Long-term sale and purchase contracts of oil commodities (i.e. “oil service contracts”) are usually contracts for the purchase, in whole or in part, of the output from the plants specified in the supply contract for a consideration adjusted to the effective production cost or to the right of use of a given plant against payment of prearranged amounts, independently of the fair value of the units of product purchased. The duty to comply with the principle of faithful representation of business transactions might require to account these contracts in the balance sheet of each contracting party in a way that could be different not only from the legal form of the contract but also, upon occurrence of certain specific conditions, from the original intention of the parties and from the overall scope of the transaction. This is due to the considerable complexity of the contracts at stake, and to the occurrence of certain typical conditions explicitly provided for by the international standards, as it will be discussed hereinafter. As a consequence, there could be a significant impact on the economic-financial results of the period for the contracting parties as well as on the quantitative representation of the respective assets. Therefore, the aim of this paper is to provide a contribution to the topic of accounting long-term oil procurement contracts in Ias/Ifrs balance-sheets according to the principle of faithful representation, thus lifting the “veil” of the legal form of the contract in favour of the economic substance of the transaction. To this end it shall have to be ascertained – based on the typical features of these kinds of contracts – whether the amount of an oil commodity is bought/sold for an industrial use exclusively, so that such transactions will be accounted as a normal purchase/sale, or through the lease of the relevant production plant (i.e. whether the party is an effective buyer/purchaser or it is a “virtual” trader of the commodity), as in this latter case the contract should be accounted in compliance with Ias 17 “Leasing”. Finally, the modalities used by a number of oil companies located in European countries to account such kind of contracts will be analyzed.
Celli, M. (2014). La contabilizzazione degli oil service contracts nel bilancio Ias/Ifrs. Evidenze empiriche dal contesto europeo. RIVISTA ITALIANA DI RAGIONERIA E DI ECONOMIA AZIENDALE, CXIV(7/8/9), 325-339.
La contabilizzazione degli oil service contracts nel bilancio Ias/Ifrs. Evidenze empiriche dal contesto europeo
CELLI MASSIMILIANO
2014-01-01
Abstract
Long-term sale and purchase contracts of oil commodities (i.e. “oil service contracts”) are usually contracts for the purchase, in whole or in part, of the output from the plants specified in the supply contract for a consideration adjusted to the effective production cost or to the right of use of a given plant against payment of prearranged amounts, independently of the fair value of the units of product purchased. The duty to comply with the principle of faithful representation of business transactions might require to account these contracts in the balance sheet of each contracting party in a way that could be different not only from the legal form of the contract but also, upon occurrence of certain specific conditions, from the original intention of the parties and from the overall scope of the transaction. This is due to the considerable complexity of the contracts at stake, and to the occurrence of certain typical conditions explicitly provided for by the international standards, as it will be discussed hereinafter. As a consequence, there could be a significant impact on the economic-financial results of the period for the contracting parties as well as on the quantitative representation of the respective assets. Therefore, the aim of this paper is to provide a contribution to the topic of accounting long-term oil procurement contracts in Ias/Ifrs balance-sheets according to the principle of faithful representation, thus lifting the “veil” of the legal form of the contract in favour of the economic substance of the transaction. To this end it shall have to be ascertained – based on the typical features of these kinds of contracts – whether the amount of an oil commodity is bought/sold for an industrial use exclusively, so that such transactions will be accounted as a normal purchase/sale, or through the lease of the relevant production plant (i.e. whether the party is an effective buyer/purchaser or it is a “virtual” trader of the commodity), as in this latter case the contract should be accounted in compliance with Ias 17 “Leasing”. Finally, the modalities used by a number of oil companies located in European countries to account such kind of contracts will be analyzed.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
