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The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008

Type Statutory-Instrument

Publication 2008-02-19

Last updated 2026-01-01

State In force

Department King's Printer of Acts of Parliament

Source legislation.gov.uk

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articles Not indexed

Reform history JSON API

S.I. 2001/544, as amended by S.I. 2001/3544, S.I. 2002/682, S.I. 2002/1310, S.I. 2002/1776, S.I. 2002/1777, S.I. 2003/1475, S.I. 2003/1476, S.I. 2003/2822, S.I. 2004/1610, S.I. 2004/2737, S.I. 2004/3379, S.I. 2005/593, S.I. 2005/1518, S.I. 2005/2114 and S.I. 2006/1969.

A number in brackets following any item is a reference to the note of that number in the notes following the formats.

FSA 2006/42.

O.J. No. L185 of 4th July 1987, p.72.

O.J. L345 of 19th December 2002, p.1.

FSA 2006/42.

See regulation 6(2) for exemption for companies falling within section 408 of the 2006 Act (individual profit and loss account where group accounts prepared).

FSA 2006/42.

Section 131 is prospectively repealed by the 2006 Act.

Article 141 is prospectively repealed by the 2006 Act.

Section 132 is prospectively repealed by the 2006 Act.

Article 142 is prospectively repealed by the 2006 Act.

2005 asp 10.

O.J.L222 of 14.8.1978, page 11, and O.J. L193 of 18.7.1983, page 1, as amended in particular by Directives 2001/65/EEC and 2003/51/EEC of the European Parliament and of the Council (O.J. L238 of 27.12.2001, page 28, and O.J. L178 of 17.7.2003, page 16).

Section 143 is prospectively repealed by the 2006 Act.

Article 153 is prospectively repealed by the 2006 Act.

Section 146(1)(aa) was inserted by section 102C(5) of 1986 c.53, as inserted by section 1(1) of 1997 c.41. Section 146 is prospectively repealed by the 2006 Act.

Article 156(1)(aa) was inserted by section 102C(6) of 1986 c.53, as inserted by section 1(1) of 1997 c.41. Article 156 is prospectively repealed by the 2006 Act.

Section 150 is prospectively repealed by the 2006 Act.

Article 160 is prospectively repealed by the 2006 Act.

1995 c.50.

O.J. No. L142, 30.4.2004, p.12.

O.J. L222 of 14.8.1978, page 11, as amended in particular by Directives 2001/65/EEC, 2003/51/EEC and 2006/46/EEC of the European Parliament and of the Council (O.J. L238 of 27.12.2001, page 28, O.J. L178 of 17.7.2003, page 16 and O.J. L224 of 16.8.2006, page 1).

O.J L374 of 31.12.1991, page 7, as amended in particular by Directives 2001/65/EEC, 2003/51/EEC and 2006/46/EEC of the European Parliament and of the Council (O.J. L238 of 27.12.2001, page 28, O.J. L178 of 17.7.2003, page 16 and O.J. L224 of 16.8.2006, page 1).

2000 c.8.

SECTION A — GENERAL RULES

1

(1) Subject to the following provisions of this Schedule—

(a) every balance sheet of a company must show the items listed in either of the balance sheet formats in Section B of this Part, and

(b) every profit and loss account must show the items listed in either of the profit and loss account formats in Section B.

(2) References in this Schedule to the items listed in any of the formats in Section B are to those items read together with any of the notes following the formats which apply to those items.

(3) Subject to paragraph 1A, the items must be shown in the order and under the headings and sub-headings given in the particular format used, but—

(a) the notes to the formats may permit alternative positions for any particular items, and

(b) the heading or sub-heading for any item does not have to be distinguished by any letter or number assigned to that item in the format used.

2

(1) Where in accordance with paragraph 1 a company's balance sheet or profit and loss account for any financial year has been prepared by reference to one of the formats in Section B, the company's directors must use the same format in preparing Companies Act individual accounts for subsequent financial years, unless in their opinion there are special reasons for a change.

(2) Particulars of any such change must be given in a note to the accounts in which the new format is first used, and the reasons for the change must be explained.

3

(1) Any item required to be shown in a company's balance sheet or profit and loss account may be shown in greater detail than required by the particular format used.

(2) The balance sheet or profit and loss account may include an item representing or covering the amount of any asset or liability, income or expenditure not otherwise covered by any of the items listed in the format used, save that none of the following may be treated as assets in any balance sheet—

(a) preliminary expenses,

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

4

(1) Where the special nature of the company's business requires it, the company's directors must adapt the arrangement, headings and sub-headings otherwise required in respect of items given an Arabic number in the balance sheet or profit and loss account format used.

(2) The directors may combine items to which Arabic numbers are given in any of the formats in Section B if—

(a) their individual amounts are not material to assessing the state of affairs or profit or loss of the company for the financial year in question, or

(b) the combination facilitates that assessment.

(3) Where sub-paragraph (2)(b) applies, the individual amounts of any items which have been combined must be disclosed in a note to the accounts.

5

(1) Subject to sub-paragraph (2), the directors must not include a heading or sub-heading corresponding to an item in the balance sheet or profit and loss account format used if there is no amount to be shown for that item for the financial year to which the balance sheet or profit and loss account relates.

(2) Where an amount can be shown for the item in question for the immediately preceding financial year that amount must be shown under the heading or sub-heading required by the format for that item.

6

Every profit and loss account must show the amount of a company's profit or loss ...before taxation.

7

(1) For every item shown in the balance sheet or profit and loss account the corresponding amount for the immediately preceding financial year must also be shown.

(2) Where 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 non-comparability and of any adjustment must be disclosed in a note to the accounts.

8

Amounts in respect of items representing assets or income may not be set off against amounts in respect of items representing liabilities or expenditure (as the case may be), or vice versa.

9

The company's directors must, in determining how amounts are presented within items in the profit and loss account and balance sheet, have regard to the substance of the reported transaction or arrangement, in accordance with generally accepted accounting principles or practice.

