Setting Your FRS 102 Transition Date

Determining Your Date

The amendments apply to accounting periods beginning on or after 1 January 2026, so your transition date follows from your accounting year-end:

Leases signed before 2026 still count

The most common misunderstanding is that the new rules only apply to leases signed from 2026 onwards. They apply to every lease in force at the transition date. A ten-year office lease signed in 2020 with five years left to run comes onto the balance sheet at transition, measured from the payments remaining at that date, not from its original commencement. Nothing about when the lease was signed exempts it.

What you measure at the transition date

The modified retrospective approach is mandatory: comparatives are never restated. For each lease you measure the lease liability at the present value of the payments remaining at the transition date, discounted at the incremental or obtainable borrowing rate evidenced at that date. The right-of-use asset is set equal to that liability, adjusted by any previously recognised prepaid or accrued rent (a prepayment increases it, an accrual reduces it, FRS 102 para 1.51(b)). Group companies that already prepare IFRS 16 figures for consolidation may instead bring in their IFRS 16 carrying amounts (para 1.48). Any cumulative effect of first applying the amendments is adjusted in opening retained earnings (para 1.47).

FRS 102 Reference: FRS 102 para 1.47-1.51

Practical timing

Auditors expect the lease inventory, rate evidence and opening balance calculations to exist well before the first affected year end, not to be reverse-engineered during the audit. With a 31 December 2026 first year end, the transition file is a 2026 job, not a January 2027 one. In Lease102, the transition screen calculates opening balances for the whole portfolio in one run; see the opening balances and bulk calculate topics.