Accounting (FRS 102)

FRS 102 section 16 is an aspect of UK Generally Accepted Accounting Standards (GAAP) and relates to income generated from property held by a freeholder or leaseholder.

Accounting (FRS 102)

Tax might not be payable if a property is used towards the production of goods or services; or you use the building to carry out administrative work. Your valuer will be able to determine whether the asset is deemed as investment property and will calculate how much tax you have to pay.

Investment properties are initially recognised at cost, but will then need to be valued at “fair value” on the date of balance sheet and with the relevant changes recognised in the profit and loss account. Sometimes, the property can not be valued reliably and so it is treated as a normal fixed asset which is carried at cost and depreciating over time.

Any deferred tax on uplifts in the property’s carrying value are to be presented in full. Methods and assumptions need to be disclosed, including whether a Registered Valuer has been instructed to calculate the amount. Any contracts entered into the purchase, development and/or maintenance of the property will also require disclosure.

Contact our team to organise an RICS-Registered Valuer who may be able to assist you with FRS 102.

Frequently asked questions

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