SECTION B — THE REQUIRED FORMATS FOR ACCOUNTS

ASSETS

(A) Called up share capital not paid (1)

(B) Fixed assets

(I) Intangible assets

(1) Development costs

(2) Concessions, patents, licences, trade marks and similar rights and assets (2)

(3) Goodwill (3)

(4) Payments on account

(II) Tangible assets

(1) Land and buildings

(2) Plant and machinery

(3) Fixtures, fittings, tools and equipment

(4) Payments on account and assets in course of construction

(III) Investments

(1) Shares in group undertakings

(2) Loans to group undertakings

(3) Participating interests

(4) Loans to undertakings in which the company has a participating interest

(5) Other investments other than loans

(6) Other loans

(7) Own shares (4)

(I) Stocks

(1) Raw materials and consumables

(2) Work in progress

(3) Finished goods and goods for resale

(4) Payments on account

(II) Debtors (5)

(1) Trade debtors

(2) Amounts owed by group undertakings

(3) Amounts owed by undertakings in which the company has a participating interest

(4) Other debtors

(5) Called up share capital not paid (1)

(6) Prepayments and accrued income (6)

(III) Investments

(1) Shares in group undertakings

(2) Own shares (4)

(3) Other investments

(IV) Cash at bank and in hand

(D) Prepayments and accrued income (6)

LIABILITIES

(A) Capital and reserves

(I) Called up share capital (12)

(II) Share premium account

(III) Revaluation reserve

(IV) Other reserves

(1) Capital redemption reserve

(2) Reserve for own shares

(3) Reserves provided for by the articles of association

(4) Other reserves

(V) Profit and loss account

(B) Provisions for liabilities

(1) Pensions and similar obligations

(2) Taxation, including deferred taxation

(3) Other provisions

(1) Debenture loans (7)

(2) Bank loans and overdrafts

(3) Payments received on account (8)

(4) Trade creditors

(5) Bills of exchange payable

(6) Amounts owed to group undertakings

(7) Amounts owed to undertakings in which the company has a participating interest

(8) Other creditors including taxation and social security (9)

(9) Accruals and deferred income (10)

(D) Accruals and deferred income (10)

A

Charges

(1) Cost of sales (14)

(2) Distribution costs (14)

(3) Administrative expenses (14)

(4) Amounts written off investments

(5) Interest payable and similar charges (16)

(6) Tax on profit or loss on ordinary activities

(7) Profit or loss on ordinary activities after taxation

(8) Extraordinary charges

(9) Tax on extraordinary profit or loss

(10) Other taxes not shown under the above items

(11) Profit or loss for the financial year

B

Income

(1) Turnover

(2) Other operating income

(3) Income from shares in group undertakings

(4) Income from participating interests

(5) Income from other fixed asset investments (15)

(6) Other interest receivable and similar income (15)

(7) Profit or loss on ordinary activities after taxation

(8) Extraordinary income

(9) Profit or loss for the financial year

A

Charges

(1) Reduction in stocks of finished goods and in work in progress

(a) Raw materials and consumables

(b) Other external charges

(3) Staff costs

(a) wages and salaries

(b) social security costs

(a) Depreciation and other amounts written off tangible and intangible fixed assets

(b) Exceptional amounts written off current assets

(5) Other operating charges

(6) Amounts written off investments

(7) Interest payable and similar charges (16)

(8) Tax on profit or loss on ordinary activities

(9) Profit or loss on ordinary activities after taxation

(10) Extraordinary charges

(11) Tax on extraordinary profit or loss

(12) Other taxes not shown under the above items

(13) Profit or loss for the financial year

B

Income

(1) Turnover

(2) Increase in stocks of finished goods and in work in progress

(3) Own work capitalised

(4) Other operating income

(5) Income from shares in group undertakings

(6) Income from participating interests

(7) Income from other fixed asset investments (15)

(8) Other interest receivable and similar income (15)

(9) Profit or loss on ordinary activities after taxation

(10) Extraordinary income

(11) Profit or loss for the financial year

SECTION A — ACCOUNTING PRINCIPLES

Preliminary

10

(1) The amounts to be included in respect of all items shown in a company's accounts must be determined in accordance with the principles set out in this Section.

(2) But if it appears to the company's directors that there are special reasons for departing from any of those principles in preparing the company's accounts in respect of any financial year they may do so, in which case particulars of the departure, the reasons for it and its effect must be given in a note to the accounts.

Accounting principles

11

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

12

Accounting policies and measurement bases must be applied consistently within the same accounts and from one financial year to the next.

13

The amount of any item must be determined on a prudent basis, and in particular—

(a) only profits realised at the balance sheet date are to be included in the profit and loss account, ...

(b) all liabilities which have arisen in respect of the financial year to which the accounts relate or a previous financial year must be taken into account, including those which only become apparent between the balance sheet date and the date on which it is signed on behalf of the board of directors in accordance with section 414 of the 2006 Act (approval and signing of accounts), and

(c) all provisions for diminution of value must be recognised, whether the result of the financial year is a profit or a loss.

14

All income and charges relating to the financial year to which the accounts relate must be taken into account, without regard to the date of receipt or payment.

15

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

SECTION B — HISTORICAL COST ACCOUNTING RULES

Preliminary

16

Subject to Sections C and D of this Part of this Schedule, the amounts to be included in respect of all items shown in a company's accounts must be determined in accordance with the rules set out in this Section.

General rules

17

(1) The amount to be included in respect of any fixed asset must be its purchase price or production cost.

(2) This is subject to any provision for depreciation or diminution in value made in accordance with paragraphs 18 to 20.

Rules for depreciation and diminution in value

18

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,

must be reduced by provisions for depreciation calculated to write off that amount systematically over the period of the asset's useful economic life.

19

(1) Where a fixed asset investment falling to be included under item B.III of either of the balance sheet formats set out in Part 1 of this Schedule has diminished in value, provisions 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.

(2) Provisions for diminution in value must 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 must be reduced accordingly.

(3) Provisions made under sub-paragraph (1) or (2) must be charged to the profit and loss account and disclosed separately in a note to the accounts if not shown separately in the profit and loss account.

20

(1) Where the reasons for which any provision was made in accordance with paragraph 19 have ceased to apply to any extent, that provision must be written back to the extent that it is no longer necessary.

(1A) But provision made in accordance with paragraph 19(2) in respect of goodwill must not be written back to any extent.

(2) Any amounts written back under sub-paragraph (1) must be recognised in the profit and loss account and disclosed separately in a note to the accounts if not shown separately in the profit and loss account.

Development costs

21

(1) Where this is in accordance with generally accepted accounting principles or practice, development costs may be included in “other intangible assets” under “fixed assets” in the balance sheet formats set out in Section B of Part 1 of this Schedule.

(2) If any amount is included in a company's balance sheet in respect of development costs, the note on accounting policies (see paragraph 44 of this Schedule) must include the following information—

(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 development costs in question.

Goodwill

22

(1) Intangible assets must be written off over the useful economic life of the intangible asset.

