Chapter 31
The Final Financial Statements of Limited Companies
Glossary
Adjusting event after the reporting period
Events that provide additional evidence of conditions that existed at the end of the reporting period.
Allotted/issued share capital
The total nominal value of the number of shares that have actually been issued at the date of the statement of financial position.
Authorised/nominal share capital
The types, nominal value and maximum number of shares that a company is permitted by its Memorandum of Association to issue.
Called-up share capital
That part of the allotted share capital which the company has required the equity shareholders to pay.
Capital/non-distributable reserves
Reserves which cannot be distributed as dividends.
Capital redemption reserve
When a company redeems shares, it must maintain the capital structure. Hence it must make a new issue of shares with the same total nominal value, or capitalise an equivalent amount of profits. Capitalisation refers to a transfer of retained profits to a capital reserve (usually called a capital redemption reserve).
Contingency
A condition which exists at end of the reporting period, where the outcome will be confirmed only on the occurrence, or non-occurrence, of one or more uncertain future events (IAS 37).
Contingent asset
A possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
Contingent liability
An obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one of more uncertain future events not wholly within the control of the entity (IAS 37).
Corporation tax
As a separate legal entity, a company is liable for taxation on its annual profit, which takes the form of income tax. This company income tax is referred to as corporation tax.
Discontinued operations
A component of an entity that either has been disposed of, or is classified as held for sale.
Events after the reporting period
Those events, both favourable and unfavourable, which occur between the statement of financial position date and the date on which the financial statements are authorised for issue (IAS 10).
Exceptional items
Material items and items though not material in size but material in nature.
General reserve
Reserves that consist of retained profits of the current and previous accounting years. This reserve is also called retained earnings, or revenue reserves.
Held for sale
When an asset/group of assets/business unit’s carrying amount will be recovered principally through a sale transaction rather than through continuing use, then it is classed as being held for sale.
Liabilities
A present obligation of a reporting entity arising from past events the settlement of which is expected to result in an outflow from the entity of economic benefits (IAS 37).
Non-adjusting events after the reporting period
Events that are indicative of conditions that arose after the reporting period.
Prior period adjustments
The correction of prior period errors and changes to accounting policies caused by the introduction of a new standard, or the revision of a standard that does not contain specific transitional arrangements.
Profit for the financial year
In companies this is the profit after taxation is deducted.
Provision
A liability of uncertain timing or amount (IAS 37).
Published accounts
The income statement, a statement of financial position and related notes that are sent to equity holders as required under the Companies Acts 2006. They are normally included in the annual return.
Reserves
Represent some sort of gain/profit/funds set asideand constitute part of a company’s capital.
Retained earnings
Reserves which consist of retained profits of the current and previous accounting years. This reserve is also called general reserve, or revenue reserves.
Revaluation reserve
This represents the holding gain which occurs when non-current assets (usually land and buildings) are revalued and shown in the statement of financial position at an amount which exceeds its historical cost. The excess (holding gain) is credited to a revaluation reserve account.
Revenue/distributable reserves
Reserves which can be distributed to equity shareholders as dividends. Revenue reserves are also called retained earnings, or general reserve.
Share premium
When shares are issued at a price in excess of their nominal value, the excess is credited to a share premium account.
Statement of changes in equity
A statement showing changes in equity reserves and gains and losses in equity (both realised and unrealised).
Total equity attributable to owners
A heading in the statement of financial position which represents the total amount of reserves plus the called-up share capital.