One transition date, not two

The FRS 102 transition is simpler than most people have been told. It is also less forgiving in one specific way.

A lot of the advice still circulating is shaped by IFRS 16, where companies chose between a full restatement and a modified approach. FRS 102 does not offer that choice.

Here is what the standard actually says for lessees:

1. Comparatives are not restated. Last year's figures stay exactly as you reported them under the old operating lease model (paragraph 1.47).
2. There is one transition date: the first day of the first accounting period in which you apply the new rules. For a 31 December year end, that is 1 January 2026 (paragraph 1.40). Not 1 January 2025, and not the date you signed each lease.
3. On that day, every lease still running goes on the balance sheet. The liability is the present value of the remaining payments. The right-of-use asset equals that liability, adjusted for any rent you had prepaid or accrued at that date (paragraph 1.51).
4. The difference goes straight to opening retained earnings. It never passes through the profit and loss account.

So there is no 2025 opening balance sheet to rebuild, and no restated comparatives to reconcile. That is the simpler part.

The less forgiving part: everything is measured as at that one date. The remaining payments, the term and the discount rate all have to be the position on 1 January 2026, taken from the contracts as they stood then. There is no earlier year to smooth things through.

If a lease has been amended, extended or novated since, the transition figures still come from the terms in force on the transition date, and the change is dealt with afterwards as a modification.

Lease102 measures every running lease at your transition date, applies the prepaid and accrued rent adjustment per lease, and flags any lease that spans the date but has not yet been transitioned, so nothing is carried at the wrong starting point.