Companies (Accounting) Act 2017

Type Act

Publication 2017-05-17

State In force

Source Irish Statute Book

articles 101

(2) The reference in subparagraph (1)(a) to the appropriate amounts in respect of any item as at any date there mentioned is a reference to amounts representing the aggregate amounts determined, as at that date, in respect of assets falling to be included under that item—

(a) on the basis of purchase price or production cost (determined in accordance with paragraphs 29 and 30),

(b) on any basis mentioned in paragraph 33, or

as the case may be, (leaving out of account in each of clauses (a), (b) and (c) any value adjustments for depreciation or diminution in value).

(3) In respect of each item within subparagraph (1)—

(a) the cumulative amount of value adjustments for depreciation or diminution in value of assets included under that item as at each date mentioned in subparagraph (1)(a),

(b) the amount of any such value adjustments made in respect of the financial year concerned,

(c) the amount of any changes made in respect of any such value adjustments during that year in consequence of the disposal of any assets, and

(d) the amount of any other changes made in respect of any such value adjustments during that year,

shall also be stated.

Information about fair valuation of assets and liabilities

46.

(1) This paragraph applies where financial instruments or assets other than financial instruments have been included at fair value by virtue of paragraph 38, 39 or 40.

(2) There shall be stated—

(a) the significant assumptions underlying the valuation models and techniques where fair values have been determined otherwise than by reference to market price in an active market,

(b) for each category of financial instruments or assets other than financial instruments, the fair value of the financial instruments or assets other than financial instruments in that category and the amounts—

(i) included in the profit and loss account, and

(ii) credited or debited to the fair value reserve,

in respect of financial instruments or assets other than financial instruments in that category,

(c) for each class of derivative financial instrument, the extent and nature of the instruments including significant terms and conditions that may affect the amount, timing and certainty of future cash flows, and

(d) a table showing movements in the fair value reserve during the financial year.

Information where investment property or living animals and plants included at fair value

47.

(1) This paragraph applies where the amounts to be included in a company’s financial statements in respect of investment property or living animals and plants have been determined in accordance with paragraph 40.

(2) The balance sheet items affected and the basis of valuation adopted in determining the amounts of the assets in question in the case of each such item shall be disclosed in the notes to the financial statements on the accounting policies adopted by the company as required by section 321.

Appropriation of profit and loss account

48.

The profit and loss account, balance sheet or notes to the financial statements of a company for a financial year shall show—

(a) the aggregate amount of dividends paid in the financial year (other than dividends for which a liability existed at the immediately preceding financial year end date),

(b) the aggregate amount of dividends the company is liable to pay at the financial year end date (other than dividends for which a liability existed at the immediately preceding financial year end date),

(d) any other increase or reduction in the balance on the profit and loss account reserve since the immediately preceding financial year end date,

(e) the profit or loss brought forward at the beginning of the financial year, and

(f) the profit or loss carried forward at the end of the financial year.

49.

(1) Where any amount is transferred to or from any revaluation reserves and the revaluation reserves are or would, but for paragraph 2(2) or 4(4)(b), be shown as separate items in the company’s balance sheet, the information mentioned in subparagraph (2) shall be given in respect of each such reserve.

(2) The information, which is to be set out in tabular form, is—

(a) the amount of the reserves as at the date of the beginning of the financial year and as at the financial year end date respectively,

(b) any amount transferred to or from the reserves during that year, and

Details of indebtedness

50.

(1) In respect of each item shown under 'creditors' in the company’s balance sheet there shall be stated the aggregate amount of any debts included under that item which fall due for payment or repayment after the end of the period of 5 years beginning with the day next following the end of the financial year.

(2) In respect of each item shown under 'creditors' in the company’s balance sheet there shall be stated—

(a) the aggregate amount of any debts included under that item in respect of which any security has been given, and

(b) an indication of the nature of the securities so given.

(3) References in subparagraph (1) to an item shown under 'creditors' in the company’s balance sheet include references, where amounts falling due to creditors within one year and after more than one year are distinguished in the balance sheet—

(a) in a case within subparagraph (1), to an item shown under the latter of those categories, and

(b) in a case within subparagraph (2), to an item shown under either of those categories,

and references to items shown under 'creditors' include references to items which would, but for paragraph 2(2) or 4(4)(b), be shown under that heading.

Guarantees and other financial commitments

51.

(1) Particulars shall be given of any charge on the assets of the company to secure the liabilities of any other person, including, where practicable, the amount secured.

(2) Particulars and the total amount or estimated total amount shall be given with respect to any other financial commitment, guarantee or contingency not provided for in the balance sheet.

(3) An indication of the nature and form of any valuable security given by the company in connection with the commitments, guarantees or contingencies referred to in subparagraph (2) shall be given in the financial statements.

(4) The total amount of any commitments referred to in subparagraph (2) concerning retirement benefits shall be disclosed separately.

(5) Particulars, including details of significant assumptions underlying the valuation models shall be given of retirement benefit commitments which are included in the balance sheet.

(6) Where any commitment referred to in subparagraph (4) or (5) relates wholly or partly to retirement benefits payable to past directors of the company, separate particulars shall be given of that commitment.

(7) The aggregate amount of any commitments, guarantees or contingencies referred to in subparagraph (2) which are undertaken on behalf of or for the benefit of—

(a) any holding undertaking or fellow subsidiary undertaking of the company,

(b) any subsidiary undertaking of the company, or

shall be separately stated and those within each of clause (a), (b) and (c) of this subparagraph shall also be stated separately from those within any other of those clauses.

Information supplementing the profit and loss account

52.

Paragraph 53 requires information which either supplements the information given with respect to any particular items shown in the profit and loss account or otherwise provides particulars of income or expenditure of the company or of circumstances affecting the items shown in the profit and loss account.

Exceptional items

53.

The profit and loss account or the notes to the financial statements shall disclose information on the nature, amount and effect of individual items of income and expenditure that are exceptional by virtue of size or incidence.

General information

54.

Paragraphs 55 and 56 require other information to be given in the notes to the financial statements.

Related party transactions

55.

(1) Subject to subparagraphs (3) and (4), particulars shall be given in the notes to the financial statements of a company of transactions which have been entered into with related parties by the company if such transactions are material and have not been concluded under normal market conditions and the particulars shall include the amount of such transactions, the nature of the related party relationship and other information about the transactions which is necessary for an understanding of the financial position of the company.

(2) The provision of particulars and other information about individual transactions may be aggregated according to their nature, except where separate information is necessary for an understanding of the effects of related party transactions on the financial position of the company.

(3) Subparagraph (1) shall not apply to transactions which are entered into between 2 or more members of a group if any subsidiary undertaking which is party to the transaction is wholly owned by such a member.

