FRS4 aims to ensure companies distinguish in their balance sheets between the various kinds of instrument - such as shares, debentures, loans and convertible debt - and reflect their costs in the profit and loss account.
The standard is based on a financial reporting exposure draft - FRED3 - published last December in response to the growth in the number of these schemes and the different accounting treatments.
Only slight changes - such as dropping the requirement to disclose the market value of debt - have been made because of the enthusiastic response to the draft. Many companies, including Blue Circle, Coats Viyella and Attwoods, have changed their approach since it was issued. Others, however, including Reckitt & Colman and British Airways, are understood to have stuck to the old approach so far.
The standard must be applied to statements relating to accounting periods ending on or after 22 June 1994.Reuse content