ORDER OF THE MINISTRY OF FINANCE OF UKRAINE

of April 26, 2000 No. 91

About approval of the National provision (standard) of financial accounting 12 "Financial investments"

In pursuance of the Program of reforming of the system of financial accounting using international standards approved by the resolution of the Cabinet of Ministers of Ukraine of October 28, 1998 No. 1706, I ORDER:

1. Approve the National provision (standard) of financial accounting 12 "Financial investments" (further - the Provision (standard) 12) approved by Methodological council on financial accounting under the Ministry of Finance of Ukraine which is applied.

2. Determine that:

2.1. The national provision (standard) 12 becomes effective since July 1, 2000.

2.2. Other regulations of the Ministry of Finance of Ukraine on financial accounting are effective in part which does not contradict the National provision (standard) 12.                                                                                

Approved by the Order of the Ministry of Finance of Ukraine of April 26, 2000 No. 91

National provision (standard) of financial accounting 12 "Financial investments"

General provisions

1. National provision (standard) of financial accounting 12 "Financial investments" (further - the National provision (standard) 12) determines methodological bases of forming in financial accounting of information on financial investments, transaction by joint activities and its disclosures in the financial reporting.

2. Regulations of the National provision (standard) 12 are applied by the companies, the organizations and other legal entities (further - the companies) irrespective of patterns of ownership (except budgetary institutions and the companies which according to the legislation constitute the financial reporting under International Financial Reporting Standards).

3. The terms provided in provisions (standards) of financial accounting have such value:

The amortized cost financial the investitsiisebestoimost of financial investment taking into account its partial write-off owing to usefulness reduction increased (reduced) by cumulative depreciation amount of discount (award).

Effective rate of percent - percent rate which is determined by division of the amount of annual interest and discount (or differences of annual interest and award) at average size of cost of investment (or obligations) and costs of its repayment.

Control participants are participants of joint activities with creation of the legal entity (joint business) who exercise control of its activities.

Effective interest rate method - depreciation method of discount or award on which the depreciation amount is determined as difference between the income by fixed rate of percent and the work of effective rate and depreciated cost at the beginning of the period for which the percent is charged.

Method of equity participation - accounting method of investments according to which book value of investments respectively increases or decreases by the amount of increase or reduction of share of the investor in investment object equity.

Market value of financial investment - the amount which can be received from sale of financial investment in the active market.

Joint activities - economic activity with creation or without creation of the legal entity which is object of general control of two or more parties according to the written agreement between them.

General control - distribution of control of economic activity according to the agreement on conducting joint activities.

The significant effect - power to participate in decision making on financial, economic and commercial policy of investment object without control of this policy.

In particular, can be the certificate of significant effect:

1) ownership of twenty or more percent of shares (authorized capital) of the company;

2) board representation or similar governing body of the company;

3) participation in decision making;

4) interchange by managerial personnel;

5) providing company with necessary technical and economic information.

The operator of joint activities - the participant of joint activities without creation of the legal entity according to the agreement it is entrusted to them to run business of joint activities, in particular its financial accounting.

Primary assessment of financial investments

4. Financial investments are initially estimated and displayed in financial accounting at cost. Cost of financial investment consists of the price of its acquisition, commission fees, duty, taxes, charges, the obligatory payments and other expenses which are directly connected with acquisition of financial investment.

5. If acquisition of financial investment is performed by exchange for securities of own issue, then cost of financial investment determined at fair value the transferred securities.

6. If acquisition of financial investment is performed by exchange for other assets, then its cost determined at fair value these assets.

7. The dividends, percent, royalty and rent which are subject to obtaining on financial investments are displayed as financial income of the investor, except cases when such receipts do not correspond to the income recognition criteria established by the National provision (standard) of the financial accounting 15 "Income" approved by the order of the Ministry of Finance of Ukraine of November 29, 1999 No. 290, No. 860/4153 registered in the Ministry of Justice of Ukraine on December 14, 1999.

Assessment of financial investments for date of balance

8. Financial investments (except investments which are kept by the company before their repayment or are considered by method of equity participation) for date of balance are displayed at fair value.

The amount of increase or reduction of book value of financial investments by date of balance (except investments which are considered by method of equity participation) is displayed as a part of other income or other expenses respectively.

9. Financial investments which fair value it is reliable to determine are excluded, are displayed for date of balance on their cost taking into account reduction of usefulness of investment.

Losses from reduction of usefulness of financial investments are displayed as a part of other expenses with simultaneous reduction of book value of financial investments.

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