(4) Subparagraph (1) applies only to related parties that are—

(a) the holders of participating interests in the company,

(b) undertakings in which the company holds a participating interest, and

(5) A word or expression that is used in this paragraph and is also used in IFRS has the meaning in this paragraph that it has in IFRS.

Events after the end of the financial year

56.

The particulars and financial impact of material events that have occurred after the end of the financial year shall be given in the notes to the financial statements.

PART V

SPECIAL PROVISIONS WHERE A COMPANY IS A HOLDING COMPANY OR SUBSIDIARY UNDERTAKING

Dealings with or interests in group undertakings

57.

This Part applies where the company is a holding company, whether or not it is itself a subsidiary undertaking.

Holding undertaking of smallest group preparing group financial statements

58.

(1) Where a company is a subsidiary undertaking, the information specified in subparagraphs (2) and (3) shall be stated with respect to the holding undertaking of the smallest group of undertakings for which group financial statements are drawn up and of which the company is a member.

(2) The name of the holding undertaking shall be stated.

(3) There shall be stated—

(a) if the holding undertaking is incorporated, the address of the holding undertaking’s registered office or where the holding undertaking is incorporated outside the State, the registered office (howsoever described) of the holding undertaking in the country in which it is incorporated, or

(b) if it is unincorporated, the address of its principal place of business.

PART VI

INTERPRETATION OF CERTAIN EXPRESSIONS IN SCHEDULE

Assets: Fixed or Current

59.

For the purposes of this Schedule, assets of a company shall be taken to be fixed assets if they are intended for use on a continuing basis in the company’s activities, and any assets not intended for such use shall be taken to be current assets.

Capitalisation

60.

References in this Schedule to capitalising any work or costs are references to treating that work or those costs as a fixed asset.

Investment property

61.

In this Schedule, 'investment property' means land or buildings (or both) held to earn rentals or for capital appreciation (or both).

Loans

62.

For the purposes of this Schedule, a loan shall be treated as falling due for payment, and an instalment of a loan shall be treated as falling due for payment, on the earliest date on which the lender could require repayment or (as the case may be) payment, if the lender exercised all options and rights available to him or her.

Materiality

63.

In this Schedule, 'material' means the status of information where its omission or misstatement could reasonably be expected to influence decisions that users make on the basis of the financial statements of the undertaking; and the materiality of individual items shall be assessed in the context of other similar items.

Value adjustments

64.

(1) References in this Schedule to value adjustments for depreciation or diminution in value of assets are references to any amount written off by way of providing for depreciation or diminution in value of assets.

(2) Any reference in the profit and loss account formats set out in Part II to the depreciation of, or amounts written off, assets of any description is a reference to the movement in any value adjustment for depreciation or diminution in value of assets of that description.

Provisions

65.

References in this Schedule to provisions for liabilities are references to any amount retained as reasonably necessary for the purpose of providing for any liability the nature of which is clearly defined and which exists at the financial year end date but, as respects the amount of which or the date on which it will be settled, there is uncertainty.

Purchase price

66.

References in this Schedule (however expressed) to the purchase price of an asset of a company or of any raw materials or consumables used in the production of any such asset shall be read as including references to any consideration (whether in cash or otherwise) given by the company in respect of that asset or in respect of those materials or consumables (as the case may require).”.

SCHEDULE 3

“SCHEDULE 3B

ACCOUNTING PRINCIPLES, FORM AND CONTENT OF FINANCIAL STATEMENTS OF A COMPANY QUALIFYING FOR THE MICRO COMPANIES REGIME

PART I

CONSTRUCTION OF REFERENCES TO PROVISIONS OF SCHEDULE

(1) Without prejudice to the generality of section 9 of the Interpretation Act 2005 and its application to the body of this Act and to Schedules 1, 2 and 5 to 18—

(a) a reference in this Schedule to a paragraph or Part is a reference to a paragraph or Part of this Schedule, unless it is indicated that a reference to some other enactment is intended,

(b) a reference in this Schedule to a section is a reference to the section of the Part in which the reference occurs, unless it is indicated that a reference to some other enactment is intended, and

(c) a reference in this Schedule to a subparagraph or clause is a reference to the subparagraph or clause of the provision in which the reference occurs, unless it is indicated that a reference to some other enactment is intended.

(2) Provisions providing for the interpretation of certain expressions appearing in this Schedule are contained in Part V.

PART II

GENERAL RULES AND FORMATS

SECTION A

GENERAL RULES

(1) Subject to the provisions of this Schedule—

(a) every balance sheet of a company shall show the items listed in either of the balance sheet formats set out in Section B, and

(b) every profit and loss account of a company shall show the items listed in the profit and loss accounts format so set out,

in either case in the order and under the headings given in the format adopted.

(2) Subparagraph (1) shall not be read as requiring the heading for any item in the balance sheet, or profit and loss account, of a company to be distinguished by any letter or number assigned to that item in the formats set out in Section B.

(1) Where, in accordance with paragraph 2(1)(a), a company’s balance sheet for any financial year has been prepared by reference to one of the formats set out in Section B, the directors of the company shall adopt the same format in preparing the financial statements for subsequent financial years unless, in their opinion, there are special reasons for a change.

(2) Where any change is made in the format adopted in preparing a balance sheet of a company, the reasons for the change, together with full particulars of the change, shall be given in a note to the financial statements in which the new format is first adopted.

(1) Any item required in accordance with paragraph 2 to be shown in the balance sheet or profit and loss account of a company may be shown in greater detail than that required by the format adopted.

(2) The balance sheet or profit and loss account of a company may include an item representing or covering the amount of any asset or liability or income or expenditure not otherwise covered by any of the items listed in the format adopted but the following shall not be treated as assets in the balance sheet of a company—

(a) preliminary expenses,

(b) expenses of and commission on any issue of shares or debentures, and

(3) The balance sheet or profit and loss account of a company may include subtotals where their inclusion facilitates the assessment of the financial position or profit or loss of the company for the financial year concerned.

(4) Where an asset or liability relates to more than one of the items listed in either of the balance sheet formats set out in Section B, its relationship to other items shall be disclosed either under the item where it is shown or in the notes to the financial statements.

(5) The opening balance sheet for each financial year shall correspond to the closing balance sheet for the preceding financial year.

In respect of every item shown in the balance sheet, or profit and loss account, or notes thereto, of a company, the corresponding amount for the financial year immediately preceding that to which the balance sheet or profit and loss account relates shall also be shown and, if that corresponding amount is not comparable with the amount to be shown for the item in question in respect of the financial year to which the balance sheet or profit and loss account relates, the former amount may be adjusted, and particulars of the adjustment and the reasons therefor shall be given in a note to the financial statements.

(1) Subject to subparagraph (2), a heading corresponding to an item listed in the format adopted in preparing the balance sheet or profit and loss account of a company shall not be included in the balance sheet or profit and loss account, as the case may be, if there is no amount to be shown for that item in respect of the financial year to which the balance sheet or profit and loss account relates.

