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Ministry of Justice of Ukraine

January 20, 2011

No. 94/18832

Approved by the Order of the Ministry of Finance of Ukraine of December 24, 2010 No. 1629

National provision (standard) of financial accounting in public sector 129 "The investment real estate"

(as amended on 13-06-2017)

I. General provisions

1. This National provision (standard) determines the methodological principles of forming in financial accounting of information on the investment real estate and its disclosure in the financial reporting.

2. Regulations of this National provision (standard) are applied by subjects of financial accounting in public sector (further - subjects of public sector).

3. This National provision (standard) is not applied to the questions settled by the National provision (standard) of financial accounting in public sector 126th "Lease" approved by the order of the Ministry of Finance of Ukraine of 24.12.2010 No. 1629, and other national provisions (standards) of financial accounting in public sector namely to:

classifications of lease on operational and financial;

to recognition of lease revenue of objects of the investment real estate;

to sales accounting and transactions on asset sale with their further lease;

to disclosure of information on operating lease in the financial reporting;

to accounting of the biological assets connected with agricultural activities;

to accounting of the rights to exploration and production of minerals and non-reproducible resources;

to assessment by the lessor of the real estate provided in lease under the agreement of finance lease.

4. Terms which are used in national provisions (standards) of financial accounting in public sector have such value:

asset carrying amount - asset cost on which it joins in balance sheet total;

the investment real estate - the parcels of land, buildings, constructions which are located on the earth, containing for the purpose of receipt of lease payments and/or increases in equity;

the operational real estate - assigned to the subject of public sector or the leased parcels of land, buildings, constructions which are located on the earth containing for the purpose of proper use in regular activities of the subject of public sector and do not bring in the income in type of lease payments and/or increases in equity.

5. For the purpose of financial accounting it is not considered the investment real estate:

5.1. The operational real estate, and also the real estate which contains for future reference as the operational real estate.

5.2. The real estate which contains with sales objective under conditions of regular activities.

5.3. The real estate which is in process of construction or improvement for the purpose of its use in the future as the investment real estate.

5.4. The real estate which contains for provision of social services which also provides cash receipt.

5.5. The real estate which contains in the special purposes.

6. If certain fixed asset object includes part which contains for the purpose of receipt of the rent and/or for increase in equity, and other part which is the operational real estate, and these parts can be aloof separately (or are separately provided in lease according to the agreement on finance lease), then these parts are displayed as separate inventory objects. If these parts cannot be aloof separately, the fixed asset object is recognized the investment real estate on condition of its use mainly for the purpose of receipt of the rent and/or for increase in equity.

In the presence of signs in case of which the fixed asset object can be carried also to the operational real estate, and to the investment real estate the subject of public sector develops criteria concerning their differentiation.

7. If the subject of public sector controls the investment real estate provided in lease to the controlling subject of public sector or the controlled subject of public sector for proper use in regular activities of the subject of public sector, such fixed asset object in case of creation of consolidated financial statements of this economic group of subjects of public sector is considered the operational real estate.

II. Recognition and assessment of the investment real estate

1. The investment real estate is recognized asset if there is probability that the subject of public sector will receive in the future from its use economic benefits or potential of usefulness, and its primary cost can be authentically determined.

2. The acquired (created) investment real estate is set off on balance of the subject of public sector at primary cost. Accounting unit of the investment real estate is the parcel of land, the building (part of the building) or their combination, and also assets which form complete complex with the investment real estate and in total provide cash receipt.

3. Primary cost of the acquired investment real estate consists of such expenses:

the amounts which pay to suppliers (sellers) and contractors for accomplishment of installation and construction works (without indirect taxes);

the registration fees, the state fee and similar payments which are made in connection with acquisition of rights (obtaining) of the rights to the investment real estate;

the amounts of indirect taxes in connection with acquisition (creation) of the investment real estate (if they are not compensated to the subject of public sector);

the legal services, commission fees connected with acquisition of the investment real estate;

other expenses which are directly connected with acquisition and finishing objects of the investment real estate to condition in which they are suitable for use with the planned purpose.

4. Primary cost of the investment real estate created by the subject of public sector is its cost determined on start date of use of the investment real estate proceeding from the total amount of expenses on its creation.

Primary cost of the investment real estate received in finance lease is determined according to the National provision (standard) of financial accounting in public sector 126th "Lease" approved by the order of the Ministry of Finance of Ukraine of 24.12.2010 No. 1629.

5. If acquisition of the investment real estate is performed on the terms of payment deferral, then its primary cost the price according to the agreement is recognized. Remuneration to the supplier on difference amount between contract price and total amount of payments of its advantage is recognized expenses of the accounting period.

6. Primary cost of the investment real estate increases by expense amount, connected with its improvement (upgrade, modification, completion, additional equipment, reconstruction and so forth) that leads to increase in the future economic benefits which are initially expected from use of the investment real estate.

7. Expenses which are performed for maintenance of the investment real estate in working order and receipts of initially certain amount of future economic benefits from its use are included in the expenses of the accounting period.

8. The investment real estate which is considered at primary cost reduced by the amount of charged depreciation taking into account losses from reduction of usefulness and benefits from its recovery is not subject to revaluation.

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