Some financial assets, such as listed shares, are carried at fair value with the gains and losses taken to profit or loss. This note discloses those fair values, the gain or loss for the year and how the fair values were arrived at. Derivatives have their own note.
What this note shows
A table with, for this year and last:
- Financial assets measured at fair value through profit or loss – the fair value at the year end.
- Fair value gains/(losses) recognised in profit or loss in the year – a loss prints in brackets.
A row only prints when it has a figure. Under the table the note states that the assets are measured at fair value and are included in investments in the balance sheet. A description of the basis of fair value follows. The note is part of FRS 102 Section 1A accounts; it is not available in FRS 105 micro-entity accounts.
Where the figures come from
You type the figures in. They are not read from the trial balance, because the investments accounts do not separate what is held at fair value from what is held at cost. Check the fair value against the investments on the balance sheet.
Completing the note in Tax Optimiser
Open the period, choose Accounts, then Notes in the left Actions menu. Select Financial instruments at fair value in the list. It has two sections.
- In the figures section, set Show this note in the accounts to Yes and enter the fair value and the gain or loss for both years. Enter a loss as a negative figure.
- In the Basis of fair value section, click Use Template and choose the wording that fits, or type your own.
- Click Save changes to save the note and rebuild the accounts preview.
Add the Financial instruments accounting policy as well: see accounting policies.
Wording templates
- Listed investments at quoted prices – states that fair value is the quoted bid price at the reporting date.
- Unlisted investments: valuation technique – for a fair value that cannot be taken from an active market. You are asked for {{InvestmentDescription}}, {{ValuationTechnique}} and {{SignificantAssumptions}}.
- Movements taken to a fair value reserve – for the less common case where fair value changes are taken to a reserve. You are asked for {{InstrumentDescription}}, {{OpeningBalance}}, {{MovementInYear}}, {{CreditedOrCharged}} and {{ClosingBalance}}.
What the note does not cover
- Derivatives: use the derivative financial instruments note.
- Investment property: use the investment property note.
- There is no fair value reserve account or movement table. If changes are taken to a reserve, give the movement in the wording.
Frequently asked questions
Do small companies have to disclose financial instruments held at fair value?
Yes. Where financial instruments are measured at fair value, the notes must give the fair value of each category, the changes in value included in profit or loss or in a fair value reserve, and the significant assumptions behind any valuation technique.
How are listed shares measured?
Under FRS 102, investments in ordinary shares that are publicly traded are measured at fair value, with changes in fair value recognised in profit or loss.
Where does the fair value of a listed investment come from?
From the quoted bid price on the reporting date, usually taken from the broker's or platform's year-end valuation.