(2) Subparagraph (1) shall not apply in any case where an amount can be shown for the item in question in respect of the financial year immediately preceding that to which the balance sheet or profit and loss account relates, and that amount shall be shown under the heading required by the format adopted as aforesaid.

(1) Subject to subparagraph (2), amounts in respect of items representing assets or income may not be set off in the financial statements of a company against amounts in respect of items representing liabilities or expenditure, as the case may be, or vice versa.

(2) Subparagraph (1) shall not apply in any case where such set off is in accordance with applicable accounting standards, provided that the gross amounts are disclosed in a note to the financial statements.

SECTION B

THE REQUIRED FORMATS FOR FINANCIAL STATEMENTS

Preliminary

References in this Part to the items listed in any of the formats set out in this Part are references to those items read together with any notes following the formats which apply to any of those items.

A number in brackets following any item in, or any heading to, any of the formats set out in this Part is a reference to the note of that number in the notes following the formats.

10.

In the notes following the formats—

(a) the heading of each note gives the required heading for the item to which it applies and a reference to any letters and numbers assigned to that item in the formats set out in this Part, and

(b) references to a numbered format are references to the balance sheet format of that number set out in this Part.

BALANCE SHEET FORMATS

Format 1

A. Called up share capital not paid

B. Fixed assets

C. Current assets

D. Prepayments and accrued income

E. Creditors: amounts falling due within one year

F. Net current assets (liabilities)

G. Total assets less current liabilities

H. Creditors: amounts falling due after more than one year

I. Provisions for liabilities

J. Accruals and deferred income

K. Capital and reserves

Format 2

ASSETS

A. Called up share capital not paid

B. Fixed assets

C. Current assets

D. Prepayments and accrued income

CAPITAL, RESERVES AND LIABILITIES

A. Capital and reserves

B. Provisions for liabilities

C. Creditors (1)

D. Accruals and deferred income

NOTE ON THE BALANCE SHEET FORMATS

(1) Creditors

(Format 2, 'CAPITAL, RESERVES AND LIABILITIES', item C)

Amounts falling due within one year and after one year shall be shown separately.

PROFIT AND LOSS ACCOUNT FORMAT

Turnover

Other income

Cost of raw materials and consumables

Staff costs

Value adjustments and other amounts written off assets

Other expenses

Tax

Profit or loss

PART III

ACCOUNTING PRINCIPLES AND VALUATION RULES

SECTION A

ACCOUNTING PRINCIPLES

Preliminary

11.

Subject to paragraph 18, the amounts to be included in the financial statements of a company in respect of the items shown shall be determined in accordance with the principles set out in paragraphs 12 to 17.

Accounting principles

12.

The company shall be presumed to be carrying on business as a going concern.

13.

Accounting policies and measurement bases shall be applied consistently from one financial year to the next.

14.

The amount of any item in the financial statements shall be determined on a prudent basis and in particular—

(a) only profits realised at the financial year end date shall be included in the profit and loss account,

(b) all liabilities which have arisen in the course of the financial year to which the financial statements relate or of a previous financial year shall be taken into account, even if such liabilities only become apparent between the financial year end date and the date on which the financial statements are signed under section 324, and

(c) all value adjustments for diminution in value shall be recognised, whether the result for the financial year to which the financial statements relate is a profit or loss.

15.

All income and expenses relating to the financial year to which the financial statements relate shall be taken into account without regard to the date of receipt or payment.

16.

In determining the aggregate amount of any item the amount of each individual asset or liability that falls to be taken into account shall be determined separately.

17.

Items in the profit and loss account and balance sheet shall be accounted for and presented having regard to the substance of the reported transaction or arrangement in accordance with applicable accounting standards.

18.

The provisions of this Schedule need not be complied with where the amounts involved are not material for the purpose of giving a true and fair view.

Departure from the accounting principles

19.

If it appears to the directors of a company that there are special reasons for departing from any of the principles stated above in preparing the company’s financial statements in any particular year, they may so depart, but particulars of the departure, the reasons for it and its effect on the balance sheet and profit and loss account of the company shall be stated in a note to the financial statements.

SECTION B

HISTORICAL COST ACCOUNTING RULES

Preliminary

20.

The amounts to be included in respect of all items shown in a company’s financial statements shall be determined in accordance with the rules set out in paragraphs 21 to 30.

FIXED ASSETS

General rules

21.

Subject to any value adjustment for depreciation or diminution in value made in accordance with paragraph 22 or 23, the amount to be included in respect of any fixed asset shall be its purchase price or production cost.

Rules for depreciation and diminution in value

22.

In the case of any fixed asset which has a limited useful economic life, the amount of—

(a) its purchase price or production cost, or

(b) where it is estimated that any such asset will have a residual value at the end of the period of its useful economic life, its purchase price or production cost less that estimated residual value,

shall be reduced by value adjustments for depreciation calculated to write off that amount systematically over the period of the asset’s useful economic life.

23.

(1) Where a financial asset of a description falling to be included under item A. III of either of the balance sheet formats set out in Part II has diminished in value, value adjustments for diminution in value may be made in respect of it and the amount to be included in respect of it may be reduced accordingly; and any such value adjustments which are not shown separately in the profit and loss account shall be disclosed (either separately or in aggregate) in a note to the financial statements.

(2) Value adjustments for diminution in value shall be made in respect of any fixed asset which has diminished in value if the reduction in its value is expected to be permanent (whether its useful economic life is limited or not) and the amount to be included in respect of it shall be reduced accordingly; and any such value adjustments which are not shown separately in the profit and loss account shall be disclosed (either separately or in aggregate) in a note to the financial statements.

(3) Where the reasons for which any value adjustment was made in accordance with subparagraph (1) or (2) have ceased to apply to any extent, that value adjustment shall be written back to the extent that it is no longer necessary; and any amounts written back in accordance with this subparagraph which are not shown in the profit and loss account shall be disclosed (either separately or in aggregate) in a note to the financial statements.

Rules for determining particular fixed asset items

24.

(1) Notwithstanding that an item in respect of 'development costs' is included under 'fixed assets' in the balance sheet formats set out in Part II, an amount may only be included in a company’s balance sheet in respect of that item in special circumstances.

(2) If an amount is included in a company’s balance sheet in respect of development costs, the following information shall be given in a note to the financial statements—

(a) the period over which the amount of those costs originally capitalised is being or is to be written off, and

(b) the reasons for capitalising the costs in question.

25.

(1) The application of paragraphs 21 to 23 in relation to goodwill and development costs (in any case where goodwill or development costs are treated as assets) and other intangible assets is subject to the following provisions of this paragraph.