(2) Where in exceptional cases the useful life of intangible assets cannot be reliably estimated, such assets must be written off over a period chosen by the directors of the company.

(3) The period referred to in sub-paragraph (2) must not exceed ten years.

(4) There must be disclosed in a note to the accounts the period referred to in sub-paragraph (2) and the reasons for choosing that period.

Current assets

Excess of money owed over value received as an asset item

Assets included at a fixed amount

Determination of purchase price or production cost

Substitution of original stated amount where price or cost unknown

SECTION C — ALTERNATIVE ACCOUNTING RULES

Preliminary

Alternative accounting rules

Application of the depreciation rules

Additional information to be provided in case of departure from historical cost accounting rules

Revaluation reserve

SECTION D — FAIR VALUE ACCOUNTING

Inclusion of financial instruments at fair value

Determination of fair value

Hedged items

Other assets that may be included at fair value

Accounting for changes in value

The fair value reserve

SECTION A — GENERAL RULES

1

Subject to the following provisions of this Part of this Schedule—

(a) every balance sheet of a company must show the items listed in the balance sheet format set out in Section B of this Part, and

(b) every profit and loss account must show the items listed in either of the profit and loss account formats in Section B.

2

(1) References in this Part of this Schedule to the items listed in any of the formats set out in Section B, are to those items read together with any of the notes following the formats which apply to those items.

(2) The items must be shown in the order and under the headings and sub-headings given in the particular format used, but—

(a) the notes to the formats may permit alternative positions for any particular items,

(b) the heading or sub-heading for any item does not have to be distinguished by any letter or number assigned to that item in the format used, and

(c) where the heading of an item in the format used contains any wording in square brackets, that wording may be omitted if not applicable to the company.

3

(1) Where in accordance with paragraph 1 a company's profit and loss account for any financial year has been prepared by reference to one of the formats in Section B, the company's directors must use the same format in preparing the profit and loss account for subsequent financial years, unless in their opinion there are special reasons for a change.

(2) Particulars of any change must be given in a note to the accounts in which the new format is first used, and the reasons for the change must be explained.

4

(1) Any item required to be shown in a company's balance sheet or profit and loss account may be shown in greater detail than required by the particular format used.

(2) The balance sheet or profit and loss account may include an item representing or covering the amount of any asset or liability, income or expenditure not specifically covered by any of the items listed in the format used, save that none of the following may be treated as assets in any balance sheet—

(a) preliminary expenses,

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

5

(1) Items to which lower case letters are assigned in any of the formats in Section B may be combined in a company's accounts for any financial year if—

(a) their individual amounts are not material for the purpose of giving a true and fair view, or

(b) the combination facilitates the assessment of the state of affairs or profit or loss of the company for that year.

(2) Where sub-paragraph (1)(b) applies, the individual amounts of any items so combined must be disclosed in a note to the accounts and any notes required by this Schedule to the items so combined must, notwithstanding the combination, be given.

6

(1) Subject to sub-paragraph (2), the directors must not include a heading or sub-heading corresponding to an item in the balance sheet or profit and loss account format used if there is no amount to be shown for that item for the financial year to which the balance sheet or profit and loss account relates.

(2) Where an amount can be shown for the item in question for the immediately preceding financial year, that amount must be shown under the heading or sub-heading required by the format for that item.

7

(1) For every item shown in the balance sheet or profit and loss account the corresponding amount for the immediately preceding financial year must also be shown.

(2) Where 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 non-comparability and of any adjustment must be disclosed in a note to the accounts.

8

(1) Subject to the following provisions of this paragraph and without prejudice to note (6) to the balance sheet format, amounts in respect of items representing assets or income may not be set off against amounts in respect of items representing liabilities or expenditure (as the case may be), or vice versa.

(2) Charges required to be included in profit and loss account format 1, items 11(a) and 11(b) or format 2, items A7(a) and A7(b) may be set off against income required to be included in format 1, items 12(a) and 12(b) or format 2, items B5(a) and B5(b) and the resulting figure shown as a single item (in format 2 at position A7 if negative and at position B5 if positive).

(3) Charges required to be included in profit and loss account format 1, item 13 or format 2, item A8 may also be set off against income required to be included in format 1, item 14 or format 2, item B6 and the resulting figure shown as a single item (in format 2 at position A8 if negative and at position B6 if positive).

9

(1) Assets must be shown under the relevant balance sheet headings even where the company has pledged them as security for its own liabilities or for those of third parties or has otherwise assigned them as security to third parties.

(2) A company may not include in its balance sheet assets pledged or otherwise assigned to it as security unless such assets are in the form of cash in the hands of the company.

(3) Assets acquired in the name of and on behalf of third parties must not be shown in the balance sheet.

10

SECTION B — THE REQUIRED FORMATS

ASSETS

(1) Cash and balances at central [or post office] banks (1)

(2) Treasury bills and other eligible bills (20)

(a) Treasury bills and similar securities (2)

(b) Other eligible bills (3)

(3) Loans and advances to banks (4), (20)

(a) Repayable on demand

(b) Other loans and advances

(4) Loans and advances to customers (5), (20)

(5) Debt securities [and other fixed-income securities] (6), (20)

(a) Issued by public bodies

(b) Issued by other issuers

(6) Equity shares [and other variable-yield securities]

(7) Participating interests

(8) Shares in group undertakings

(9) Intangible fixed assets (7)

(10) Tangible fixed assets (8)

(11) Called up capital not paid (9)

(12) Own shares (10)

(13) Other assets

(14) Called up capital not paid (9)

(15) Prepayments and accrued income

LIABILITIES

(1) Deposits by banks (11), (20)

(a) Repayable on demand

(b) With agreed maturity dates or periods of notice

(2) Customer accounts (12), (20)

(a) Repayable on demand

(b) With agreed maturity dates or periods of notice

(3) Debt securities in issue (13), (20)

(a) Bonds and medium term notes

(b) Others

(4) Other liabilities

(5) Accruals and deferred income

(6) Provisions for liabilities

(a) Provisions for pensions and similar obligations

(b) Provisions for tax

(7) Subordinated liabilities (14), (20)

(8) Called up share capital (15)

(9) Share premium account

(10) Reserves

(a) Capital redemption reserve

(b) Reserve for own shares

(d) Other reserves

(11) Revaluation reserve

(12) Profit and loss account

MEMORANDUM ITEMS

(1) Contingent liabilities (16)

(1) Acceptances and endorsements

(2) Guarantees and assets pledged as collateral security (17)

(3) Other contingent liabilities

(2) Commitments (18)

(1) Commitments arising out of sale and option to resell transactions (19)

(2) Other commitments

Subordinated assets

11

(1) The amount of any assets that are subordinated must be shown either as a subdivision of any relevant asset item or in the notes to the accounts; in the latter case disclosure must be by reference to the relevant asset item or items in which the assets are included.

