Valid from 01/04/2009
Amounts recognised in determining a company's profit or lossU.K.
308Amounts recognised in determining a company's profit or lossU.K.
(1)References in this Part to an amount recognised in determining a company's profit or loss for a period are references to an amount recognised in—
(a)the company's profit and loss account, income statement or statement of comprehensive income for that period,
(b)the company's statement of total recognised gains and losses, statement of recognised income and expense, statement of changes in equity or statement of income and retained earnings for that period, or
(c)any other statement of items taken into account in calculating the company's profits and losses for that period.
(2)If, in accordance with generally accepted accounting practice, an amount is shown as a prior period adjustment in any statement within subsection (1), it must be brought into account for the purposes of this Part in calculating the company's profits and losses for the period to which the statement relates.
(3)Subsection (2) does not apply to an amount recognised for accounting purposes by way of correction of a fundamental error.
309Companies without GAAP-compliant accountsU.K.
(1)If a company—
(a)draws up accounts which are not GAAP-compliant accounts, or
(b)does not draw up accounts at all,
this Part applies as if GAAP-compliant accounts had been drawn up.
(2)Accordingly, references in this Part to amounts recognised for accounting purposes are references to the amounts that would have been recognised if GAAP-compliant accounts had been drawn up for the period of account in question and any relevant earlier period.
(3)For this purpose a period of account is relevant to a later period if the accounts for the later period rely to any extent on amounts derived from the earlier period.
(4)In this section “GAAP-compliant accounts” means accounts drawn up in accordance with generally accepted accounting practice.
310Power to make regulations about recognised amountsU.K.
(1)The Treasury may by regulations—
(a)make provision excluding from section 308(1) or (2) amounts of a specified description, and
(b)make provision for or in connection with bringing into account in specified circumstances amounts in relation to which section 308(1) or (2) does not have effect as a result of regulations under paragraph (a).
(2)The regulations may provide that section 308(1) or (2) does not apply to specified amounts in a period of account so far as they derive from or otherwise relate to amounts brought into account in a specified way in a previous period of account.
(3)The regulations may—
(a)make different provision for different cases, and
(b)make provision subject to an election or to other specified conditions.
(4)The regulations may apply to periods of account beginning before they are made, but not earlier than the beginning of the calendar year in which they are made.
(5)The power to make regulations under this section does not apply to exchange gains or losses (but see section 328(4) to (7)).
311Amounts not fully recognised for accounting purposes: introductionU.K.
(1)Section 312 applies for the purpose of determining the credits and debits which a company is to bring into account for a period for the purposes of this Part in the following case.
(2)The case is where—
(a)the company is, or is treated as, a party to a creditor relationship in the period,
(b)an amount is not fully recognised for the period in respect of the relationship as a result of the application of generally accepted accounting practice in relation to the relationship (see subsection (6)), and
(c)condition A or B is met.
(3)Condition A is that—
(a)the company is or is treated as a party to a debtor relationship in the period, and
(b)an amount is not fully recognised for the period in respect of the debtor relationship as a result of the application of generally accepted accounting practice in relation to the relationship.
(4)Condition B is that—
(a)an amount (a “relevant capital contribution”) has at any time been contributed to the company which forms part of its capital for the period, and
(b)an amount is not fully recognised for the period in respect of the relevant capital contribution as a result of the application of generally accepted accounting practice in relation to the contribution.
(5)It does not matter for the purposes of subsection (4) whether the contribution forms part of the company's share capital or other capital for the period.
(6)For the purposes of this section an amount is not fully recognised for a period in respect of a relationship of a company or a relevant capital contribution to it if—
(a)no amount in respect of the relationship or contribution is recognised in determining its profit or loss for the period, or
(b)an amount is so recognised in respect of only part of the relationship or contribution.
312Determination of credits and debits where amounts not fully recognisedU.K.
(1)In determining the credits and debits which a company is to bring into account for the period referred to in section 311(1) for the purposes of this Part in respect of—
(a)the creditor relationship mentioned in section 311(2), or
(b)in a case where condition A in section 311(3) is met, the debtor relationship by reference to which that condition is met,
the assumption in subsection (2) is to be made.
(2)The assumption is that an amount in respect of the whole of the relationship in question is recognised in determining the company's profit or loss for the period.
(3)But the amount of any debits to be brought into account by the company for a period as a result of this section applying in respect of its debtor relationships must not exceed the amount of any credits to be brought into account by it for the period as a result of this section applying in respect of its creditor relationships.
(4)Subsection (5) applies in any case where—
(a)apart from this section any credits or debits are brought into account for a period for the purposes of this Part by the company in respect of a loan relationship, and
(b)the relationship is a creditor relationship within subsection (1)(a) or a debtor relationship within subsection (1)(b).
(5)The credits and debits which are to be so brought into account as a result of this section are to be determined on the same basis of accounting as that on which the credits or debits mentioned in subsection (4)(a) are determined.
(6)In any other case, the credits and debits which are to be so brought into account as a result of this section are to be determined on an amortised cost basis of accounting.