(2) Subject to subparagraph (3)—

(a) the amount of the consideration for any goodwill acquired by a company,

(b) the amount of development costs capitalised, or

shall be reduced by value adjustments for depreciation calculated to write off that amount systematically over the useful economic life of the goodwill, development costs or other intangible assets.

(3) Where, in exceptional circumstances, the useful life of goodwill acquired by a company or development costs or other intangible assets capitalised cannot be reliably estimated, the amounts referred to in subparagraph (2)(a), (b) and (c) shall be reduced by value adjustments for depreciation calculated to write off those amounts systematically over a period which shall be not more than 10 years.

(4) In any case where any goodwill acquired by a company is shown or included as an asset in the company’s balance sheet, the period chosen for writing off the consideration for that goodwill and the reasons for choosing that period shall be disclosed in a note to the financial statements.

(5) Where, in accordance with paragraph 23(2), a value adjustment for diminution in value has been recognised for goodwill, even if it is considered that the reason for the diminution in value has ceased to exist, the value adjustment shall not be reversed as required by paragraph 23(3).

CURRENT ASSETS

26.

Subject to paragraph 27, the amount to be included in respect of any current asset shall be its purchase price or production cost.

27.

(1) If the net realisable value of any current asset is lower than its purchase price or production cost, the amount to be included in respect of that asset shall be the net realisable value.

(2) Where the reasons for which any value adjustment for diminution in value was made under subparagraph (1) have ceased to apply to any extent that value adjustment shall be written back to the extent that it is no longer necessary.

MISCELLANEOUS

Excess of money owed over value received as an asset item

28.

(1) Where the amount repayable on any debt owed by a company is greater than the value of the consideration received in the transaction giving rise to the debt, the amount of the difference may be treated as an asset.

(2) Where any such amount exists—

(a) it shall be written off by reasonable amounts each year and shall be completely written off before repayment of the debt, and

(b) if the amount not written off is not shown as a separate item in the company’s balance sheet, it shall be disclosed in a note to the financial statements.

DETERMINATION OF PURCHASE PRICE OR PRODUCTION COST

29.

(1) The purchase price of an asset shall be determined by adding to the actual price paid any expenses incidental to its acquisition and by deducting from the actual price paid any income incidental to its acquisition.

(2) The production cost of an asset shall be determined by adding to the purchase price of the raw materials and consumables used the amount of the costs incurred by the company which are directly attributable to the production of that asset.

(3) In addition there may be included in the production cost of an asset—

(a) a reasonable proportion of the costs incurred by the company which are only indirectly attributable to the production of that asset, but only to the extent that they relate to the period of production, and

(b) interest on capital borrowed to finance the production of that asset, to the extent that it accrues in respect of the period of production,

provided, however, that in a case within clause (b), the inclusion of the interest in determining the cost of that asset and the amount of the interest so included is disclosed in a note to the financial statements.

(4) Distribution costs may not be included in production costs.

30.

(1) Subject to the qualification mentioned in subparagraph (2), the purchase price or production cost of—

(a) any assets which fall to be included in the general item 'stocks' shown in a company’s balance sheet, and

(b) any assets which are fungible assets (including investments), may be determined by the application of any of the methods mentioned in subparagraph (3) in relation to any such assets of the same class.

(2) The method chosen must be one which appears to the directors to be appropriate in the circumstances of the company.

(3) The methods are—

(a) the method known as 'first in, first out' (FIFO),

(b) a weighted average price, and

(4) For the purpose of this paragraph, assets of any description shall be regarded as fungible if assets of that description are substantially indistinguishable from one another.

PART IV

INFORMATION REQUIRED BY WAY OF NOTES TO FINANCIAL STATEMENTS

Preliminary

31.

(1) Any information required in the case of any company by the following provisions of this Part shall (if not given in the company’s financial statements) be given by way of a note to those financial statements.

(2) These notes shall be presented in the order in which, where relevant, the items to which they relate are presented in the balance sheet and in the profit and loss account.

Information supplementing the balance sheet

32.

Paragraphs 33 to 35 require information which either supplements the information given with respect to any particular items shown in the balance sheet or is otherwise relevant to assessing the company’s financial position in the light of the information so given.

Appropriation of profit and loss account

33.

The profit and loss account, balance sheet or notes to the financial statements of a company for a financial year shall show—

(a) the aggregate amount of dividends paid in the financial year (other than dividends for which a liability existed at the immediately preceding financial year end date),

(d) any other increase or reduction in the balance on the profit and loss account since the immediately preceding financial year end date,

(e) the profit or loss brought forward at the beginning of the financial year, and

(f) the profit or loss carried forward at the end of the financial year.

Details of indebtedness

34.

In respect of 'creditors' shown in the company’s balance sheet there shall be stated—

(a) the aggregate amount of any debts included under that item in respect of which any security has been given, and

(b) an indication of the nature of the securities so given.

Guarantees and other financial commitments

35.

(1) Particulars shall be given of any charge on the assets of the company to secure the liabilities of any other person, including, where practicable, the amount secured.

(2) Particulars and the total amount or estimated total amount shall be given with respect to any other financial commitments, guarantees or contingencies not provided for in the balance sheet.

(4) The total amount of any commitments within subparagraph (2) concerning retirement benefits shall be disclosed separately.

(5) Particulars shall be given of retirement benefit commitments which are included in the balance sheet.

(6) The aggregate amount of any commitments, guarantees or contingencies referred to in subparagraph (2) which are undertaken on behalf of or for the benefit of—

(a) any holding undertaking or fellow subsidiary undertaking of the company,

(b) any subsidiary undertaking of the company, or

shall be separately stated and those within each of clauses (a), (b) and (c) shall also be stated separately from those within any other of those clauses.

PART V

INTERPRETATION OF CERTAIN EXPRESSIONS IN SCHEDULE

Assets: fixed or current

36.

Materiality

37.

In this Schedule, 'material' means the status of information where its omission or misstatement could reasonably be expected to influence decisions that users make on the basis of the financial statements of the undertaking. The materiality of individual items shall be assessed in the context of other similar items.

Value adjustments

38.

(2) Any reference in the profit and loss account format set out in Part II to amounts written off assets is a reference to the movement in any value adjustment for depreciation or diminution in value of assets of that description.

Provisions

39.

References in this Schedule to provisions are references to any amount retained as reasonably necessary for the purpose of providing for any liability the nature of which is clearly defined and which exists at the financial year end date but, as respects the amount of which or the date on which it will be settled, there is uncertainty.

Purchase price

40.