(2) In the case of assets items 2 to 5 in the balance sheet format, the amounts required to be shown by note (20) to the format as sub-items of those items must be further subdivided so as to show the amount of any claims included therein that are subordinated.

(3) For this purpose, assets are subordinated if there is a contractual obligation to the effect that, in the event of winding up or bankruptcy, they are to be repaid only after the claims of other creditors have been met, whether or not a ranking has been agreed between the subordinated creditors concerned.

Syndicated loans

12

(1) Where a company is a party to a syndicated loan transaction the company must include only that part of the total loan which it itself has funded.

(2) Where a company is a party to a syndicated loan transaction and has agreed to reimburse (in whole or in part) any other party to the syndicate any funds advanced by that party or any interest thereon upon the occurrence of any event, including the default of the borrower, any additional liability by reason of such a guarantee must be included as a contingent liability in Memorandum item 1(2).

Sale and repurchase transactions

13

(1) The following rules apply where a company is a party to a sale and repurchase transaction.

(2) Where the company is the transferor of the assets under the transaction—

(a) the assets transferred must, notwithstanding the transfer, be included in its balance sheet,

(b) the purchase price received by it must be included in its balance sheet as an amount owed to the transferee, and

(3) Where the company is the transferee of the assets under the transaction, it must not include the assets transferred in its balance sheet but the purchase price paid by it to the transferor must be so included as an amount owed by the transferor.

Sale and option to resell transactions

14

(1) The following rules apply where a company is a party to a sale and option to resell transaction.

(2) Where the company is the transferor of the assets under the transaction, it must not include in its balance sheet the assets transferred but it must enter under Memorandum item 2 an amount equal to the price agreed in the event of repurchase.

(3) Where the company is the transferee of the assets under the transaction it must include those assets in its balance sheet.

Managed funds

15

(1) For the purposes of this paragraph, “managed funds” are funds which the company administers in its own name but on behalf of others and to which it has legal title.

(2) The company must, in any case where claims and obligations arising in respect of managed funds fall to be treated as claims and obligations of the company, adopt the following accounting treatment.

(3) Claims and obligations representing managed funds are to be included in the company's balance sheet, with the notes to the accounts disclosing the total amount included with respect to such assets and liabilities in the balance sheet and showing the amount included under each relevant balance sheet item in respect of such assets or (as the case may be) liabilities.

Vertical layout

(1) Interest receivable (1)

(1) Interest receivable and similar income arising from debt securities [and other fixed-income securities]

(2) Other interest receivable and similar income

(2) Interest payable (2)

(3) Dividend income

(a) Income from equity shares [and other variable-yield securities]

(b) Income from participating interests

(4) Fees and commissions receivable (3)

(5) Fees and commissions payable (4)

(6) Dealing [profits] [losses] (5)

(7) Other operating income

(8) Administrative expenses

(a) Staff costs

(i) Wages and salaries

(ii) Social security costs

(iii) Other pension costs

(b) Other administrative expenses

(9) Depreciation and amortisation (6)

(10) Other operating charges

(11) Provisions

(a) Provisions for bad and doubtful debts (7)

(b) Provisions for contingent liabilities and commitments (8)

(12) Adjustments to provisions

(a) Adjustments to provisions for bad and doubtful debts (9)

(b) Adjustments to provisions for contingent liabilities and commitments (10)

(13) Amounts written off fixed asset investments (11)

(14) Adjustments to amounts written off fixed asset investments (12)

(15) [Profit] [loss] on ordinary activities before tax

(16) Tax on [profit] [loss] on ordinary activities

(17) [Profit] [loss] on ordinary activities after tax

(18) Extraordinary income

(19) Extraordinary charges

(20) Extraordinary [profit] [loss]

(21) Tax on extraordinary [profit] [loss]

(22) Extraordinary [profit] [loss] after tax

(23) Other taxes not shown under the preceding items

(24) [Profit] [loss] for the financial year

Horizontal layout

A. Charges

(1) Interest payable (2)

(2) Fees and commissions payable (4)

(3) Dealing losses (5)

(4) Administrative expenses

(a) Staff costs

(i) Wages and salaries

(ii) Social security costs

(iii) Other pension costs

(b) Other administrative expenses

(5) Depreciation and amortisation (6)

(6) Other operating charges

(7) Provisions

(a) Provisions for bad and doubtful debts (7)

(b) Provisions for contingent liabilities and commitments (8)

(8) Amounts written off fixed asset investments (11)

(9) Profit on ordinary activities before tax

(10) Tax on [profit] [loss] on ordinary activities

(11) Profit on ordinary activities after tax

(12) Extraordinary charges

(13) Tax on extraordinary [profit] [loss]

(14) Extraordinary loss after tax

(15) Other taxes not shown under the preceding items

(16) Profit for the financial year

B. Income

(1) Interest receivable (1)

(1) Interest receivable and similar income arising from debt securities [and other fixed-income securities]

(2) Other interest receivable and similar income

(2) Dividend income

(a) Income from equity shares [and other variable-yield securities]

(b) Income from participating interests

(3) Fees and commissions receivable (3)

(4) Dealing profits (5)

(5) Adjustments to provisions

(a) Adjustments to provisions for bad and doubtful debts (9)

(b) Adjustments to provisions for contingent liabilities and commitments (10)

(6) Adjustments to amounts written off fixed asset investments (12)

(7) Other operating income

(8) Loss on ordinary activities before tax

(9) Loss on ordinary activities after tax

(10) Extraordinary income

(11) Extraordinary profit after tax

(12) Loss for the financial year

Interest receivable(Format 1, item 1; format 2, item B1.)This item is to include all income arising out of banking activities, including—income from assets included in assets items 1 to 5 in the balance sheet format, however calculated,income resulting from covered forward contracts spread over the actual duration of the contract and similar in nature to interest, andfees and commissions receivable similar in nature to interest and calculated on a time basis or by reference to the amount of the claim (but not other fees and commissions receivable).

