SORP FRS 102’s release is making charities think twice about the accounting treatment of their tangible fixed assets, including property.
SORP FRS 102’s regime change says investment properties must continue to be accounted for under the revaluation model.
If you’re a charity now may be a good time to consider whether the properties used to support your activities; offices, community centres and religious buildings, should be treated this way too!
There are three options available for property assets in the year of transfer to SORP FRS 102:
· The charity can choose between the cost model
· The revaluation model
· A one-off revaluation in the year of transfer
The advantage of the cost model is that of continuity. The majority of charities currently account for their buildings at cost and depreciate by a set percentage every year. Continuing with this model will mean the readers of the accounts will see a consistent year on year treatment of the value of tangible fixed assets.
Those who choose to move to a full revaluation model will see the most significant change in their accounting. The standards do not require a professional valuation every year. However, do require the trustees to review the value at which the assets are held and consider whether the buildings have suffered any impairment during the year.