Barclays 2004 Annual Report Download - page 224

222
Notes to the accounts
For the year ended 31st December 2004
52 Differences between UK GAAP and US GAAP accounting principles (continued)
(u) Asset retirement obligation
The Group recognises a liability for an asset retirement obligation and capitalises an amount for asset retirement cost. The entity estimates the
initial fair value of the liability using an expected present value technique.
2004 2003
£m £m
Asset retirement obligations at beginning of year 4–
Liability incurred in the period 36 4
Asset retirement obligations at end of year 40 4
(v) Assets held for sale
The Group acquired an interest in New World Networks International Ltd (NWN) following a debt for equity restructuring in February 2003 and
has consequently classified it as an asset held for sale under Statement of Financial Accounting Standards 144. The Group is aiming to partially
recover its exposure by disposing of its interest in NWN to a third party and has engaged a third party to find a buyer. The Group is currently in
negotiations with several interested parties and anticipate a disposal to occur in 2005. NWN has property, plant and equipment of £76m and
liabilities of £83m.
(w) Total assets
Netting
Certain transactions have been netted in the UK as required under FRS 5. To the extent these arrangements do not satisfy the requirement of
FIN 39 and FIN 41, total assets have been increased by £65,505m (2003: £45,277m).
2004 2003
£m £m
Repurchase and reverse repurchase agreements 18,572 9,684
Securities lending and borrowing agreements 21,824 18,743
Receivables and payables in respect of unsettled trades (7,250) (6,030)
Cash collateral held against derivatives 14,787 7,964
Loans and deposits 17,572 14,916
Total 65,505 45,277
Gross assets and liabilities have been increased by £60,400m (2003: £49,099m) due to inclusion of certain BGI insurance products. The legal form
of these products is similar to insurance contracts, which are accounted for in accordance with SFAS 97. Accordingly, the assets and liabilities
associated with these products are recorded on the balance sheet.
The inclusion of acceptances resulted in an increase in total assets under US GAAP of £263m (2003: £654m).
(x) Profit and loss account presentation
There are certain differences in the presentation of the profit and loss account between UK GAAP and US GAAP. Exceptional items (2004: £45m
profit, 2003: £4m profit, 2002: £3m loss) would be classified as operating income or expense under US GAAP rather than being shown separately.
Under US GAAP, net interest received (2004: £(219)m, 2003: £68m, 2002: £75m) relating to trading activities would be shown within net interest
revenue, rather than included in dealing profits. Reconciling differences arising from associated undertakings (2004: £7m profit, 2003: £7m profit,
2002: £6m profit) would be included within a single component of net income.
(y) Changes in UK GAAP
During 2004, Barclays restated the 2003 shareholders’ funds under UK GAAP in respect of a change of accounting policy for shares held in ESOP
trusts, as required by UITF 38, as described on page 129. The restatement had no impact on net income. There has been no effect on the reported
US GAAP figures.
Shareholders’ funds
Original
reconciliation Prior year Reconciliation
item adjustment item
£m £m £m
2003
Own shares (99) 99 –
Total affected reconciling items (99) 99 –