The Law of Ukraine “On Amendments to the Tax Code of Ukraine on reduction in tax pressure on taxpayers” of 17.07.2015, № 655-VIII (hereinafter - the Law № 655)amended the Tax Code of Ukraine of 02.12.2010, № 2755-VІ (hereinafter - TCU). In particular, recognition of fixed assets for tax accounting purposes is adjusted, it is contained in subparagraph 14.1.138 of TCU.
From the first of September 2015 fixed assets are the tangible assets, including mineral reserves provided for the use of subsoil areas (excluding the cost of land, uncompleted capital investments, public highways, library and archive funds, tangible assets, which value does not exceed 6000 hryvnia, unproductive fixed assets and intangible assets) that appointed by the taxpayer for use in business activity of the taxpayer, the cost of which exceeds UAH 6000 and gradually decreases due to physical or functional depreciation and which expected useful life (operation) is more than one year from putting into commission (or operating cycle, if it is longer than a year).
This innovation is the requirement of time in connection with significant inflation processes in Ukraine’s economy. In addition, increasing of cost criterion enables more assets to be attributed to the low-value non-current tangible assets and accordingly to depreciate with methods “50% - 50%” or “100%” value, which is depreciated.
Increased limit of cost criterion, in our opinion, should be applied from 01.09.2015. Thus, while the acquisition of assets the company should compare their original cost from UAH 6000 already from September of current year to refer them to fixed assets or to low-value non-current tangible assets.
It should be noted that from 01.09.2015 the fixed assets, which depreciated cost is less than UAH 6000 as on 01.09.2015, should not be translated into low-value non-current tangible assets. The change of cost criterion is not the reason for reclassification of asset that is already being used by the company. Since asset evaluation occurs at the time of its crediting to the balance. So, only original cost of recently acquired item of fixed assets should be compared with UAH 6000.
New cost criterion legislated in subparagraph 14.1.138 of TCU should be applied to the original cost of fixed assets. It should be noted that from 01.01.2015 the procedure for determining of original cost of fixed assets is excluded from the TCU (calculation of income tax is connected to accounting). So, regulations of Accounting Standards 7 “Fixed Assets” should be used. According to para.4 of Accounting Standards 7, original cost of fixed assets is a historical (actual) cost price of non-current assets in the amount of cash or fair value of other assets paid (transferred), spent for the acquisition (creation) of non-current assets. Expenses that form the original cost of item of fixed assets are spelled out in para.8 of Accounting Standards 7.
It should be pointed out that there is no cost criterion for the classification of assets as fixed assets. Thus, according to requirements of para.4 of Accounting Standards 7 fixed assets are tangible assets that the company / institution maintains in order to use them in the production process / activity or supply of goods, services providing, leasing to other people or to carry out administrative social and cultural functions, which expected useful life (operation) is more than one year (or operating cycle, if it is longer than a year). According to para.5.2 of Accounting Standards 7, companies are entitled to determine independently the cost characteristic features of objects that are included in low-value non-current tangible assets. The most common, cost limit for the purposes of accounting is established as in tax accounting. If you decide to conduct appropriate adjustments - to increase the cost limit, they should be done in order of accounting policies. Although the cost limit is not necessary to be changed in the accounting.