Interest payable(Format 1, item 2; format 2, item A1.)This item is to include all expenditure arising out of banking activities, including—charges arising out of liabilities included in liabilities items 1, 2, 3 and 7 in the balance sheet format, however calculated,charges resulting from covered forward contracts, spread over the actual duration of the contract and similar in nature to interest, andfees and commissions payable similar in nature to interest and calculated on a time basis or by reference to the amount of the liability (but not other fees and commissions payable).

Fees and commissions receivable(Format 1, item 4; format 2, item B3.)Fees and commissions receivable are to comprise income in respect of all services supplied by the company to third parties, but not fees or commissions required to be included under interest receivable (format 1, item 1; format 2, item B1).In particular the following fees and commissions receivable must be included (unless required to be included under interest receivable)—fees and commissions for guarantees, loan administration on behalf of other lenders and securities transactions,fees, commissions and other income in respect of payment transactions, account administration charges and commissions for the safe custody and administration of securities,fees and commissions for foreign currency transactions and for the sale and purchase of coin and precious metals, andfees and commissions charged for brokerage services in connection with savings and insurance contracts and loans.

Fees and commissions payable(Format 1, item 5; format 2, item A2.)Fees and commissions payable are to comprise charges for all services rendered to the company by third parties but not fees or commissions required to be included under interest payable (format 1, item 2; format 2, item A1).In particular the following fees and commissions payable must be included (unless required to be included under interest payable)—fees and commissions for guarantees, loan administration and securities transactions;fees, commissions and other charges in respect of payment transactions, account administration charges and commissions for the safe custody and administration of securities;fees and commissions for foreign currency transactions and for the sale and purchase of coin and precious metals; andfees and commissions for brokerage services in connection with savings and insurance contracts and loans.

Dealing [profits] [losses](Format 1, item 6; format 2, items B4 and A3.)This item is to comprise—the net profit or net loss on transactions in securities which are not held as financial fixed assets together with amounts written off or written back with respect to such securities, including amounts written off or written back as a result of the application of paragraph 33(1),the net profit or loss on exchange activities, save in so far as the profit or loss is included in interest receivable or interest payable (format 1, items 1 or 2; format 2, items B1 or A1), andthe net profits and losses on other dealing operations involving financial instruments, including precious metals.

Depreciation and amortisation(Format 1, item 9; format 2, item A5.)This item is to comprise depreciation and other amounts written off in respect of balance sheet assets items 9 and 10.

Provisions: Provisions for bad and doubtful debts(Format 1, item 11(a); format 2, item A7(a).)Provisions for bad and doubtful debts are to comprise charges for amounts written off and for provisions made in respect of loans and advances shown under balance sheet assets items 3 and 4.

Provisions: Provisions for contingent liabilities and commitments(Format 1, item 11(b); format 2, item A7(b).)This item is to comprise charges for provisions for contingent liabilities and commitments of a type which would, if not provided for, be shown under Memorandum items 1 and 2.

Adjustments to provisions: Adjustments to provisions for bad and doubtful debts(Format 1, item 12(a); format 2, item B5(a).)This item is to include credits from the recovery of loans that have been written off, from other advances written back following earlier write offs and from the reduction of provisions previously made with respect to loans and advances.

10.

Adjustments to provisions: Adjustments to provisions for contingent liabilities and commitments(Format 1, item 12(b); format 2, item B5(b).)This item comprises credits from the reduction of provisions previously made with respect to contingent liabilities and commitments.

11.

Amounts written off fixed asset investments(Format 1, item 13; format 2, item A8.)Amounts written off fixed asset investments are to comprise amounts written off in respect of assets which are transferable securities held as financial fixed assets, participating interests and shares in group undertakings and which are included in assets items 5 to 8 in the balance sheet format.

12.

Adjustments to amounts written off fixed asset investments(Format 1, item 14; format 2, item B6.)Adjustments to amounts written off fixed asset investments are to include amounts written back following earlier write offs and provisions in respect of assets which are transferable securities held as financial fixed assets, participating interests and group undertakings and which are included in assets items 5 to 8 in the balance sheet format.

SECTION A — ACCOUNTING PRINCIPLES

Preliminary

16

(1) The amounts to be included in respect of all items shown in a company's accounts must be determined in accordance with the principles set out in this Section.

(2) But if it appears to the company's directors that there are special reasons for departing from any of those principles in preparing the company's accounts in respect of any financial year they may do so, in which case particulars of the departure, the reasons for it and its effect must be given in a note to the accounts.

Accounting principles

17

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

18

Accounting policies and measurement bases must be applied consistently within the same accounts and from one financial year to the next.

19

The amount of any item must be determined on a prudent basis, and in particular—

(a) only profits realised at the balance sheet date are to be included in the profit and loss account, ...

(b) all liabilities which have arisen in respect of the financial year to which the accounts relate or a previous financial year must be taken into account, including those which only become apparent between the balance sheet date and the date on which it is signed on behalf of the board of directors in accordance with section 414 of the 2006 Act (approval and signing of accounts), and

(c) all provisions for diminution of value must be recognised, whether the result of the financial year is a profit or a loss.

20

All income and charges relating to the financial year to which the accounts relate must be taken into account, without regard to the date of receipt or payment.

SECTION B — HISTORICAL COST ACCOUNTING RULES

Preliminary

General rules

Rules for depreciation and diminution in value

Development costs

Goodwill

Treatment of fixed assets

Financial fixed assets

Current assets

Excess of money owed over value received as an asset item

Determination of cost

Substitution of original stated amount where price or cost unknown

SECTION C — ALTERNATIVE ACCOUNTING RULES

Preliminary

Alternative accounting rules

Application of the depreciation rules

Additional information to be provided in case of departure from historical cost accounting rules

Revaluation reserve

SECTION D — FAIR VALUE ACCOUNTING

Inclusion of financial instruments at fair value

Determination of fair value

Hedged items

Other assets that may be included at fair value

Accounting for changes in value

The fair value reserve

Assets and liabilities denominated in foreign currencies

SECTION A — GENERAL RULES

1

(1) Subject to the following provisions of this Schedule—

(a) every balance sheet of a company must show the items listed in the balance sheet format in Section B of this Part, and

(b) every profit and loss account must show the items listed in the profit and loss account format in Section B.

(2) References in this Schedule to the items listed in any of the formats in Section B are to those items read together with any of the notes following the formats which apply to those items.

(3) The items must be shown in the order and under the headings and sub-headings given in the particular format, but—

(a) the notes to the formats may permit alternative positions for any particular items, and

(b) the heading or sub-heading for any item does not have to be distinguished by any letter or number assigned to that item in the format used.

2

(1) Any item required to be shown in a company's balance sheet or profit and loss account may be shown in greater detail than required by the particular format.

