NAC I-54: How to Measure a Financial Investment upon Contribution and Spin-off

In April 2026, the National Accounting Board approved the new Interpretation I-54, “Valuation of Financial Investments in Contributions and Spin-offs.” This responds to the long-standing inconsistencies in accounting for non-monetary contributions and, at the same time, to the relatively new form of reorganization known as a spin-off.

Key topics of the interpretation

The interpretation provides practical guidance for the accounting treatment of these transactions on the part of the contributor, i.e., the entity that receives an interest in another company in exchange for the transferred assets and liabilities.

Previous accounting regulations provided relatively detailed rules for the accounting treatment of the transaction on the acquirer’s side. However, the procedure for valuing the acquired interest on the contributor’s side was not comprehensively addressed, which led to differing approaches in practice.

The new interpretation focuses on:

• how to determine the value of the resulting financial investment,
• how to treat provisions and reserves,
• how to recognize goodwill or valuation differences,
• how to work with deferred tax,
• and how to proceed in case of a negative investment value.

Basis of measurement: net book value

The National Accounting Board confirms that financial investments should be based on the net book value of the transferred assets. Thus, the measurement includes not only assets and liabilities, but also allowances, reserves, deferred taxes, and goodwill.

The interpretation also emphasizes the need to update the valuation of these items as of the transaction date. When assessing the adequacy of allowances or reserves, the entity may also consider the conclusions of an expert valuation prepared for the purposes of the contribution or conversion.

Recognition of a negative investment value

One of the most significant conclusions of the interpretation is the recommended procedure for situations where the carrying amount of the transferred liabilities exceeds the carrying amount of the transferred assets.

According to the interpretation, in such a case:

• the financial investment should be reported at zero value,
• the negative difference should be recognized directly in equity.

This approach is based on the economic substance of the transaction and, according to the NAB, better fulfills the requirement of a true and fair view in accounting. It should be noted, however, that this conclusion represents a deviation from Czech Accounting Standard No. 014 – Long-Term Financial Assets, according to which the negative difference is recognized as revenue.

Allowances, provisions and deferred tax

The Interpretation also rejects the practice of releasing allowances or reserves that affect net income prior to a contribution or conversion, solely for the purpose of increasing the value of the resulting investment. The NAB emphasizes that allowances and reserves should be based on the best available estimate of future economic impacts, and their reversal is justified only if it is demonstrated that the original estimate was incorrect.

Deferred tax also plays a significant role in the valuation of an investment. Deferred tax assets and liabilities related to the transferred assets and liabilities are included in the valuation of the financial investment and must be updated as of the transaction date. If the legal conditions are met, a previously unrecognized deferred tax asset may also be recognized.

How we can help

We recommend that companies preparing for reorganizations, transformations, or non-cash contributions pay close attention to the correct determination of the net book value of the transferred assets, the updating of related accounting estimates, and the assessment of the impact on equity. Please do not hesitate to contact us, we will be happy to help you navigate the accounting and tax implications of the entire transaction.