161Election to use realisation principleU.K.
(1)The filing member of a multinational group may elect that all of the group’s members in a territory, or all of the group’s members in that territory that are investment entities, are to use the realisation principle in determining gains and losses in relation to—
(a)all assets and liabilities that are subject to fair value or impairment accounting, or
(b)tangible assets that are subject to fair value accounting or impairment accounting.
(2)Where such an election is in force in relation to members of multinational group in a territory—
(a)the underlying profits of each of the group’s members for each of the accounting periods in respect of which the election is in force are to be adjusted so as to exclude gains and losses in respect of assets or liabilities to which the election applies that are attributable to fair value or impairment accounting;
(b)the carrying value of an asset or liability to which the election applies to be used for the purposes of determining gains or losses in respect of that asset or liability, is to be its carrying value at the later of—
(i)the commencement of the first accounting period of the multinational group to which the election applied, or
(ii)the time the asset was acquired or the liability was incurred.
(3)Paragraph 1 of Schedule 15 (long term elections) applies to an election under this section.
(4)Where an election under this section has been revoked, the underlying profits of each member of a multinational group in respect of which the election was in force are to be adjusted in the first accounting period in respect of which the election no longer applies (“the revocation period”) by adjusting for the change in treatment of the assets and liabilities that were subject to the election and that remain held by the member at the commencement of the revocation period.
(5)To adjust the underlying profits of a member of a multinational group for the change in treatment of an asset or liability subject to an election under this section, subtract the carrying value of that asset or liability as determined in accordance with subsection (2)(b) from the fair value of the asset or liability at the commencement of the revocation period and—
(a)if the amount given is positive, add it to those profits, or
(b)if the amount is negative, subtract it from those profits.