(2) The balance sheet or profit and loss account may include an item representing or covering the amount of any asset or liability, income or expenditure not specifically covered by any of the items listed in the formats set out in Section B, save that none of the following may be treated as assets in any balance sheet—

(a) preliminary expenses,

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

3

(1) The directors may combine items to which Arabic numbers are given in the balance sheet format set out in Section B (except for items concerning technical provisions and the reinsurers' share of technical provisions), and items to which lower case letters in parentheses are given in the profit and loss account format so set out (except for items within items I.1 and 4 and II.1, 5 and 6) if—

(a) their individual amounts are not material for the purpose of giving a true and fair view, or

(b) the combination facilitates the assessment of the state of affairs or profit or loss of the company for the financial year in question.

(2) Where sub-paragraph (1)(b) applies—

(a) the individual amounts of any items which have been combined must be disclosed in a note to the accounts, and

(b) any notes required by this Schedule to the items so combined must, notwithstanding the combination, be given.

4

(1) Subject to sub-paragraph (2), the directors must not include a heading or sub-heading corresponding to an item in the balance sheet or profit and loss account format used if there is no amount to be shown for that item for the financial year to which the balance sheet or profit and loss account relates.

(2) Where an amount can be shown for the item in question for the immediately preceding financial year that amount must be shown under the heading or sub-heading required by the format for that item.

5

(1) For every item shown in the balance sheet or profit and loss account the corresponding amount for the immediately preceding financial year must also be shown.

(2) Where 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 non-comparability and of any adjustment must be disclosed in a note to the accounts.

6

Subject to the provisions of this Schedule, amounts in respect of items representing assets or income may not be set off against amounts in respect of items representing liabilities or expenditure (as the case may be), or vice versa.

7

(1) The provisions of this Schedule which relate to long-term business apply, with necessary modifications, to business which consists of effecting or carrying out relevant contracts of general insurance which—

(a) is transacted exclusively or principally according to the technical principles of long-term business, and

(b) is a significant amount of the business of the company.

(2) For the purposes of paragraph (1), a contract of general insurance is a relevant contract if the risk insured against relates to—

(a) accident, or

(b) sickness.

(3) Sub-paragraph (2) must be read with—

(a) section 22 of the Financial Services and Markets Act 2000 ,

(b) the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 , and

8

SECTION B — THE REQUIRED FORMATS

9

(1) Where in respect of any item to which an Arabic number is assigned in the balance sheet or profit and loss account format, the gross amount and reinsurance amount or reinsurers' share are required to be shown, a sub-total of those amounts must also be given.

(2) Where in respect of any item to which an Arabic number is assigned in the profit and loss account format, separate items are required to be shown, then a separate sub-total of those items must also be given in addition to any sub-total required by sub-paragraph (1).

10

(1) In the profit and loss account format set out below—

(a) the heading “Technical account — General business” is for business which consists of effecting or carrying out contracts of general business; and

(b) the heading “Technical account — Long-term business” is for business which consists of effecting or carrying out contracts of long-term insurance.

(2) In sub-paragraph (1), references to—

(a) contracts of general or long-term insurance, and

(b) the effecting or carrying out of such contracts,

must be read with section 22 of the Financial Services and Markets Act 2000, the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, and Schedule 2 to that Act.

ASSETS

(A) Called up share capital not paid (1)

(B) Intangible assets

(1) Development costs

(2) Concessions, patents, licences, trade marks and similar rights and assets (2)

(3) Goodwill (3)

(4) Payments on account

(I) Land and buildings (4)

(II) Investments in group undertakings and participating interests

(1) Shares in group undertakings

(2) Debt securities issued by, and loans to, group undertakings

(3) Participating interests

(4) Debt securities issued by, and loans to, undertakings in which the company has a participating interest

(III) Other financial investments

(1) Shares and other variable-yield securities and units in unit trusts

(2) Debt securities and other fixed-income securities (5)

(3) Participation in investment pools (6)

(4) Loans secured by mortgages (7)

(5) Other loans (7)

(6) Deposits with credit institutions (8)

(7) Other (9)

(IV) Deposits with ceding undertakings (10)

(D) Assets held to cover linked liabilities (11)

(Da) Reinsurers' share of technical provisions (12)

(1) Provision for unearned premiums

(2) Long-term business provision

(3) Claims outstanding

(4) Provisions for bonuses and rebates

(5) Other technical provisions

(6) Technical provisions for unit-linked liabilities

(E) Debtors (13)

(I) Debtors arising out of direct insurance operations

(1) Policyholders

(2) Intermediaries

(II) Debtors arising out of reinsurance operations

(III) Other debtors

(IV) Called up share capital not paid (1)

(F) Other assets

(I) Tangible assets

(1) Plant and machinery

(2) Fixtures, fittings, tools and equipment

(3) Payments on account (other than deposits paid on land and buildings) and assets (other than buildings) in course of construction

(II) Stocks

(1) Raw materials and consumables

(2) Work in progress

(3) Finished goods and goods for resale

(4) Payments on account

(III) Cash at bank and in hand

(IV) Own shares (14)

(V) Other (15)

(G) Prepayments and accrued income

(I) Accrued interest and rent (16)

(II) Deferred acquisition costs (17)

(III) Other prepayments and accrued income

LIABILITIES

(A) Capital and reserves

(I) Called up share capital or equivalent funds

(II) Share premium account

(III) Revaluation reserve

(IV) Reserves

(1) Capital redemption reserve

(2) Reserve for own shares

(3) Reserves provided for by the articles of association

(4) Other reserves

(V) Profit and loss account

(B) Subordinated liabilities (18)

(Ba) Fund for future appropriations (19)

(1) Provision for unearned premiums (20)

(a) gross amount

(b) reinsurance amount (12)

(2) Long-term business provision (20)(21)(26)

(a) gross amount

(b) reinsurance amount (12)

(3) Claims outstanding (22)

(a) gross amount

(b) reinsurance amount (12)

(4) Provision for bonuses and rebates (23)

(a) gross amount

(b) reinsurance amount (12)

(5) Equalisation provision (24)

(6) Other technical provisions (25)

(a) gross amount

(b) reinsurance amount (12)

(D) Technical provisions for linked liabilities (26)

(a) gross amount

(b) reinsurance amount (12)

(E) Provisions for other risks

(1) Provisions for pensions and similar obligations

(2) Provisions for taxation

(3) Other provisions

(F) Deposits received from reinsurers (27)

(G) Creditors (28)

(I) Creditors arising out of direct insurance operations

(II) Creditors arising out of reinsurance operations

(III) Debenture loans (29)

(IV) Amounts owed to credit institutions

(V) Other creditors including taxation and social security

(H) Accruals and deferred income

Additional items

11

(1) Every balance sheet of a company which carries on long-term business must show separately as an additional item the aggregate of any amounts included in liabilities item A (capital and reserves) which are required not to be treated as realised profits under section 843 of the 2006 Act.

