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Abstract

Psychology and Psychotherapy: Research Study

The Revaluation Decision for Fixed Assets After the Covid-19 Crisis: The Italian Case

  • Open or CloseAlberto Marchesi*

    School of Banking, Finance and Insurance, Catholic University of Milan, Italy

    *Corresponding author:Alberto Marchesi, School of Banking, Finance and Insurance, Catholic University of Milan, Italy

Submission: May 17, 2021;Published: May 26, 2021

Abstract

This paper aims at discussing the major implications in the case of the recent special law which allows to Italian GAAPs compliant companies the possibility to revalue non-current assets in their 2020 financial statements, one of the various government interventions to face the economic crisis generated by the Covid- 19 pandemic. It appears to be an interesting opportunity for Italian SMEs, which could benefit both from an important increase in equity, with consequent reduction of their leverage ratios, and from relevant tax savings, stemming from tax-deductible higher depreciation against the payment of a moderate substitutive tax. Still, the operation has to be carefully analyzed by companies in its complexity, in order to take an optimal decision on a rational basis, considering the need of full compliance with accounting procedures and requirements, of balancing effects on financial ratios and on risks of future impairment, as well as of compatibility with the company’s overall financial strategy and with signaling effects to the financial market. Financial statements after revaluation will also have to be thoroughly studied by banks and other financial analysts, in order to rate correctly the company and to apply adequate loan covenants.

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