CFM16245 - Accounting for financial instruments: IAS 32 and IAS 39: recognition and derecognition

UK GAAP and recognition

IAS 39 goes into considerable detail as to when a financial asset or liability should be recognised in the balance sheet of a company or other entity, and in particular when it should be taken off the balance sheet (derecognised). The ASB has retained FRS 5 for the time being, so that UK companies will not need to comply with the IAS 39 requirements on recognition and derecognition. However in April 2005 the ASB published a proposed amendment to FRS 26 to extend its scope for accounting periods beginning on or after 1 January 2007 and also to incorporate the IAS 39 provisions on recognition and derecognition into FRS 26 – see CFM16005.

This guidance is therefore no more than an introduction to this complex area. HMRC staff should consult one of the department's compliance accountants if they need further details.