(2) A company which carries on long-term business must show separately, in the balance sheet or in the notes to the accounts, the total amount of assets representing the long-term fund valued in accordance with the provisions of this Schedule.

Managed funds

12

(1) For the purposes of this paragraph “managed funds” are funds of a group pension fund—

(a) the management of which constitutes long-term insurance business, and

(b) which the company administers in its own name but on behalf of others, and

(2) The company must, in any case where assets and liabilities arising in respect of managed funds fall to be treated as assets and liabilities of the company, adopt the following accounting treatment: assets and liabilities representing managed funds are to be included in the company's balance sheet, with the notes to the accounts disclosing the total amount included with respect to such assets and liabilities in the balance sheet and showing the amount included under each relevant balance sheet item in respect of such assets or (as the case may be) liabilities.

Deferred acquisition costs

13

The costs of acquiring insurance policies which are incurred during a financial year but which relate to a subsequent financial year must be deferred in a manner specified in Note (17) on the balance sheet format.

I

Technical account — General business

(1) Earned premiums, net of reinsurance

(a) gross premiums written (1)

(b) outward reinsurance premiums (2)

(d) change in the provision for unearned premiums, reinsurers' share

(2) Allocated investment return transferred from the non-technical account (item III.6) (10)

(2a) Investment income (8)(10)

(a) income from participating interests, with a separate indication of that derived from group undertakings

(b) income from other investments, with a separate indication of that derived from group undertakings

(aa) income from land and buildings

(bb) income from other investments

(d) gains on the realisation of investments

(3) Other technical income, net of reinsurance

(4) Claims incurred, net of reinsurance (4)

(a) claims paid

(aa) gross amount

(bb) reinsurers' share

(b) change in the provision for claims

(aa) gross amount

(bb) reinsurers' share

(5) Changes in other technical provisions, net of reinsurance, not shown under other headings

(6) Bonuses and rebates, net of reinsurance (5)

(7) Net operating expenses

(a) acquisition costs (6)

(b) change in deferred acquisition costs

(d) reinsurance commissions and profit participation

(8) Other technical charges, net of reinsurance

(8a) Investment expenses and charges (8)

(a) investment management expenses, including interest

(b) value adjustments on investments

(9) Change in the equalisation provision

(10) Sub-total (balance on the technical account for general business) (item III.1)

II

Technical account — Long-term business

(1) Earned premiums, net of reinsurance

(a) gross premiums written (1)

(b) outward reinsurance premiums (2)

(2) Investment income (8)(10)

(a) income from participating interests, with a separate indication of that derived from group undertakings

(b) income from other investments, with a separate indication of that derived from group undertakings

(aa) income from land and buildings

(bb) income from other investments

(d) gains on the realisation of investments

(3) Unrealised gains on investments (9)

(4) Other technical income, net of reinsurance

(5) Claims incurred, net of reinsurance (4)

(a) claims paid

(aa) gross amount

(bb) reinsurers' share

(b) change in the provision for claims

(aa) gross amount

(bb) reinsurers' share

(6) Change in other technical provisions, net of reinsurance, not shown under other headings

(a) Long-term business provision, net of reinsurance (3)

(aa) gross amount

(bb) reinsurers' share

(b) other technical provisions, net of reinsurance

(7) Bonuses and rebates, net of reinsurance (5)

(8) Net operating expenses

(a) acquisition costs (6)

(b) change in deferred acquisition costs

(d) reinsurance commissions and profit participation

(9) Investment expenses and charges (8)

(a) investment management expenses, including interest

(b) value adjustments on investments

(10) Unrealised losses on investments (9)

(11) Other technical charges, net of reinsurance

(11a) Tax attributable to the long-term business

(12) Allocated investment return transferred to the non-technical account (item III.4)

(12a) Transfers to or from the fund for future appropriations

(13) Sub-total (balance on the technical account — long-term business) (item III.2)

III

Non-technical account

(1) Balance on the general business technical account (item I.10)

(2) Balance on the long-term business technical account (item II.13)

(2a) Tax credit attributable to balance on the long-term business technical account

(3) Investment income (8)

(a) income from participating interests, with a separate indication of that derived from group undertakings

(b) income from other investments, with a separate indication of that derived from group undertakings

(aa) income from land and buildings

(bb) income from other investments

(d) gains on the realisation of investments

(3a) Unrealised gains on investments (9)

(4) Allocated investment return transferred from the long-term business technical account (item II.12) (10)

(5) Investment expenses and charges (8)

(a) investment management expenses, including interest

(b) value adjustments on investments

(5a) Unrealised losses on investments (9)

(6) Allocated investment return transferred to the general business technical account (item I.2) (10)

(7) Other income

(8) Other charges, including value adjustments

(8a) Profit or loss on ordinary activities before tax

(9) Tax on profit or loss on ordinary activities

(10) Profit or loss on ordinary activities after tax

(11) Extraordinary income

(12) Extraordinary charges

(13) Extraordinary profit or loss

(14) Tax on extraordinary profit or loss

(15) Other taxes not shown under the preceding items

(16) Profit or loss for the financial year

SECTION A — ACCOUNTING PRINCIPLES

Preliminary

14

The amounts to be included in respect of all items shown in a company's accounts must be determined in accordance with the principles set out in this Section.

15

But if it appears to the company's directors that there are special reasons for departing from any of those principles in preparing the company's accounts in respect of any financial year they may do so, in which case particulars of the departure, the reasons for it and its effect must be given in a note to the accounts.

Accounting principles

16

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

17

Accounting policies and measurement bases must be applied consistently within the same accounts and from one financial year to the next.

18

The amount of any item must be determined on a prudent basis, and in particular—

(a) subject to note (9) on the profit and loss account format, only profits realised at the balance sheet date are to be included in the profit and loss account, ...

(b) all liabilities which have arisen in respect of the financial year to which the accounts relate or a previous financial year must be taken into account, including those which only become apparent between the balance sheet date and the date on which it is signed on behalf of the board of directors in accordance with section 414 of the 2006 Act (approval and signing of accounts), and

(c) all provisions for diminution of value must be recognised, whether the result of the financial year is a profit or a loss.

