Accounting for intangible assets in accounting. Accounting Posting Examples

Fixed assets and intangible assets act as key elements of the financial system of the enterprise. In this regard, the distribution and control of the movement of these resources is very relevant. Next, we consider how accounting for intangible assets is carried out in accounting.

General information

As stated in paragraph 3 of PBU 1/2007, intangible assets represent part of the property of an enterprise. This category has a number of features. In particular, intangible assets include resources that:

• They do not have a physical (material) structure. This feature distinguishes intangible assets of the organization from other non-current categories. In a practical sense, this means that the physical depreciation of this group of resources is impossible. This feature, in turn, assumes their inventory in a special order (examples of accounting entries showing this will be given below)
• They can be distinguished (separated) by the enterprise from other property. The use of intangible assets can be carried out in different departments of the company, regardless of the operation of other resources. The letter of the Ministry of Finance clarifies that the main feature by which the separation of elements occurs is the fulfillment by them of independent functions in the provision of services, performance of work, production of goods or in the process of applying them in the company's management system.
• They have the ability to bring the company economic income (benefit) in the long term. This can be explained as follows: managerial or production activity is carried out as part of entrepreneurial activity as a whole. The main goal of the latter is profit.
  
• Not intended to be resold. In this case, it is necessary to clarify an important point. The above circumstance does not mean that the considered category of resources cannot be oversold. In this case, we are talking exclusively about the original purpose for which the formation or acquisition of intangible assets was carried out - for sale to other commercial entities without exploitation from the seller company.
• Designed for use in the manufacture of products, during the execution of work and the provision of services, or for the needs of company management. In this case, the accounting of intangible assets in accounting is carried out without adding to them the exclusive rights and intellectual property of the non-productive sphere.
• They have properly executed documents. The papers confirm the existence of the asset itself, the exclusive right of the enterprise to the results of intellectual labor. The documents may include patents, an agreement on the assignment or acquisition of a trademark, certificate, etc. It should be noted that ensuring compliance with this condition is accompanied by the fact that when transferring rights to use intellectual property, their registration is required.
• Acquired for use over time. In this case, we mean a period of more than 12 months. or a normal operating cycle if its duration exceeds a year. On the one hand, since intangible assets most often include rights to use certain intellectual property, signing contracts for a period shorter than that is considered inappropriate. On the other hand, it is precisely such a duration of operation that makes it possible to classify them as non-current resources. Thanks to this, the procedure for transferring the total amount of expenses is also established and the depreciation of intangible assets is recorded.
  

Norms and Rules

PBU 1/2007 is currently operating without changes, although part 4 of the Civil Code was adopted. However, some letters from the Ministry of Finance indicate that some work is being done in this direction. Accounting for intangible assets in accounting includes:

• Establishment of exact compliance of actual reporting with the requirements of existing regulatory acts.
• Preparation of analytical accounting information for the expected transition to the rules, which will be supposedly adjusted in accordance with the adopted fourth part of the Civil Code. This is due to the fact that the new document contains fundamental differences from previously existing norms.
• Preparation of documentation, in accordance with which the accounting will be carried out of those objects that may be classified, according to part 4, to intangible assets. Here, first of all, we are talking about production secrets, the turnover of which is not regulated by law today.
• Preparation for an inventory of intangible assets. Additionally, directly in the course of the process, one should check the conformity of the documentation confirming the rights to a certain resource with the new provision of the Civil Code. In case of discrepancies, copyright, licensing and other agreements may require renewal. At the same time, it cannot be ruled out that during re-registration the useful life will be changed. This, in turn, may affect the accounting for depreciation of intangible assets.
  

Types of intangible assets

The intangible assets of a company should include exclusive rights to:

• Programs for PC, database.
• Industrial design, invention, selection achievements, utility model. The patent holder has this right.
• Trademark, name of place of production.
• Objects of copyright and related rights to objects owned by the company.

Receipt of intangible assets

The most common way is to receive for a fee. According to paragraph 6 of the relevant Regulation, the initial value of intangible assets is set as the sum of actual purchase costs excluding VAT and other reimbursable income, except as otherwise provided by law. Actual expenses may include:

• Amounts paid to the seller in accordance with the terms of the assignment agreement.
• Customs and patent duties, registration fees and other similar payments made in connection with the acquisition of rights.
• Amounts paid by enterprises for consulting and information services related to the purchase of intangible assets.
• Remuneration paid to the intermediary organization through which the asset is received.
• Non-refundable taxes.
• Other expenses directly related to the purchase of intangible assets.
  

If upon payment of intangible assets the terms of the contract provide for installments or deferred payment, the actual costs are taken into account in full amount of the debt. The acquisition of intangible assets may incur additional costs. This is the cost of bringing the intangible asset into a usable condition. These include, in particular, the remuneration of employees engaged in this work, the corresponding deductions for social security and insurance, material and other expenses. If there are additional costs, the cost of intangible assets will increase. As indicated in paragraph 8 of PBU 1/2007, the actual costs of obtaining intangible assets do not include general and other expenses, except when they are directed to the direct purchase of intangible assets.

