Standards - ASB's FRED 17 slammed for confusing process
The Accounting Standards Board may be forced to re-consider its position on gains made from the disposal of assets.
In Financial Reporting Exposure Draft (FRED) 17: Measurement of tangible fixed assets, the ASB proposes gains made on disposal of an asset sold for more than its depreciated value should be recorded in the statement of recognised gains and losses (STRGL), rather than in the profit and loss account.
But as the FRED17 consultation period came to a close last week, it emerged many respondents have told the ASB this is unsatisfactory. The Scots ICA said the approach would lead to confusion resulting ‘in no distinction between the treatment of unrealised gains on assets, and gains on the sale of such assets, as both would be reported in the STRGL.’
The Oil Industry Accounting Committee said: ‘Any profit on disposal would be excluded from the profit and loss account and taken through the STRGL, while any losses below depreciated cost would always go on the p&l account.’
The ASB also looks set to embrace the notion of a single performance statement which would mean the STRGL in its current form would be defunct.
Selling their assets short, page 12.