110.—(1) Subject to subsection (2), the amounts to be included in the accounts of a credit union in respect of items shown shall be determined in accordance with the following principles—

(a) the credit union shall be presumed to be carrying on business as a going concern;

(b) accounting policies shall be applied consistently from one financial year to the next;

(c) the amount of any item in the accounts shall be determined on a prudent basis and in particular—

(i) only surpluses realised at the balance sheet date shall be included in the income and expenditure account, and

(ii) all liabilities and losses which have arisen or are likely to arise in respect of the financial year to which the accounts relate, or a previous financial year, shall be taken into account, including those liabilities and losses which only become apparent between the balance sheet date and the date on which the accounts are signed in pursuance of section 111;

F336[ (d) all income and charges relating to the financial year to which the accounts relate shall be taken into account without regard to the date of receipt or payment;

(e) in determining the aggregate amount of any item the amount of each individual asset or liability that falls to be taken into account shall be determined separately; and

(f) in determining how amounts are presented within items in the income and expenditure account and balance sheet, the directors of a credit union shall have regard to the substance of the reported transaction or arrangement, in accordance with generally accepted accounting principles or practice.]

(2) If it appears to the directors of a credit union that there are special reasons for departing from any of the principles specified in subsection (1), they may so depart, but particulars of the departure, the reasons for it and its effect on the balance sheet and income and expenditure account shall be stated in a note to the accounts, for the financial year concerned, of the credit union.