FRS 3 has been superseded by FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland for accounting periods beginning on or after 1 January 2015. For more information visit:

• icaew.com/newukgaap

Synopsis

FRS 3 requires a layered format for the profit and loss account to highlight a number of important components of financial performance:

• Results of continuing operations (including acquisitions) 
• Results of discontinued operations Profits and losses on the sale or termination of an operation, costs of a fundamental reorganisation or restructuring and profits or losses on the disposal of fixed assets 
• Extraordinary items

The effect of FRS 3 has been effectively to outlaw extraordinary items. If any were to arise, the standard requires them to be included in the earnings figure used to calculate earnings per share.

FRS 3 also requires some additional statements and notes to the financial statements:

• a statement of total recognised gains and losses – a primary financial statement that includes the profit or loss for the period together with all movements in reserves reflecting recognised gains and losses attributable to shareholders.
• note of historical cost profits – in order to be able to compare profits/losses between companies which have revalued their fixed assets and those that have not.

• Read FRC Summary on FRS 3

Last updated 21 June 2015