SCHEDULE 4

“SCHEDULE 4

ACCOUNTING PRINCIPLES, FORM AND CONTENT OF GROUP FINANCIAL STATEMENTS

PART I

CONSTRUCTION OF REFERENCES TO PROVISIONS OF SCHEDULE

Without prejudice to the generality of section 9 of the Interpretation Act 2005 and its application to the body of this Act and to Schedules 1, 2 and 5 to 18—

(a) a reference in this Schedule to a paragraph or Part is a reference to a paragraph or Part of this Schedule, unless it is indicated that a reference to some other enactment is intended, and

(b) a reference in this Schedule to a subparagraph or clause is a reference to the subparagraph or clause of the provision in which the reference occurs, unless it is indicated that a reference to some other enactment is intended.

PART II

GENERAL RULES AND FORMATS

GENERAL RULES

(1) Group financial statements shall comply, except for any necessary modifications to take account of differences between group financial statements and entity financial statements, with the provisions of Schedule 3 as if the undertakings included in the consolidation (the 'group') were a single company.

(2) In particular, for the purposes of paragraph 68 of Schedule 3 as it applies to group financial statements—

(a) any subsidiary undertakings of the holding company not dealt with in the group financial statements shall be treated as a subsidiary undertaking of the group, and

(b) if the holding company is itself a subsidiary undertaking, the group shall be treated as a subsidiary undertaking of any holding undertaking of the holding company, and the reference to fellow subsidiary undertakings shall be read accordingly.

(1) The group balance sheet and group profit and loss account shall consolidate in full the information contained in the separate balance sheets and profit and loss accounts of the holding company and of the subsidiary undertakings included in the consolidation, subject to the adjustments required or permitted by the following provisions of this Schedule and to such other adjustments (if any) as may be appropriate in accordance with generally accepted accounting practice.

(2) If the financial year of a subsidiary undertaking dealt with in the group financial statements differs from that of the holding company, the group financial statements shall be drawn up—

(a) from the entity financial statements of the subsidiary undertaking for its financial year last ending before the end of the holding company’s financial year provided that the financial year ended no more than 3 months before that of the holding undertaking and subparagraph (3) is complied with,

(b) from interim financial statements drawn up by the subsidiary undertaking as at the end of the holding company’s financial year.

(3) Where the group financial statements are drawn up from entity financial statements of a subsidiary undertaking referred to in subparagraph (2)(a), account shall be taken and, where appropriate, disclosure shall be made of important events concerning the assets and liabilities, the financial position and the profit or loss of the subsidiary undertaking between the subsidiary undertaking’s financial year end date and that of the holding company.

AMENDMENTS TO FORMATS IN SCHEDULE 3

Non-controlling interests

(1) In applying Balance Sheet Formats 1 and 2 set out in Part II of Schedule 3 to group financial statements a separate item under the heading 'Non-controlling Interests' shall be shown—

(a) in Format 1 after item H, and

(b) in Format 2 under the general heading 'CAPITAL, RESERVES AND LIABILITIES', between items A and B.

(2) The amount to be shown under the heading 'Non-controlling Interests' referred to in subparagraph (1) shall be the amount of share capital and reserves attributable to shares in subsidiary undertakings consolidated in the group financial statements held by or on behalf of persons other than the holding company and its subsidiary undertakings.

(1) In applying Profit and Loss Account Formats 1 and 2 set out in Part II of Schedule 3 to group financial statements, the profit or loss for the year shown as—

(a) in Format 1, item 16, and

(b) in Format 2, item 18,

shall be attributed between amounts due to 'Non-controlling Interests' and equity holders of the holding company.

(2) The amount to be shown under the heading 'Non-controlling Interests' in accordance with subparagraph (1) shall be the amount of any profit or loss for the year attributable to shares in subsidiary undertakings consolidated in the group financial statements held by or on behalf of persons other than the holding company and its subsidiary undertakings.

Other changes

(1) The formats set out in Part II of Schedule 3 shall have effect in relation to group financial statements with the following modifications.

(2) In the Balance Sheet Formats, the items headed 'Participating interests', that is—

(a) in Format 1, item A.III.3, and

(b) in Format 2, item A.III.3 under the heading 'ASSETS',

shall be replaced by 2 items, 'Interests in associated undertakings' and 'Other participating interests'.

(3) In the Profit and Loss Account Formats, the items headed 'Income from participating interests', that is—

(a) in Format 1, item 8, and

(b) in Format 2, item 10,

shall be replaced by 2 items, 'Income from interests in associated undertakings' and 'Income from other participating interests'.

PART III

ACCOUNTING PRINCIPLES AND VALUATION RULES

ACCOUNTING PRINCIPLES

General

In determining the amounts to be included in the group financial statements, the accounting principles and valuation rules contained in Part III of Schedule 3 shall apply and shall be applied consistently within those group financial statements.

(1) Subject to subparagraph (2), a holding company shall apply the same methods of valuation in drawing up its group financial statements as it applies in drawing up its entity financial statements unless the group and entity financial statements are drawn up under different accounting standards; and if so the applicable accounting standards shall be disclosed in the notes to the group and entity financial statements and the reasons given.

(2) Subparagraph (1) shall not apply where, in the opinion of the directors, a departure from that paragraph is necessary for the purpose of giving a true and fair view.

(3) Where there is any application of subparagraph (2), the particulars of the departure and the reasons therefor shall be disclosed in the notes to the group financial statements.

(1) Where the assets and liabilities to be included in the group financial statements have been valued or otherwise determined by undertakings included in the consolidation according to accounting rules differing from those used in the group financial statements, the values or amounts shall be adjusted so as to accord with the rules used for the group financial statements.

(2) The adjustments referred to in this paragraph need not be made if they are not material for the purpose of giving a true and fair view.

(3) If, in the opinion of the directors of the holding company, there are special reasons for departing from subparagraph (1) they may do so but particulars of any such departure, the reasons therefor and its effect shall be stated in the notes to the group financial statements.

Preparing the consolidation

10.

(1) Group financial statements shall show the assets, liabilities and financial position as at the end of the financial year and the profit or loss for the financial year of the holding company and the undertakings included in the consolidation as if they were a single undertaking.

(2) In particular—

(a) debts and claims between the undertakings included in the consolidation shall be eliminated in preparing the group financial statements,

(b) income and expenditure relating to transactions between the undertakings included in the consolidation shall be eliminated in preparing the group financial statements, and

(c) where profits and losses resulting from transactions between the undertakings included in the consolidation are included in the book values of assets, they shall be eliminated in preparing the group financial statements,

however clauses (a) to (c) need not be complied with where the amounts involved are not material for the purpose of giving a true and fair view.

11.

(1) The methods of consolidation shall be applied consistently from one financial year to the next.

(2) If, in the opinion of the directors of the holding company, there are special reasons for departing from subparagraph (1) they may do so but particulars of any such departure, the reasons therefor and its effect shall be stated in the notes to the group financial statements.

Accounting for an acquisition

12.

(1) Paragraphs 13 to 16 apply where an undertaking becomes a subsidiary undertaking of the holding company.

(2) That event is referred to in those provisions as an 'acquisition' and references to the undertaking acquired or acquired undertaking shall be read accordingly.