Special requirements

Valuation of intangible assets, the value of which is determined upon purchase in foreign currency, should be carried out in rubles. Recalculation is carried out at the rate of the Central Bank of the Russian Federation, which is valid at the time of the transaction to obtain the company ownership, operational management and economic management. According to paragraph 27 of the Regulation "Accounting for Intangible Assets in Accounting", the business reputation of a company can be defined as the difference between the purchase price of the enterprise (as purchased property as a whole) and the price (on the balance sheet) of all its obligations and resources. A negative reputation is considered as a discount provided to the buyer, due to the absence of the factor of regular customers, proper quality, sales and marketing skills, management experience, business relations, proper qualifications of employees, etc., and is taken into account as income for the coming periods. The Tax Code does not have a special rule for accounting for obligations and property received upon acquisition of a company. In the letter of the Ministry of Finance there is, however, an explanation. It states that the liabilities of the purchased company are accounted for at the value indicated in the balance sheet, and the negative reputation acting as the buyer's income is recorded in the reporting period in which, in fact, the acquisition took place.

Accounting policy

The requirements for its preparation are regulated by the relevant Regulation. It establishes the basis for the formation (justification and choice), as well as the disclosure (disclosure) of the accounting policies of companies acting as legal entities, in accordance with the law. The exceptions are budgetary institutions and credit enterprises. The accounting policies of the company should include ways to balance. In accordance with paragraph 12 of the Regulation, it is:

• Methods for estimating stocks of production, goods in progress and finished products.
• Methods of depreciation of tangible, intangible assets and fixed assets.
• Methods of recognition of profits from the provision of services, sale of goods, performance of work.
  

In general, this includes any methods that comply with paragraph 11 of the Regulation. If during the preparation of the financial statements there is significant uncertainty regarding the conditions and events, which, in turn, may cast doubt on the applicability of the assumption of continuity of production, the company should indicate it and describe unambiguously what it is caused by. Based on the foregoing, it can be said that the enterprise, when formulating the policy, should disclose accounting methods that have a significant impact on the assessment and subsequent decision-making by persons interested in reporting. They are recognized as those which, without knowledge of the use of which, a reliable analysis of the financial situation, movement of funds or the results of the company’s activities is impossible.

Accounting Posting Examples

There is a special Instruction for maintaining items of income and expenses of the enterprise budget. In accordance with it, when writing off objects of intangible assets, their price is reduced by the amount of depreciation, which was accrued over the period of operation, if it was accounted for on account. 05. How is this reflected? This is recorded by correspondence on the loan "Intangible assets" (account 04) and debit c. 05. The residual price of retired intangible assets is deducted from the credit account. 04 to debit count. 91 "Other expenses and income." The balance on the last account is established every month by comparing the credit and debit turnover. It is written off from subaccount 9 "Balance of other expenses and income" to the account. 99 - "Losses and Gains."

Useful life

The object of an intangible asset accepted for accounting is established for the period of operation. At the end of this period, intangible assets should be written off. This task is carried out on the basis of an act that is drawn up by a specially created commission. Its composition is determined by the head of the company. In accordance with the act approved by the head of the enterprise, an intangible asset is derecognized. An appropriate entry is made in the Card. The depreciation charge on an intangible asset is terminated from the first day of the month following that during which the full repayment of the price of the intangible asset was made. The company, for example, owns intangible assets, the initial price of which is 18,000 p. (without VAT). The period of its operation is set at five years and ends in December. The depreciation amount accumulated during the period of use will amount to 17,700 rubles as of November 30. In December, the company must make certain notes on how intangible assets are operated. Postings should be like that.

Write-off of intangible assets

In the production activities of the company, there are quite frequent situations when, for various reasons, intangible assets become unsuitable for subsequent use. In this case, they are written off. This event is held in accordance with the act, which is drawn up by the commission and approved by the management of the enterprise. The document must specify:

• The initial cost of an intangible asset to be written off.
• The residual price of the item.
• Amortization amount accrued during operation.
• Reasons for writing off and other information.
  

The certificate approved by the management is transferred to the accounting department of the company. There, a note is made that the intangible asset has dropped out, and corresponding entries are made about it. Along with the asset, depreciation amounts accrued during its operation are also written off. Unsuitable intangible assets cannot participate in the production process and generate revenue for the company. The write-off is reflected as follows.

The decrease in economic income of the enterprise upon disposal of an intangible asset is considered an expense. This is established in paragraph 2 of the Regulation. Moreover, according to paragraph 11 of the same document, expenses associated with the disposal, sale and other write-off of funds other than cash are considered operating expenses.

Gift agreement

In the process, a company may transfer an intangible asset free of charge. This is a gift agreement. According to Art. 423 of the Civil Code, a transfer is deemed to be gratuitous if the party providing something to another entity does not receive payment or counter-provision from it. In Art. 574, paragraph 2 of the Civil Code, it is established that if the legal entity acts as the donor. person, and the cost of the transferred more than 5 minimum wages, the gift contract is in writing. At the same time, free transfer is prohibited between commercial companies (except for ordinary gifts, the price of which is not higher than the established minimum wages).