FRS 102 transition adjustment
The cumulative effect of adopting the new FRS 102 lease model, recognised in retained earnings at the transition date.
Definition
Under the modified retrospective approach, any difference between the opening ROU asset and lease liability at the transition date is recognised as a debit or credit to retained earnings. This avoids restating prior year comparative figures but requires clear disclosure of the adjustment in the statutory note.
Why it matters
The transition adjustment must be disclosed in the first set of accounts prepared under the new standard. It explains the opening balance sheet impact and is a required element of the FRS 102 transition note.
In AuditLease
AuditLease calculates and discloses the FRS 102 transition adjustment in the statutory accounts note when the standard is set to FRS 102 and the period covers the transition year.
Related terms
Put this into practice with AuditLease
AuditLease handles IFRS 16 and FRS 102 lease calculations, statutory note generation, journal entries, and audit evidence, so your team spends less time on spreadsheets and more time on judgements.
This definition is for general information only and is not accounting or legal advice. Definitions are based on IFRS 16, FRS 102, and associated guidance published by the IFRS Foundation and the Financial Reporting Council. Users should refer to the applicable accounting standards and their professional advisers for judgement-specific matters.