13.

An acquisition shall be accounted for by the acquisition method of accounting unless the conditions for accounting for it as a merger as set out in paragraph 15 are satisfied and the merger method of accounting is adopted.

14.

(1) The acquisition method of accounting is as described in subparagraphs (2) to (6).

(2) The identifiable assets and liabilities of the undertaking acquired shall be included in the consolidated balance sheet at their fair values as at the date of acquisition.

(3) The income and expenditure of the undertaking acquired shall be brought into the group financial statements only as from the date of acquisition.

(4) There shall be calculated the difference between the acquisition cost of the interest in the shares of the acquired undertaking incurred by the undertakings included in the group financial statements, and the interest of the undertakings included in the group financial statements in the adjusted capital and reserves of the undertaking acquired.

(5) For the foregoing purpose—

'acquisition cost' means the amount of any cash consideration and the fair value of any other consideration, together with such amounts (if any) in respect of fees and other expenses of the acquisition as the holding company may determine to have been incurred in relation to the acquisition;

'adjusted capital and reserves of the undertaking acquired' means its capital and reserves at the date of the acquisition after adjusting the identifiable assets and liabilities of the undertaking to fair values as at that date.

(6) The resulting amount—

(a) if positive, shall be treated as goodwill and the provisions of Schedule 3 in relation to goodwill shall apply, and

(b) if negative, shall be treated as negative goodwill and may be transferred to the profit and loss account in accordance with the accounting principles in Part III of Schedule 3.

15.

The conditions for accounting for an acquisition as a merger are—

(a) that all of the entities involved in the business combination are ultimately controlled by the same party both before and after the business combination,

(b) that such control is not transitory, and

16.

(1) The merger method of accounting is as set out in subparagraphs (2) to (6).

(2) The assets and liabilities of the undertaking acquired shall be brought into the group financial statements at the amount at which they stand in the acquired undertaking’s financial statements, subject to any adjustment authorised or required by this Part.

(3) The income and expenditure of the acquired undertaking shall be included in the group financial statements for the entire financial year, including the period before the acquisition.

(4) The group financial statements shall show corresponding amounts relating to the previous financial year as if the undertaking had been included in the consolidation throughout that year.

(5) There shall be set off against the aggregate of—

(a) the appropriate amount in respect of any shares issued by the acquiring company in consideration for the acquisition of shares in the acquired undertaking, and

(b) the fair value of any other consideration for the acquisition of shares in the acquired undertaking, determined as at the date when those shares were acquired,

the nominal value of the issued share capital of the acquired undertaking held by the undertakings consolidated in the group financial statements.

(6) The resulting amount shall be shown as an adjustment to the consolidated reserves.

(7) In subparagraph (5)(a), the 'appropriate amount' in respect of the shares issued shall be determined in accordance with the requirements of sections 71 to 75.

17.

Where an acquisition has taken place in the financial year and the merger method of accounting has been adopted, the notes to the financial statements shall disclose—

(a) the address of the acquired undertaking’s registered office or where the acquired undertaking is incorporated outside the State, the registered office (howsoever described) of the acquired undertaking in the country in which it is incorporated,

(b) the name of the ultimate controlling party referred to in paragraph 15(a),

(c) the address of that controlling party’s registered office or where the controlling party is incorporated outside the State, the registered office (howsoever described) of the controlling party in the country in which it is incorporated, and

(d) the information referred to in paragraph 16(6).

18.

(1) Where a group is acquired, paragraphs 12 to 17 apply with the following adaptations.

(2) References to shares of the acquired undertaking shall be read as references to shares of the holding undertaking of the group acquired.

(3) Other references to the acquired undertaking shall be read as references to the group acquired; and references to the assets and liabilities, income and expenditure and capital and reserves of the acquired undertaking shall be read as references to the assets and liabilities, income and expenditure and capital and reserves of the group after making the set offs and other adjustments required by this Part in the case of group financial statements.

Changes in the composition of the group

19.

If the composition of the undertakings consolidated in the group financial statements has changed significantly in the course of a financial year, the group financial statements shall include information which makes the comparison of successive sets of group financial statements meaningful.

ACCOUNTING FOR JOINT VENTURES AND ASSOCIATES IN GROUP FINANCIAL STATEMENTS

Joint ventures

20.

(1) Where a holding company or one of its subsidiary undertakings consolidated in the group financial statements manages another undertaking jointly with one or more undertakings not consolidated in the group financial statements, that other undertaking (the 'joint venture') may, if it is not a subsidiary undertaking of the holding company, be proportionally consolidated in the group financial statements in proportion to the rights in its capital held by the holding company or the subsidiary undertakings consolidated in the group financial statements, as the case may be.

(2) The provisions of this Schedule relating to the preparation of consolidated financial statements shall apply, with any necessary modifications, to the inclusion of joint ventures in the consolidated financial statements by proportional consolidation in accordance with subparagraph (1).

Associated undertakings

21.

(1) In paragraph 22, 'associated undertaking' means an undertaking in which an undertaking consolidated in the group financial statements has a participating interest and over whose operating and financial policy it exercises a significant influence and which is not—

(a) a subsidiary undertaking of the holding company, or

(b) a joint venture proportionally consolidated in accordance with paragraph 20.

(2) Where an undertaking holds 20 per cent or more of the voting rights in another undertaking, it shall be presumed to exercise such an influence over it unless the contrary is shown.

(3) The voting rights in an undertaking means the rights conferred on shareholders in respect of their shares or, in the case of an undertaking not having a share capital, on members, to vote at general meetings of the undertaking on all or substantially all matters.

(4) The provisions of section 7(5) and (6) with respect to determining whether shares are held in a body corporate and with respect to reckoning the amount of voting rights held apply, with any necessary modifications, in determining for the purpose of this paragraph whether an undertaking holds 20 per cent or more of the voting rights in another undertaking.

22.

(1) The interest of an undertaking consolidated in the group financial statements in an associated undertaking, and the amount of profit or loss attributable to such an interest, shall be shown in the group financial statements by way of the equity method of accounting including dealing with any goodwill arising in accordance with paragraphs 21 to 23 and 25 of Schedule 3.

(2) Where the associated undertaking is itself a holding undertaking, the net assets and profits or losses to be taken into account are those of the holding undertaking and its subsidiary undertakings (after making any consolidation adjustments).

(3) The equity method of accounting need not be applied if the amounts in question are not material for the purpose of giving a true and fair view.

Participating interest

23.

(1) Subject to subparagraph (5), in paragraph 21 and this paragraph, 'participating interest' means an interest held by one undertaking in the equity shares of another undertaking which it holds on a long term basis for the purpose of securing a contribution to that undertaking’s own activities by the exercise of control or influence arising from or related to that interest.

