Amendment to the Accounting Procedures

An amendment to the Decree of the Finance Ministry of the Slovak Republic of 29 February 2024, amending Decree of the Finance Ministry of the Slovak Republic No. 23054/2002-92 of 16 December 2002 laying down details of the accounting procedures and the framework for the chart of accounts for entrepreneurs maintaining accounts under the system of double entry bookkeeping (hereafter referred to as the "Accounting Procedures"), entered into force on 15 March 2024. A notification of the issuance of the Decree was published in the Collection of Laws (Notification No. 37/2024 Coll.) and in Finančný spravodajca [Financial Bulletin] (Notification No. 4/2024).

The Decree incorporates the changes resulting from Act No. 309/2023 Coll. on Conversions of Companies and Cooperatives and on Amendments to Certain Laws (hereafter referred to as the "Act on Conversions") and the subsequent amendment to Act No. 431/2002 Coll. on Accounting as amended.

Most amendments to the Accounting Procedures are related to a new instrument of partial division – a spin-off.

In contrast to the hitherto applicable legislation, where, in the instance of division, an accounting entity being divided was wound up without liquidation, an accounting entity will not cease to exist in the instance of a spin-off.

The introduction of this new instrument - a spin-off - necessitated amending the related provisions of the Accounting Procedures, for example:

• A spin-off has been added to Article 26, whereas the principle of valuation of assets and liabilities as of the date preceding the decisive date and accounting for differences from revaluation has not changed. This means that assets and liabilities relating to an accounting entity divided by spin-off should also be valued at their fair value, except where the legal successor is not a Slovak accounting entity.
• A spin-off has been added to Article 37 regulating the value of goodwill/negative goodwill.
• Accounting for goodwill in the instance of a merger, where the accounting entity being wound up holds an ownership interest in the successor accounting entity, has been added with respect to:
  • division by merger, where the accounting entity being wound up holds an ownership interest in the successor accounting entity, and
  • spin-off by merger, where the accounting entity being divided by spin-off holds an ownership interest in the successor accounting entity.
• The presentation of differences arising from the offsetting of mutual receivables and liabilities in the opening balance sheet of the successor accounting entity has been amended.
• Other legislative and technical provisions concerning the new terminology according to the Act on Conversions have been added.