19

All income and charges relating to the financial year to which the accounts relate are to be taken into account, without regard to the date of receipt or payment.

20

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

Valuation

21

(1) The amounts to be included in respect of assets of any description mentioned in paragraph 22 (valuation of assets: general) must be determined either—

(a) in accordance with that paragraph and paragraph 24 (but subject to paragraphs 27 to 29), or

(b) so far as applicable to an asset of that description, in accordance with Section C (valuation at fair value).

(2) The amounts to be included in respect of assets of any description mentioned in paragraph 24 (alternative valuation of fixed-income securities) may be determined—

(a) in accordance with that paragraph (but subject to paragraphs 27 to 29), or

(b) so far as applicable to an asset of that description, in accordance with Section C.

(3) The amounts to be included in respect of assets which—

(a) are not assets of a description mentioned in paragraph 22 or 23, but

(b) are assets of a description to which Section C is applicable,

may be determined in accordance with that Section.

(4) Subject to sub-paragraphs (1) to (3), the amounts to be included in respect of all items shown in a company's accounts are determined in accordance with Section C.

SECTION B — CURRENT VALUE ACCOUNTING RULES

Valuation of assets: general

22

(1) Subject to paragraph 24, investments falling to be included under assets item C (investments) must be included at their current value calculated in accordance with paragraphs 25 and 26.

(2) Investments falling to be included under assets item D (assets held to cover linked liabilities) must be shown at their current value calculated in accordance with paragraphs 25 and 26.

23

(1) Intangible assets other than goodwill may be shown at their current cost.

(2) Assets falling to be included under assets items F.I (tangible assets) and F.IV (own shares) in the balance sheet format may be shown at their current value calculated in accordance with paragraphs 25 and 26 or at their current cost.

(3) Assets falling to be included under assets item F.II (stocks) may be shown at current cost.

Alternative valuation of fixed-income securities

24

(1) This paragraph applies to debt securities and other fixed-income securities shown as assets under assets items C.II (investments in group undertakings and participating interests) and C.III (other financial investments).

(2) Securities to which this paragraph applies may either be valued in accordance with paragraph 22 or their amortised value may be shown in the balance sheet, in which case the provisions of this paragraph apply.

(3) Subject to sub-paragraph (4), where the purchase price of securities to which this paragraph applies exceeds the amount repayable at maturity, the amount of the difference—

(a) must be charged to the profit and loss account, and

(b) must be shown separately in the balance sheet or in the notes to the accounts.

(4) The amount of the difference referred to in sub-paragraph (3) may be written off in instalments so that it is completely written off when the securities are repaid, in which case there must be shown separately in the balance sheet or in the notes to the accounts the difference between the purchase price (less the aggregate amount written off) and the amount repayable at maturity.

(5) Where the purchase price of securities to which this paragraph applies is less than the amount repayable at maturity, the amount of the difference must be released to income in instalments over the period remaining until repayment, in which case there must be shown separately in the balance sheet or in the notes to the accounts the difference between the purchase price (plus the aggregate amount released to income) and the amount repayable at maturity.

(6) Both the purchase price and the current value of securities valued in accordance with this paragraph must be disclosed in the notes to the accounts.

(7) Where securities to which this paragraph applies which are not valued in accordance with paragraph 22 are sold before maturity, and the proceeds are used to purchase other securities to which this paragraph applies, the difference between the proceeds of sale and their book value may be spread uniformly over the period remaining until the maturity of the original investment.

Meaning of “current value”

25

(1) Subject to sub-paragraph (5), in the case of investments other than land and buildings, current value means market value determined in accordance with this paragraph.

(2) In the case of listed investments, market value means the value on the balance sheet date or, when the balance sheet date is not a stock exchange trading day, on the last stock exchange trading day before that date.

(3) Where a market exists for unlisted investments, market value means the average price at which such investments were traded on the balance sheet date or, when the balance sheet date is not a trading day, on the last trading day before that date.

(4) Where, on the date on which the accounts are drawn up, listed or unlisted investments have been sold or are to be sold within the short term, the market value must be reduced by the actual or estimated realisation costs.

(5) Except where the equity method of accounting is applied, all investments other than those referred to in sub-paragraphs (2) and (3) must be valued on a basis which has prudent regard to the likely realisable value.

26

(1) In the case of land and buildings, current value means the market value on the date of valuation, where relevant reduced as provided in sub-paragraphs (4) and (5).

(2) Market value means the price at which land and buildings could be sold under private contract between a willing seller and an arm's length buyer on the date of valuation, it being assumed that the property is publicly exposed to the market, that market conditions permit orderly disposal and that a normal period, having regard to the nature of the property, is available for the negotiation of the sale.

(3) The market value must be determined through the separate valuation of each land and buildings item, carried out at least every five years in accordance with generally recognised methods of valuation.

(4) Where the value of any land and buildings item has diminished since the preceding valuation under sub-paragraph (3), an appropriate value adjustment must be made.

(5) The lower value arrived at under sub-paragraph (4) must not be increased in subsequent balance sheets unless such increase results from a new determination of market value arrived at in accordance with sub-paragraphs (2) and (3).

(6) Where, on the date on which the accounts are drawn up, land and buildings have been sold or are to be sold within the short term, the value arrived at in accordance with sub-paragraphs (2) and (4) must be reduced by the actual or estimated realisation costs.

(7) Where it is impossible to determine the market value of a land and buildings item, the value arrived at on the basis of the principle of purchase price or production cost is deemed to be its current value.

Application of the depreciation rules

27

(1) Where—

(a) the value of any asset of a company is determined in accordance with paragraph 22 or 23, and

(b) in the case of a determination under paragraph 22, the asset falls to be included under assets item C.I,

that value must be, or (as the case may require) must be the starting point for determining, the amount to be included in respect of that asset in the company's accounts, instead of its cost or any value previously so determined for that asset. Paragraphs 36 to 41 and 43 apply accordingly in relation to any such asset with the substitution for any reference to its cost of a reference to the value most recently determined for that asset in accordance with paragraph 22 or 23 (as the case may be).

(2) The amount of any provision for depreciation required in the case of any asset by paragraph 37 or 38 as it applies by virtue of sub-paragraph (1) is referred to below in this paragraph as the adjusted amount, and the amount of any provision which would be required by that paragraph in the case of that asset according to the historical cost accounting rules is referred to as the historical cost amount.

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