(2) The reference in subparagraph (1) to an interest in equity shares includes—

(a) an interest which is convertible into an interest in equity shares, and

(b) an option to acquire equity shares or any such interest,

and an interest or option falls within clause (a) or (b) notwithstanding that the equity shares to which it relates are, until the conversion or the exercise of the option, unissued.

(3) Where an undertaking holds an interest in equity shares and such an interest represents 20 per cent or more of all such interests in the other undertaking it shall be presumed to hold that interest on the basis and for the purpose mentioned in subparagraph (1) unless the contrary is shown.

(4) For the purpose of this paragraph an interest held on behalf of an undertaking shall be treated as held by it.

(5) In the balance sheet and profit and loss formats set out in Part II of Schedule 3, 'participating interest' does not include an interest in a group undertaking.

PART IV

INFORMATION REQUIRED BY WAY OF NOTES TO GROUP FINANCIAL STATEMENTS

24.

Without prejudice to paragraph 2, the notes to the group financial statements shall, in addition to providing the information required by Schedule 3, also state the information required by paragraphs 25 to 31.

25.

Where sums originally denominated in currencies, other than the currency in which the group financial statements are presented, have been brought into account under any items shown in the balance sheet or profit and loss account, the basis on which those sums have been translated into the currency in which the group financial statements are presented shall be stated.

26.

In respect of the aggregate of the amounts shown in the group balance sheet under the heading 'creditors' there shall be stated the information required by paragraph 56 of Schedule 3 as if references in that paragraph to a company were to the company and its subsidiary undertakings taken as a whole.

27.

In relation to each joint venture proportionally consolidated, there shall be stated the nature of the joint management arrangement.

28.

In disclosing the information in relation to particulars of staff required by section 317, there shall be shown separately the average number of persons employed by undertakings that are proportionally consolidated.

29.

In relation to acquisitions taking place in the financial year, there shall be stated in the notes to the group financial statements—

(a) the name and registered office of the acquired undertaking or where the acquired undertaking is incorporated outside the State, the registered office (howsoever described) of the acquired undertaking in the country in which it is incorporated, or

(b) where a group was acquired, the name and registered office of the holding undertaking of that group or where the holding undertaking is incorporated outside the State, the registered office (howsoever described) of the holding undertaking in the country in which it is incorporated, and

30.

(1) Where a holding company prepares group financial statements, the following information shall be given with respect to each undertaking which is a subsidiary undertaking of the holding company at the end of the financial year:

(a) whether the subsidiary undertaking is included in the consolidation and, if it is not, the reasons for excluding it from the consolidation;

(b) a statement identifying which of the conditions specified in section 7(2) is the undertaking a subsidiary undertaking of its immediate holding undertaking.

(2) Paragraph (1)(b) need not be applied if the subsidiary undertaking is an undertaking within the description of section 7(2)(a)(iii) or (iv) and the immediate holding undertaking holds the same proportion of shares in the undertaking as it holds voting rights.

31.

Paragraph 65 of Schedule 3 shall, in the case of group financial statements, apply to all transactions entered into by the holding company, or any subsidiary undertaking included in the consolidation, with related parties, being transactions of the kind referred to in that paragraph but not being intra-group transactions.

PART V

MISCELLANEOUS MATTERS

Deferred tax

32.

Deferred tax balances shall be recognised on consolidation where it is probable that a charge to tax or a reduction in tax payable will arise within the foreseeable future for one of the undertakings included in the consolidation.”.

SCHEDULE 5

“SCHEDULE 4A

ACCOUNTING PRINCIPLES, FORM AND CONTENT OF GROUP FINANCIAL STATEMENTS FOR COMPANIES SUBJECT TO THE SMALL COMPANIES REGIME

PART I

CONSTRUCTION OF REFERENCES TO PROVISIONS OF SCHEDULE

Without prejudice to the generality of section 9 of the Interpretation Act 2005 and its application to the body of this Act and to Schedules 1, 2 and 5 to 18—

(a) a reference in this Schedule to a paragraph or Part is a reference to a paragraph or Part of this Schedule, unless it is indicated that a reference to some other enactment is intended, and

PART II

GENERAL RULES AND FORMATS

GENERAL RULES

(1) Group financial statements shall comply, except for any necessary modifications to take account of differences between group financial statements and entity financial statements, with the provisions of Schedule 3A as if the undertakings included in the consolidation (the 'group') were a single company.

(2) In particular, for the purposes of paragraph 57 of Schedule 3A as it applies to group financial statements—

(a) any subsidiary undertakings of the holding company not dealt with in the group financial statements shall be treated as a subsidiary undertaking of the group, and

(2) If the financial year of a subsidiary undertaking dealt with in the group financial statements differs from that of the holding company, the group financial statements shall be drawn up—

(b) from interim financial statements drawn up by the subsidiary undertaking as at the end of the holding company’s financial year.

AMENDMENTS TO FORMATS IN SCHEDULE 3A

Non-controlling interests

(1) In applying Balance Sheet Formats 1 and 2 set out in Part II of Schedule 3A to group financial statements a separate item under the heading 'Non-controlling Interests' shall be shown—

(a) in Format 1 after item H, and

(b) in Format 2 under the general heading 'CAPITAL, RESERVES AND LIABILITIES', between items A and B.

(1) In applying Profit and Loss Account Formats 1 and 2 set out in Part II of Schedule 3A to group financial statements the profit or loss for the year shown—

(a) in Format 1, item 16, and

(b) in Format 2, item 18,

shall be attributed between amounts due to 'Non-controlling Interests' and equity holders of the holding company.

Other changes

(1) The formats set out in Part II of Schedule 3A shall have effect in relation to group financial statements with the following modifications.

(2) In the Balance Sheet Formats, the items headed 'Participating interests', that is—

(a) in Format 1, item A.III.3, and

(b) in Format 2, item A.III.3 under the heading 'ASSETS',

shall be replaced by 2 items, 'Interests in associated undertakings' and 'Other participating interests'.

(3) In the Profit and Loss Account Formats, the items headed 'Income from participating interests', that is—

(a) in Format 1, item 8, and

(b) in Format 2, item 10,

shall be replaced by 2 items, 'Income from interests in associated undertakings' and 'Income from other participating interests'.

PART III

ACCOUNTING PRINCIPLES AND VALUATION RULES

ACCOUNTING PRINCIPLES

General

In determining the amounts to be included in the group financial statements, the accounting principles and valuation rules contained in Part III of Schedule 3A shall apply and shall be applied consistently within those group financial statements.

(2) Subparagraph (1) shall not apply where, in the opinion of the directors, a departure from that paragraph is necessary for the purpose of giving a true and fair view.

(3) Where there is any application of subparagraph (2), the particulars of the departure and the reasons therefor shall be disclosed in the notes to the group financial statements.

