The Sorp revision: Assets

By finance expert Don Bawtree

Don Bawtree
Don Bawtree

Commentators are saying the balance sheet will not change much under the new Sorp - but this is not true. The numbers may be very different. The basic principles will be unchanged and the latest standard on heritage assets foreshadowed the new Sorp.

Investments will need recategorising, and perhaps revaluing, to allow for mixed-motive holdings. Any goodwill will need to be analysed out.

You may be bringing in new stock items, depending on whether you have items for distribution (as food banks do) or donated retail stock.

Accounting policy has changed for financial instruments. Some instruments are defined as "complex" or "embedded" and are likely to appear on the balance sheet for the first time.

Recognising income when probable instead of certain will increase pledges, trade debt and legacies. There might be new liabilities too, with a renewed focus on provisions for loss-making contracts, and the end of the multi-employer, defined-benefit pension scheme opt-out for many.

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