has delivered IFRS, US GAAP, UK Tax and VAT training (at all levels from an introduction to the complexities of IAS 39) to a multitude of organisations world-wide since 1992. Malcolm has particular experience in delivering bespoke training programmes to multi-nationals in the financial services, transport and energy sectors as well as delivering UK tax and VAT update programmes to accounting and law firms. He is passionate about training and his enthusiasm ensures that the participants enjoy the learning experience whilst gaining knowledge through their engagement in the sessions and through encouraging them to ask questions and discuss practical issues they may have. Malcolm also provides consultancy services to companies and accounting firms, including provision of VAT advice, reviewing accounting policy manuals and advising on accounting treatments of various transactions. In his spare time, Malcolm enjoys flying having gained a Private Pilot's Licence in 2014.

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