In 2000, the Accounting Regulations, approved by order of the Ministry of Finance dated 05.06.1999, came into force - RAS 10/99 “Organization expenses”. It was developed in pursuance of the state program for reforming the Russian accounting system in accordance with IFRS. In this article, we will deal with the specifics of applying PBU 10/1999 "Organization Costs".
General information
Why do I need 10/99 PBU? In accounting for an organization, expenses occupy a special place. The Regulation under consideration establishes the rules for the reflection of information about costs in commercial enterprises having the status of legal entities. At the same time, PBU "Expenses" does not extend its effect to insurance and credit organizations.
The cost of the enterprise is considered to be a decrease in economic benefits due to disposal of an asset (monetary or non-monetary) or the occurrence of an obligation leading to a decrease in the capital of the company (except for cases of reduction of deposits by decision of the property owners).
Exceptions
According to PBU, the following are not recognized as expenses of an organization:
- The cost of the purchase or creation of any non-current assets. Among them are OS, intangible assets, construction in progress, etc.
- Deposits in the share / authorized capital of other enterprises, the acquisition of securities of JSC not for sale / resale.
- Transfer of funds for charity needs, expenses for sporting events, entertainment, recreation, etc.
- Transfer of amounts under agency agreements, commission agreements, etc. in favor of the principal, principal, agent, commission agent.
- Advance payment of services, work, inventory and other valuables.
- Repayment of a loan, loan.
- Payment of advance payment or deposit on account of payment for work, services or inventory.
Cost classification
According to RAS 10/99, the organization’s expenses are divided according to the conditions of the business, its nature and directions. The Regulation provides for the following classification:
- Costs of ordinary (main) activities.
- Other costs.
The second group, in turn, includes operating, non-operating and extraordinary expenses.
The first group includes costs associated with:
- release and sale of products;
- purchase and sale of goods;
- the provision of services, work;
- providing for a fee the company's own assets for temporary use (possession) under a lease agreement, if this is the usual activity of the company;
- participation in the capital of other organizations, if this is the usual activity of the company;
- depreciation of fixed assets, intangible assets and other depreciable objects.
If this or that type of activity is not usual for the enterprise, then the costs associated with the transfer for a temporary use of own assets, products of intellectual labor, participation in the capitals of other business companies, must be recognized as operating expenses.
Accounting
PBU 10/99 establishes the following rules for the reflection of costs for ordinary activities. These costs are taken into account in the amount calculated in monetary terms and equal to the amount of payment or payables (if expenses have been calculated but have not yet been paid).
If the actual revenues cover only part of the recognized costs, then when accepted for accounting, the payment made and the payables in the uncovered part are summed up. Their sizes are determined in accordance with the price and conditions established in the contract between the supplier and the enterprise (contractor) or other counterparty.
Features of determining the amount of debt or payment
In paragraphs 1-6 of PBU 10, when accounting for the expenses of an organization, the price can be used at which, in comparable conditions, the company determines the costs of other services, work, material and production values, and the provision for temporary possession / use of similar objects. This procedure applies when the value of the asset is not fixed in the contract and cannot be established by its terms.
If inventories, works, services are purchased as part of a commercial loan provided in the form of installments / deferred payments, the costs should be taken in the amount of all accounts payable.
In accordance with PBU, in accounting for the expenses of an organization under contracts establishing obligations that are non-monetary, the amount of debt or payment is determined based on the value of objects transferred or to be transferred under the terms of the contracts. It is determined taking into account the price at which, in similar circumstances, the company evaluates comparable goods.
If it is impossible to determine the value of the values to be transferred or transferred, then the amount of accounts payable or payment is set at the cost of the products received by the enterprise. She, in turn, is determined on the basis of prices at which, in comparable conditions, the company purchases goods.
This principle of calculating the price of exchanged objects is consistent with the provisions of Art. 524 GK. According to the norm, the current price is the amount that is charged under comparable conditions for similar products in the place where the goods are supposed to be transferred. If the current price is not set in such a place, the value applied in another territory can be used if it can be a reasonable replacement. In this case, it is necessary to take into account the difference in the cost of transportation of objects.
Difficulties in applying regulatory documents
Many experts point out certain contradictions between PBU 5/98 "Accounting for fixed assets" and PBU 6/97 "Accounting for inventories", on the one hand, and the new Regulations adopted in 1999 (PBU 9 "Revenue of the enterprise" and PBU 10 "Expenses of the organization") .
