UBI Banca Group

7.5 Property, equipment and investment property acquired through
finance leases
A finance lease is a contract that substantially transfers all the risks and rewards incident to
ownership of an asset. Legal title may or may not be transferred at the end of the lease term.
The beginning of the lease term is the date on which the lessee is authorised to exercise his
right to use the asset leased and therefore corresponds to the date on which the lease is
initially recognised.
When the contract commences, the lessee recognises the financial lease transactions as assets
and liabilities in its balance sheet at the fair value of the asset leased or, if lower, at the
present value of the minimum payments due. To determine the present value of the minimum
payments due, the discount rate used is the contractual interest rate implicit in the lease, if
practicable, or else the lessee’s incremental borrowing rate is used. Any initial direct costs
incurred by the lessee are added to the amount recognised for the asset.
The minimum payments due are apportioned between the finance charges and the reduction
of the residual liability. The former are allocated over the lease term so as to produce a
constant rate of interest on the residual liability.
The finance lease contract involves recognition of the depreciation charge for the asset leased
and of the finance charges for each financial year. The depreciation policy used for assets
acquired under finance leases is consistent with that adopted for owned assets. See the
relative paragraph for a more detailed description.
7.6 Derecognition criteria
Property, equipment and investment property are derecognised when they are disposed of or
when they are permanently retired from use and no future economic benefits are expected
from their disposal. Any gains or losses resulting from the retirement or disposal of the
property, equipment and investment property, calculated as the difference between the net
consideration on the sale and the carrying amount of the asset are recognised in the income
statement under item 270 “Profit (loss) on the disposal of investments”.
8. Intangible assets
8.1 Definition
An intangible asset is defined as an identifiable non-monetary asset without physical
substance that is used in carrying on a company’s business.
The asset is identifiable when:
• it is separable, which is to say capable of being separated and sold, transferred, licensed,
rented, or exchanged;
• it arises from contractual or other legal rights, regardless of whether those rights are
transferable or separable from other rights and obligations.
An asset possesses the characteristic of being controlled by the company as a result of past
events and the assumption that its use will cause economic benefits to flow to the enterprise.
An entity has control over an asset if it has the power to obtain future economic benefits
arising from the resource in question and may also limit access by others to those benefits.
Future economic benefits arising from an intangible asset might include receipts from the sale
of products or services, savings on costs or other benefits resulting from the use of the asset
by an enterprise.
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