In order to receive a loan, an enterprise voluntarily agrees with the terms of the mandatory valuation of the property, both for the collateral of the loan and for the maximum amount of credit that the business entity can count on.
The criterion for attributing the costs of the assessment to the deductions of the relevant tax period is the efficiency of its implementation, both in a voluntary and compulsory form, since the evaluation results in an inflow of economic benefits. Therefore, conducting a voluntary or mandatory appraisal of property does not mean the allocation of expenses in a voluntary appraisal only for financial purposes, but in the case of a compulsory appraisal – as deductions.
In case of voluntary evaluation, there is no direct obligatory dependence of its conduct on the other side (external factor), the company independently decides on the purpose and necessity of evaluation, which may later affect external factors (property buyers, tenants, etc.) to obtain income as an inflow of economic benefits.
The company may pursue the following objectives for the valuation of the property:
Determination of the market and liquidation value of the property in the current conditions for the sale and purchase;
Planning accounting for financial purposes, based on the estimated (revalued) value;
Determination of the value of the rent when renting the property, depending on its estimated market value;
Determination of market collateral valuation (value) in case of receiving the loan amount;
Conducting an independent assessment of the market value of the property for its recognition by foreign investors in accordance with the requirements of their investment projects when buying property (real estate) or investing funds in an enterprise, as a share, etc.
When evaluating a property by an appraisal company, the purpose of the appraisal is indicated. However, in practice, for various reasons, an enterprise may not always use the results of an appraisal or derive economic benefits from an appraisal in the tax period for its conduct.
At the same time, the results of this assessment may be necessary and applied in the tax period of its conduct for purposes other than originally indicated, without the need for a different (repeated) assessment.
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Thus, an enterprise has the right to use the results of the initial assessment at the time of its holding in the relevant tax period, and its results can be used for another purpose (other purposes) in a given tax period or go beyond the framework of this tax period.
Expenses related to property valuation in the part in which it was used for purposes other than the original, are deductible for the corresponding tax period. The use of the results of the initial assessment for purposes other than those specified in the initial assessment should be provided with specific goals and conditions of business activities, the economic advantage of using its results.
Consequently, if the valuation results are not used in the tax period in full, the expenses related to the valued assets that are not secured by the inflow of the economic benefit of the tax are charged to the expenses of future tax periods in proportion to the established base of their distribution: the market part of the property value, assessed, not participating in the inflow of economic benefits.
The appraisal company made an assessment of the property of the enterprise to provide collateral in obtaining a loan. The loan was issued to the enterprise under the provision of the estimated collateral in the tax period following the valuation period. Expenses on property valuation made in the tax year are charged to 251 “Expenses of future (future) periods (period)” and will be deductible in the tax period in which the company can receive a loan using the result of property valuation on bail.