The military commissariat confiscated a bus from a company for army needs (there are an order and certificate of transfer and acceptance). Whether to charge depreciation in the accounting and tax records?
The Article 6 of the Law of Ukraine “On mobilization preparation and mobilization” of 21.10.1993, № 3543-XII (hereinafter – the Law on mobilization) is amended by the Law of Ukraine “On Amendments to Certain Legislative Acts of Ukraine concerning improvement of defense and mobilization issues during mobilization” of 20.05.2014, № 1275-VII. This article is supplemented with the p. 3, which provides for:
“Performance of military transportation service duties during mobilization, if the legal regime of defense emergency is not imposed, is implemented according to the mobilization plan of Ukraine by means of free involvement of transport vehicles of companies, institutions and organizations of all forms of ownership for the needs of the Armed Forces of Ukraine, other military units on terms of their return to the owners after the announcement of demobilization.
The volumes of vehicles as per types and models, which are planned to be involved during the mobilization, for companies, institutions and organizations of all forms ownerships, are established in accordance to the Mobilization plan of Ukraine by the local state administrations for military commissariat submission.
The vehicles involving during the mobilization are carried out by the military commissariat based on the local state administrations judgments that are issued by the appropriate regulations.
The transfer and acceptance of vehicles, which are involved in the mobilization and their return after the announcement of demobilization, are carried out on the bases of certificates of transfer and acceptance, where the information about the owners, technical state, book (carrying) value and other required information are included. The certifications enable to identify the transport vehicles.
The transport vehicles return to the owner is carried out within 30 calendar days from the announcement of demobilization.
The compensation procedure of damage caused to vehicles as a result of their involvement in the mobilization is determined by the Cabinet of Ministers of Ukraine.”
Thus, the transport vehicles could be withdrawn for the Armed Forces of Ukraine needs during the mobilization. The reason for the primary vehicle withdrawal is the local state administrations judgment, which is issued by the relevant orders. The transport vehicles transfer to the Armed Forces of Ukraine is conducted by the means of the certificate of transfer and acceptance (internal displacement) of fixed assets (Form N-1ОЗ).
The return of the primary vehicle to the company should be expected within 30 days of the announcement of demobilization.
Accounting
UAS 7 “Capital assets” determines the methodological formation aspects of information on the capital assets in the accounting, which is approved by the Ministry of Finance of Ukraine order of 27.04.2000, № 92.
According to p.23 UAS 7 the charging of depreciation is carried out during the subject useful life (operation), which is established by the company/institution (in the executive order) recognizing the subject as the asset (including in the asset list), and suspended for the period of its reconstruction, modernization, further construction, retrofitting and deactivation.
In other words, this paragraph determines that the charging of depreciation is suspended only for the period of reconstruction, modernization, further construction, retrofitting and deactivation of the subject FA. In any other situations the depreciation is charged. The production method of the depreciation is the exception, when the depreciation charges are directly dependent on the fact of subject use in the accounting period. If it has been used, it is necessary to know, the volume of production, which is produced with its help.
The companies that make up the tax accounting in accordance with international standards, are governed by the provisions of the International Accounting Standard 16 “Capital assets”, which is approved by the International Accounting Standards Board (hereinafter – IAS 16).
According to p. 55 IAS 16 the asset depreciation is started when it becomes available to use, viz. when it is delivered to the location and brought to the exploitable condition in the defined methods by the managerial personnel. The asset depreciation is to be stopped at one of the two dates, which is previously: at the date from which the asset is classified as retained for sale (or included in residual group, which is classified as retained for sale) according to the IFRS 5, or at the date from which the asset recognition is stopped. Therefore, the depreciation is not to be stopped, when the asset is not used or it is being withdrawn from the active use until it is fully depreciated. However, according to the used depreciated methods, the depreciation expenses can become zero, if there is no production.
Thus, the international standards clearly determine that the company continues to charge the depreciation in case of bus transfer to the Armed Forces of Ukraine during the mobilization.
To be continued.
