UBI Banca Group

Tangible assets, functional and other, are initially recognised at cost (item 120 “Property,
equipment and investment property”), inclusive of all costs directly connected with bringing
the assets to working condition for the use of the assets and of purchase taxes and duties that
are not recoverable This amount is subsequently increased to include expenses incurred from
which it is expected future benefits will be obtained. The costs of ordinary maintenance are
recognised in the income statement at the time at which they are incurred while extraordinary
maintenance costs (improvements) from which future benefits are expected are capitalised by
increasing the value of the relative asset.
Improvements and expenses incurred to increase the value of leased assets from which future
benefits are expected are recognised:
– under the most appropriate category of item 120, “Property, equipment and
investment property” if they are independent and can be separately identified,
whether they are leased assets the property of others or whether they are held
under a financial leasing contract
– under item 120 “Property, equipment and investment property” if they are not
independent and cannot be separately identified as an increase to the type of
assets concerned if held by means of a financial leasing contract or under item
160 “Other assets” if they are held under an ordinary leasing contract
The cost of property, equipment and investment property is recognised as an asset if, and only
if:
• it is probable that the future economic benefits associated with the asset will flow to the
enterprise;
• the cost of the asset can be reliably determined.
7.4 Measurement criteria
Subsequent to initial recognition, items of property, equipment and investment property for
use in operations are recognised at cost, as defined above, net of accumulated depreciation
and any permanent cumulative impairment. The depreciable amount, equal to cost less the
residual value (i.e. the amount that would be normally obtained from disposal, less disposal
costs, if the asset was normally in the conditions, including age, expected at the end of its
useful life), should be allocated on a systematic basis over the asset's useful life by adopting
the straight line method of depreciation. The useful life of an asset, which is reviewed
periodically to detect any significant change in estimates compared to previous figures, is
defined as:
• the period of time over which it is expected that the asset can be used by a company or,
• the quantity of products or similar units that a company expects to obtain from the use of
the asset.
Since property, equipment and investment property may consist of items with different useful
lives, land, whether by itself or as part of the value of a building is not depreciated since it
constitutes a fixed asset with an indefinite life. The value attributable to the land is deducted
from the total value of a property for all buildings in proportion to the percentage of
ownership. Buildings, on the other hand, are depreciated according to the criteria described
above.
Works of art are not depreciated because they generally increase in value over time.
Depreciation of an asset starts when it is available for use and ceases when the asset is
derecognised, which is the most recent of when it is classified as for sale and the date of
derecognition. As a consequence depreciation does not stop when an asset is left idle or is no
longer in use, unless the asset has already been fully depreciated.
Improvements and expenses which increase the value are depreciated as follows:
• if they are independent and can be separately identified, according to the presumed useful
life as described above;
• if they are not independent and cannot be separately identified, then if they are held under
an ordinary leasing contract, over the shorter of the period in which the improvements and
expenses can be used and that of the remaining life of the contract taking account of any
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