In the Official Gazette (Part I) No 28 of January 10, 2022, the Ministry of Finance order No. 1592 was published to amend and complete the accounting regulations applicable to economic operators.
The accounting rules for individual annual accounts and consolidated annual accounts, approved under O.MFP No 1802/2014, are supplemented as follows:
- the definitions set out in point 8 (turnover, acquisition cost, production cost, fixed assets, public benefit purpose entities, etc.) are used in the sense of these accounting regulations and not in the context of other regulatory acts.
- revenues corresponding to the turnover are determined by the entity according to the specific nature of the activity carried out, according to the law.
- an asset within the meaning of point 80 paragraph (5) is normally prepared for its pre-established use or sale when the physical construction of the asset is completed, even if some routine administrative work may still continue.
Given that only minor changes are to be made, such as the interior decoration of a building according to the specifications of the buyer or user, then it is considered that most of the activities have been completed.
Please note that according to point 80 paragraph (5) the capitalization of borrowing costs must cease when most of the activities necessary for the preparation of the asset with a long manufacturing cycle have been carried out for its intended use or sale.
According to the new document, within the meaning of these regulations, the start date of the capitalization of borrowing costs, as part of the cost of an asset with a long production cycle, is the date on which the entity first meets all the following conditions:
- a) bears the expenses for the respective asset;
- b) bears the costs of indebtedness; and
- c) undertakes the activities necessary for the preparation of the asset for its intended use or for sale.
For the purposes of accounting regulations, an entity incurs expenses for an asset with a long manufacturing cycle only when those expenses have generated cash payments, transfers of other assets or the acquisition of interest-bearing debts.
The activities necessary to prepare the asset for its intended use or for sale do not include only the physical construction of the asset.
They include the technical and administrative work prior to the commencement of the physical construction, such as the activities associated with obtaining the approvals prior to the commencement of the physical construction. However, such activities preclude the holding of an asset when no production or development activity takes place that would alter the condition of the asset.
For example, debt costs incurred in the course of land development are capitalized during the period in which the activities related to the development are carried out. On the other hand, debt costs incurred in the period in which land acquired for the purpose of building construction is held without being subject to associated planning activities shall not be accepted for capitalization.
- another change found in OMF no. 1592/2022, the share capital presented in the annual financial statements must correspond to the one registered at the trade register office.
- the entity is responsible for the scope of operations that involve the collection of amounts on behalf of third parties.
- an entity acting on its own behalf may fulfill its obligation to provide a specified good or service itself or may hire another party (for example, a subcontractor) to fulfill an obligation in part or in full in his name. An entity that acts in its own name recognizes income at the value corresponding to the goods or services transferred.
- the category of subsidiaries represented by public interest entities also includes entities whose securities are admitted to trading on a regulated market in any Member State, as defined in Law no. 126/2018 regarding the markets of financial instruments, with the subsequent modifications and completions.
The accounting regulations in accordance with the International Financial Reporting standards, approved by MFP order No 2.844/2016, are amended as follows:
In case of recording an intangible or tangible asset, the revenues generated by this operation are highlighted separately (account 7583 “Revenues from the sale of intangible and tangible assets and other capital operations”), the expenses representing the unamortized value of the asset (account 6583 “Expenses with transfer of other assets and other capital operations ») and other expenses related to its transfer.
In this situation, any adjustments for depreciation previously made are reversed accordingly to income (account 7813 “Revenue from adjustments for depreciation of fixed assets, real estate investments and productive biological assets valued at cost”).
Legal basis:
MF Order no. 1592/2021 for amending and supplementing the accounting regulations applicable to economic operators.