The Financial Reporting Review Panel announced its intervention in Chez Gerard’s accounts this morning as the company released its preliminary annual results for the 53 weeks ended 1 July 2001.
Officials at the watchdog said Chez Gerard had not properly applied the rules of FRS15, the standard that deals with tangible fixed assets.
The standard came into effect on 23 March 2000, leading Chez Gerard and other restaurant chains to review their existing depreciation policies. Previously the company had not depreciated its freehold or long leasehold premises, but the new policy involved depreciating them over 50 years or the life of the lease.
However, the FRRP took issue with the way revisions to the useful economic lives and residual values of the assets were calculated on adoption of the new standard.
The resulting revision to Chez Gerard’s accounts, as a prior year adjustment to last year’s accounts, has the effect of increasing the net book value of tangible fixed assets at 25 June 2000 by £610,000 and increasing the loss for the year ending on that date by £603,000.
The company said in its results statement: ‘The adjustment regarding FRS15 ensures that the incremental charge to depreciation on long-leasehold and freehold properties arising from our adoption of this standard is dealt with prospectively from the date of implementation, 27 June 1999, over the remaining useful lives of the assets, rather than by way of a prior year adjustment.’
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