“Deferred expenses”: what applies to them? Postings and write-offs of deferred expenses

In 2011, accounting legislation was amended. The adjustments, in particular, related to the reflection of expenses that arose in one period, but related to several financial cycles. Such costs are referred to as BPO. Next, we consider how future expenses are taken into account, what applies to them.

Normative base

The financial statements of the new form were approved by Order of the Ministry of Finance 66n. a line was fixed from it, fixing future expenses (stocks). After that, the following Order 186n made adjustments to paragraph 65 of PBU. In the new edition, this document contains provisions on how deferred expenses are recorded, what applies to them at present. So, the costs that are incurred by the organization in the reporting cycle, but relating to the following, are entered into the balance sheet under the terms of recognition of assets. Deferred expenses are written off in accordance with the general rules for the disposal of funds of this type.

Accounting concept

In accordance with clause 8.3 of the CBU, an asset in a domestic market economy is recognized as such if it is likely to receive future profit from this asset. At the same time, its cost can be measured with a sufficient level of reliability. Clause 7.2 of the Concept states that the assets are household assets that came under the control of the enterprise as a result of entrepreneurial activity, and which could bring it profit in future periods. Upcoming economic benefits include the potential for assets to indirectly or directly contribute to the flow of cash. It is generally accepted that funds can make a profit in the future if they:

1. Used separately or in combination with other means during the production of services, products or works intended for sale.
2. Exchanged for other assets.
3. Distributed between the owners of the enterprise.
   

Classification

In accordance with the new version of paragraph 65 of PBU, certain types of deferred expenses should relate to certain assets. In some cases, classification is difficult. However, if it is established that the expense matches the general definition of an asset, then it can be considered as other non-current or other working capital in accordance with the write-off period. If it is expected that BPO will be disposed of at cost over the course of the year, then it is shown as part of current assets. If the write-off of deferred expenses will be carried out for a period exceeding 12 months, they will be included in non-current assets.

The difficulty of implementing the concept

The above situation caused certain difficulties for accountants. For example, the question arose of how to distribute if deferred expenses include insurance payments. The fact is that they cannot be included in any asset. To clarify the situation, the Ministry of Finance issued a letter. In accordance with it, defining expenses of future periods (which relates to them in the current cycle and concerns coming ones), if they meet the conditions under which an asset is recognized, then they are recorded in the balance sheet in its composition and are disposed of in the manner adopted for of this category. In other cases, such costs are shown as BPO. Their write-off is carried out by means of a reasonable distribution between financial periods according to the rules established in the organization (in proportion to the quantity of products, for example), during the period that they relate.

The opinion of experts

Given the above, we can assume that the very procedure for recognition and subsequent write-off of expenses for future periods has remained the same. The changes affected only the rules for fixing the BPO in the balance sheet. According to experts, these adjustments specifically indicate how deferred expenses are shown and what applies to them. In particular, only those costs that really are such should be included in their composition. Their description is contained in PBU 10/99 (in paragraphs 2 and 3). On the other hand, they should relate to future financial periods. In other words, a cycle exists and can be established during which realized costs will bring economic profit to the enterprise.

Deferred expenses: invoice

When working with the cost item, it is necessary to clearly determine whether the asset has its own disposal rules, or whether these are costs that are recognized as lump sums. When performing operations, it is necessary to adhere to the established algorithm. First of all, it should be checked whether the current accounting standards provide for a method for the uniform distribution of the analyzed costs. With a positive answer to this question, they remain on the account. 97. Future costs in this case can continue to be allocated. If the specified method is not provided, it is necessary to determine whether income from these funds is possible in the upcoming financial cycles. The possibility of transferring such expenses to the future is provided for in PBU 10/99 (in paragraphs 9 and 19). If yes, they should also be distributed.

Other costs

They must be either written off or included in advances paid. In the first case, it is necessary to verify compliance with all conditions for the recognition of costs, which are established in PBU 10/99 (according to paragraph 16). In particular, it is necessary to determine that:

1. The expense can be realized under a specific contract, the requirement of a law or other regulatory act, the custom of business turnover.
2. The amount of costs can be set.
3. There is confidence that in the implementation of a particular operation there will be a decrease in the economic profit of the enterprise. In other words, the organization transferred the asset or not uncertainty about its transfer.

If at least one of the indicated conditions is not fulfilled, then the issued advance (accounts receivable) is recorded in accounting. This provision also applies to payment for work (services), when at the time of the transfer of funds it was not fulfilled (not provided). In this case, the contract may be terminated at any time with the requirement of a full or partial refund. The remaining costs are included in losses.

Cost categories by item

In accordance with the new rules, only certain deferred expenses are allocated during a certain period. The account may contain:

1. One-time payments for the right to use the results of intellectual activity or means of individualization, which are paid under license agreements, commercial concession agreements and other similar documents with a fixed validity period.
2. Discount on bonds or accrued interest.
3. Additional costs for loans.
4. Accrued interest on the bill amount.
5. Costs incurred regarding upcoming work under a contract. They include the cost of materials that were transferred to fulfill the terms of the agreement. This category also includes rents that are listed in the financial period, but apply to upcoming cycles. The disposal of such costs is carried out in the manner specified in PBU 2/08 (in paragraphs 21 and 16).
6. The cost of raw materials allocated to production, but relating to future periods. This provision applies if materials are used in preparatory work as part of seasonal production, during mining and preparatory activities in the development of new units, workshops, enterprises (start-up costs), in the development of new technologies and products, in the process of land reclamation.
   

