OIC 16: Some New Developments On Tangible Fixed Assets

The amendments made by the Italian Accounting Standard Board (Organismo Italiano di Contabilità - OIC) to accounting standard No. 16, on tangible fixed assets concern the general reorganisation of the subject matter and a better coordination with the provisions of the other OIC national accounting standards. In particular, among the new developments brought about by OIC 16, we highlight the following:

Effective as of 2014 financial statements, it shall be necessary to strip the value of buildings from the value of the land on which they stand. In order to calculate the value allocated to the land, it is necessary to distinguish the case in which the area has been purchased separately or not. If the area has been purchased separately, it is necessary to make reference to the value inferable from the accounts or from the sale and purchase deeds.

If the land has been purchased together with the building without there being any separate consideration for the land in the purchase deed, OIC 16 states that, for depreciation purposes, the value of the building must be stripped, also based on estimates. In this case, the value of the land must be calculated as residual balance, after having first stripped the value of the building.

Consequently, in addition to the estimate of the land referred to the moment of purchasing the building, it is possible to use other criteria, such as values identified by the Council decisions for ICI (council tax) and IMU (local property tax) tax purposes of the building areas at the time of the purchase.

In addition to the criteria above, it is however possible to also calculate the value of the areas based on the relevant estimate in a survey drafted as at 31 December 2014. Such a survey will show a value for the area and for the building as at such date. The percentage ratio between the two values could be applied to the book value in order to be able to distinguish the value of the building from that of the area.

Failing any such survey, it is possible to identify the value of the land based on a lump-sum valuation criterion allocating the unit cost as a percentage over the cost for the building.

Some implementation aspects related to the rules on the depreciation process have been clarified. In particular: The provision under which depreciation was to be suspended for yielders not used for a long time has been removed; indeed, also in these special situations the asset, even if not used, is subject to technical and...

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