(2) The adjustments referred to in this paragraph need not be made if they are not material for the purpose of giving a true and fair view.

Preparing the consolidation

10.

(2) In particular—

(a) debts and claims between the undertakings included in the consolidation shall be eliminated in preparing the group financial statements,

(b) income and expenditure relating to transactions between the undertakings included in the consolidation shall be eliminated in preparing the group financial statements, and

however clauses (a) to (c) need not be complied with where the amounts involved are not material for the purpose of giving a true and fair view.

11.

(1) The methods of consolidation shall be applied consistently from one financial year to the next.

(2) If, in the opinion of the directors of the holding company, there are special reasons for departing from subparagraph (1), they may do so but particulars of any such departure, the reasons therefor and its effect shall be stated in the notes to the group financial statements.

Accounting for an acquisition

12.

(1) Paragraphs 13 to 16 apply where an undertaking becomes a subsidiary undertaking of the holding company.

(2) That event is referred to in those provisions as an 'acquisition' and references to the undertaking acquired or acquired undertaking shall be read accordingly.

13.

14.

(1) The acquisition method of accounting is as described in subparagraphs (2) to (6).

(2) The identifiable assets and liabilities of the undertaking acquired shall be included in the consolidated balance sheet at their fair values as at the date of acquisition.

(3) The income and expenditure of the undertaking acquired shall be brought into the group financial statements only as from the date of acquisition.

(5) For the foregoing purpose—

(6) The resulting amount—

(a) if positive, shall be treated as goodwill and the provisions of Schedule 3A in relation to goodwill shall apply, and

(b) if negative, shall be treated as negative goodwill and may be transferred to the profit and loss account in accordance with the accounting principles in Part III of Schedule 3A.

15.

The conditions for accounting for an acquisition as a merger are—

(a) that all of the entities involved in the business combination are ultimately controlled by the same party both before and after the business combination,

(b) that such control is not transitory, and

16.

(1) The merger method of accounting is as set out in subparagraphs (2) to (6).

(3) The income and expenditure of the acquired undertaking shall be included in the group financial statements for the entire financial year, including the period before the acquisition.

(4) The group financial statements shall show corresponding amounts relating to the previous financial year as if the undertaking had been included in the consolidation throughout that year.

(5) There shall be set off against the aggregate of—

(a) the appropriate amount in respect of any shares issued by the acquiring company in consideration for the acquisition of shares in the acquired undertaking, and

(b) the fair value of any other consideration for the acquisition of shares in the acquired undertaking, determined as at the date when those shares were acquired,

the nominal value of the issued share capital of the acquired undertaking held by the undertakings consolidated in the group financial statements.

(6) The resulting amount shall be shown as an adjustment to the consolidated reserves.

(7) In subparagraph (5)(a), the 'appropriate amount' in respect of the shares issued shall be determined in accordance with the requirements of sections 71 to 75.

17.

Where an acquisition has taken place in the financial year and the merger method of accounting has been adopted, the notes to the financial statements shall disclose—

(b) the name of the ultimate controlling party referred to in paragraph 15(a),

(d) the information referred to in paragraph 16(6).

18.

(1) Where a group is acquired, paragraphs 12 to 17 apply with the following adaptations.

(2) References to shares of the acquired undertaking shall be read as references to shares of the holding undertaking of the group acquired.

Changes in the composition of the group

19.

ACCOUNTING FOR JOINT VENTURES AND ASSOCIATES IN GROUP FINANCIAL STATEMENTS

Joint ventures

20.

Associated undertakings

21.

(a) a subsidiary undertaking of the holding company, or

(b) a joint venture proportionally consolidated in accordance with paragraph 20.

(2) Where an undertaking holds 20 per cent or more of the voting rights in another undertaking, it shall be presumed to exercise such an influence over it unless the contrary is shown.

22.

(3) The equity method of accounting need not be applied if the amounts in question are not material for the purpose of giving a true and fair view.

Participating interest

23.

(1) Subject to subparagraph (5), in paragraph 21 and this paragraph 'participating interest' means an interest held by one undertaking in the equity shares of another undertaking which it holds on a long term basis for the purpose of securing a contribution to that undertaking’s own activities by the exercise of control or influence arising from or related to that interest.

(2) The reference in subparagraph (1) to an interest in equity shares includes—

(a) an interest which is convertible into an interest in equity shares, and

(b) an option to acquire equity shares or any such interest,

and an interest or option falls within clause (a) or (b) notwithstanding that the equity shares to which it relates are, until the conversion or the exercise of the option, unissued.

(4) For the purpose of this paragraph an interest held on behalf of an undertaking shall be treated as held by it.

(5) In the balance sheet and profit and loss formats set out in Part II of Schedule 3A, 'participating interest' does not include an interest in a group undertaking.

PART IV

INFORMATION REQUIRED BY WAY OF NOTES TO GROUP FINANCIAL STATEMENTS

24.

Without prejudice to paragraph 2, the notes to the group financial statements shall, in addition to providing the information required by Schedule 3A, also state the information required by paragraphs 25 to 31.

25.

26.

In respect of the aggregate of the amounts shown in the group balance sheet under the heading 'creditors', there shall be stated the information required by paragraph 50 of Schedule 3A as if references in that paragraph to a company were to the company and its subsidiary undertakings taken as a whole.

27.

In relation to each joint venture proportionally consolidated, there shall be stated the nature of the joint management arrangement.

28.

In disclosing the information in relation to staff numbers required by section 317, there shall be shown separately the average number of persons employed by undertakings that are proportionally consolidated.

29.

In relation to acquisitions taking place in the financial year, there shall be stated in the notes to the group financial statements—

30.

Paragraph 55 of Schedule 3A shall, in the case of group financial statements, apply to all transactions entered into by the holding company, or any subsidiary undertaking included in the consolidation, with related parties that are—

(a) the holders of participating interests in the holding company or any subsidiary undertaking,

(b) undertakings in which the holding company or any subsidiary undertaking holds a participating interest, or

31.

(a) whether the subsidiary undertaking is included in the consolidation and, if it is not, the reasons for excluding it from consolidation;

(b) a statement identifying which of the conditions specified in section 7(2) is the undertaking a subsidiary undertaking of its immediate holding undertaking.

(2) Paragraph (1)(b) need not be applied if the company is a company within the description of section 7(2)(a)(iii) or (iv) and the immediate holding undertaking holds the same proportion of shares in the undertaking as it holds voting rights.

PART V

MISCELLANEOUS MATTERS

Deferred tax

32.

SCHEDULE 6

“SCHEDULE 18

TABLE OF ACTIVITIES RELEVANT TO THE DEFINITIONS OF 'LOGGING UNDERTAKING' AND 'MINING OR QUARRYING UNDERTAKING' IN SECTION 1449

Annex I to Regulation (EC) No. 1893/2006

Table 1

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