Mistakes

Often on the count. 97 fix:

1. R&D costs . These deferred expenses are reflected in the account. 08 and are shown under the article on which other non-current assets are recorded. After completion of work, they are included in the invoice. 04 and shown under the article "Results of development and research."
2. Subscription costs for periodicals. These costs are included in advance. The fact is that the company at any time can refuse to receive the following numbers and request a refund of the amount paid.
3. Lease payments that are listed at a time for the upcoming dates. They should also be included in receivables, as services have not yet been provided.

To eliminate inaccuracies, an inventory of deferred expenses is required.

Loss inclusion

Under the new rules, current expenses include:

1. Expenses under insurance contracts. These include, among other things, agreements on the protection of civil liability, property, hull and compulsory motor liability insurance, and so on. The paid amount of the contribution (premium) under these acts may be taken into account at the same time as part of the expenses at the time of receipt of the policy (the beginning of the contract), because the regulatory acts do not establish a special procedure for recording them. The paid insurance premium is not included in the advance payment, since in case of early refusal of the organization from the contract, it will not be returned unless another condition is provided for in the agreement.
2. Holidays, passing to the next month, and contributions from these amounts. Their uniform inclusion in expenses in accordance with the current PBU is not provided. Also, they cannot be considered advances, since they are paid for the time worked.
   

1C: deferred expenses

At the request of users to sch. 76 The BPO Directory was tied. This is done for those cases when it became necessary to distribute insurance evenly, but the user does not consider that it is included in deferred expenses. Postings in this case are carried out using account. 76:

• "Contributions (payments) for voluntary insurance in case of damage to health or death" (76.01.2).
• Deductions for other categories of insurance (76.01.9).

Innovation

As one of the innovations regarding the changes in the legislation described above, there is a props indicating the type of asset. Its meaning is to establish that line of balance, which will include certain expenses of future periods. Postings should be made at the same time as filling in this attribute for all BPMs that have a debit balance at the end of the financial cycle. If this information is not available, then the costs are included in other current assets in the balance sheet (line 1260). This attribute is not important for writing off and recording expenses. The amendments to the law also did not affect the recognition and disposal of the BPO - it is the same in the program. This means that if it becomes necessary to somehow redefine the types of assets for the established deferred expenses before generating financial statements, the values ​​of the relevant details can be changed without re-arranging either the receipt documents or the disposal operations for the indicated costs.

Explanation of amounts by balance lines

This can be done using the appropriate button. It is located on the top command line of the report and is called "Decrypt." During the formation and automatic filling of the balance, the program allows you to determine indicators. To verify the correctness of filling in the asset type in the BPO directory, analyzing the way in which expenses will be displayed in the balance sheet, you can use the standard sub-account analysis standard accounting report method. In this case, you must first configure it. It is done like this:

1. The type of subconto should establish future expenses.
2. In the first grouping, BPM and type of asset are indicated.
3. In the second grouping, expenses for future periods are set.

Other report parameters can be configured as needed. The result is a picture that fully reflects the distribution of expenses for future periods between the balance sheet assets. At the same time, a decryption will be given for each BPO. In a similar way, you can configure the balance sheet for the account. 97.

Independent determination of accounting

This operation is allowed in respect of expenses that relate to future periods and are not directly indicated in the current PBU as a BPO. With the independent determination of the accounting procedure, the following options are possible:

1. Fixation on “costly” articles and write-offs subsequently to articles on accounting for profit from sales (p. 90) or other costs and incomes (p. 91).
2. Reflection on the sc. 97 (BPO) with the distribution of "costs" upon the onset of the period in which they are included.

One more option is allowed. It consists in the reflection of expenses on special subaccounts of expenses and their subsequent inclusion in accounts that take into account profit from sales (inv. 90) or other expenses and income. In this case, the prescription of PBU 10/99 (paragraph 19) will be respected. This requirement provides for the reflection of expenses in the statement of profit and loss by means of their reasonable distribution over financial periods in the case when the costs determine the receipt of income over several cycles, when it is not possible to clearly determine or only indirect connection between costs and profit is possible. It should be noted that the last two options may be the most convenient for the enterprise. In these cases, it is possible to bring the tax and balance sheet as close as possible. The first provides for not a one-time, but a gradual write-off of expenses that relate to upcoming periods. A specific definition of a method of accounting and disposal is carried out in the framework of the financial policy of the organization. The main criterion for the gradual, and not lump-sum distribution of certain costs is profit, which is associated not with the present, but in the upcoming cycles.

VAT

As indicated above, the amount of expenses for future periods is recorded on the account. 97. The "input" VAT "relating to them is deductible in the general manner. This is carried out after they are shown in the accounting, provided that these costs are necessary for the implementation of activities that are taxed, and if the supplier has an account -texture.