Amendment to FRS 5 'Reporting the Substance of Transactions': The Private Finance Initiative

Article Abstract:

The Accounting Standards Board has released an exposure draft to amend Financial Reporting Standard 5 on 'Reporting the Substance of Transactions.' An application note has been added to clarify the accounting treatment for transactions arising from the Private Finance initiative (PFI). The board developed the guidance in response to the controversy regarding the accounting method for PFI transactions. The standard addresses issues such as relevant payments and variations, demand risk, penalties for underperformance or non-availability, ways of dealing with changes in operating costs and the arrangements at the end of the contract and residual value risk. Other topics covered by the draft include the presence, if any, of third party revenues and the party responsible for determining the nature of the property.

Accounting Methods, Reporting & Disclosure, Finance, Corporations, Corporate finance

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Financial Reporting Standard 14: Earnings Per Share

Article Abstract:

The UK Accounting Standards Board's Financial Reporting Standard (FRS) No 14, 'Earnings Per Share,' provides guidance on the calculation and presentation of earnings and other amounts per share in the financial statements of firms with publicly traded shares as well as other entities that want to make such a disclosure. The Standard recommends methods for determining the number of shares that should be used as basis for the computation of earnings per share and other amounts per share. It also provides a framework for the presentation of these financial information. FRS 14 will take effect for accounting periods ending on or after Dec 23, 1998 and will cover all entities whose ordinary or potentially ordinary shares are or will be publicly traded.

Accounting and auditing, Earnings per share

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