FRS 102 Changes – What Isle of Man Businesses Need to Know Before 2026

Major updates to UK GAAP are coming into effect from 1 January 2026.

These changes, introduced through the FRC’s Periodic Review 2024, will impact how businesses report revenue, leases, and disclosures. Only weeks remain before the FRS 102 changes take effect. Is your business ready?

Key Changes to FRS 102

1. Revenue Recognition (Section 23)

FRS 102 now adopts a five-step model aligned with IFRS 15.

1. Identify the contract with a customer

2. Identify performance obligations

3. Determine the transaction price

4. Allocate the price to obligations

5. Recognise revenue when obligations are satisfied

This structured approach changes how and when revenue is recognised, especially for businesses with long-term projects or bundled services.

2. Lease Accounting (Section 20)

Lessees must now recognise most leases on the balance sheet as both a right-of-use asset and a lease liability. The distinction between operating and finance leases is removed.

Exemptions apply for:

· Short-term leases (≤12 months)

· Low-value assets

3. Disclosure Requirements for Small Entities (Section 1A)

Small businesses will need to provide expanded disclosures, including:

· Going concern assessments

· Related party transactions

· Revenue and lease details

What does FRS 102 Simplify?

· Less disclosure overall compared to IFRS 15.

· Reduced complexity for small entities (Section 1A).

How We Can Help

At ATLA Audit and Assurance Limited, we’re here to help Isle of Man businesses implement the new FRS 102 requirements effectively. Our transition services include:

Updated Financial Statements & Disclosures

Preparing compliant financial statements with all required disclosures under the revised standard.

Advisory on Transition Adjustments & Opening Balance Entries

Providing detailed guidance on the accounting entries required at the transition date, ensuring they reflect the new recognition and measurement principles accurately.

Lease & Revenue Contract Reviews

Assessing current lease agreements and revenue contracts to apply the updated requirements correctly and avoid compliance risks.

Were Here To Help

Let us help you prepare for the 2026 changes. Contact us today at Audit@Atla.im

For more information, please click here:

FRS 102 – Revenue

Lease Accounting Update