Valuation – Assets & new accounting rules

Andrew StrideBy Andrew Stride

Companies have an obligation under Financial accounting rules to ensure that their fixed property assets are faithfully recorded within their annual company accounts.

This process has, of course, been the norm for many years and accountants have used differing entries (depending on circumstances) either ‘at cost’ or on a more market led basis of value. This all happened under the snappily titled UK Generally Accepted Accounting Principles (UK GAPP).

Over recent years there has nevertheless been a drive to internationalise reporting standards and so FRS102 (Financial Reporting Standard) became effective for accounting periods ending after 1st January 2015 for medium and large-sized companies. This is slightly amended for small businesses but the principles are broadly the same.

From a Valuers’ perspective, for occupational properties, this normally means an appraisal on a ‘fair value basis’ in order to replace the buildings service potential to the business. Properties held for investment purposes continue to be reflected to a market led basis and require more frequent valuations. Please note that these may include group properties occupied by related entities.

FRS102 require revaluations of company assets on a sufficiently frequent basis to ensure fair value is maintained in the annual accounts. Clearly commercial property values and costs have been rising and Finance Directors should therefore make sure that they revalue regularly in order comply with these obligations.

Dunlop Heywood is able to provide valuation advice compliant under FRS102 and is happy to discuss any requirements that you may have in this regard. In the first instance please contact Andrew Stride BSc MRICS Registered Valuer on (0161 817 4852).