I must say that the approach provided for by earlier documents is considered justified in terms of reflecting tangible objects at their actual cost as acquired. At present, when using the methods for estimating income and expenses in accordance with PBU-99, that is, published in 1999, an enterprise actually charges only “negotiable” taxes and can reduce or increase the book value of valuables. For “negotiable” include, for example, fees for the use of roads, for the maintenance of housing and communal services, social and cultural institutions.
Problem solution
Many accountants do not understand what they need to be guided by PBU in accounting for the costs of the organization.
Experts recommend using this approach: if the requirements of normative acts approved by the same institution of power and of the same status have contradictions, you need to be guided by the provisions of a document published later.
Nuances
When changing obligations under the contract, the initial amount of payment or payables should be adjusted in accordance with the value of the asset to be written off due to disposal. It is determined based on the price at which similar assets are valued when disposed of under similar conditions.
The amount of accounts payable or payment is established taking into account all the discounts provided to the company in accordance with the contract.
Total differences
Due to them, the amount of payment decreases or increases. Such differences arise when paying in rubles in the amount corresponding to the amount in foreign currency. They are the differences between the ruble valuation of the payment, expressed in foreign currency and made on the fact, calculated in accordance with the official or agreed rate on the day the corresponding debt was taken into account, and the ruble valuation calculated at the rate at the date the expenses were recognized in the account.
Expenditures
The costs of ordinary activities should be divided into groups by:
- Material costs.
- Labor costs.
- Costs for social needs.
- Depreciation payments.
- Other costs.
According to RAS 10, expenses are reflected in the documents by cost items. The company sets their list on their own.
For the formation and analysis of the financial result from the implementation of ordinary activities, the cost of sold services, works and products is determined. Moreover, as established in PBU "Costs" from 1999, the costs of operations recognized in the current year and previous periods, as well as the carry-over costs associated with the receipt of income in the coming periods are taken into account. In the latter case, adjustments depending on the specifics of production are taken into account.
Features of the formation of a group of operating costs
In accordance with RAS, the expenses of organizations in this category include interest deducted by the company for the use of borrowed funds.
Enterprises can now account for interest on amounts received not from banks, which were reflected, for example, on the account before 01.01.2000. 88 at the expense of sources of own funds. These percentages (i.e. losses) will not be taken into account for tax purposes. Some experts consider this innovation as an attempt to stop the practice of displaying data on the account. 88.
Non-operating and extraordinary costs
To deal with these cost groups, you must refer to Government Decision No. 696 of 09/26/1999. According to this act, non-operating costs include interest deducted by the issuer for certain types of bonds. In particular, we are talking about securities that are put into circulation through trade organizers that have a license issued by the Federal Commission. The costs of deduction of these percent for tax purposes should be taken within the limits of the Central Bank refinancing rate increased by 3 points.
The group of emergency expenses under PBU includes expenses arising from unforeseen situations (natural disasters, nationalization of property, accidents, etc.). In this case, the list of non-operating expenses includes uncompensated losses resulting from natural disasters. We are talking about the destruction and spoilage of inventories, finished goods and other valuables, losses during the shutdown of production, etc. The cost includes expenses related to the prevention or elimination of the consequences of accidents or natural disasters. Non-operating expenses include uncompensated losses incurred in connection with fires and other emergency situations caused by extreme conditions of production activity.
Other costs
The amount of costs associated with the sale, disposal, write-off for other reasons of fixed assets and other assets, expressed in non-monetary form (excluding foreign currency), products, goods, are determined according to the rules of paragraph 6 of PBU 10 "Costs". Accounting in this order is carried out in respect of costs associated with:
- Participation in the capital of other business entities.
- Granting for temporary possession / use of the enterprise’s own assets, rights obtained under patents for industrial designs, inventions and other products of intellectual labor, when their creation is not an ordinary activity.
- Payment of interest on the use of borrowed funds.
- Payment of services of credit organizations.
Additionally
According to the provisions of PBU 10, accounting for the organization’s expenses related to the payment of penalty interest, forfeit, fines for non-fulfillment of contractual terms, compensation for losses caused by the enterprise is carried out in the amounts awarded by a court decision or recognized by the business entity.
Accounts receivable, the statute of limitations for which have expired, other debts, the collection of which is impossible, are carried forward to the costs in the amount in which they are reflected in the financial statements.
The devaluation amounts of objects (other than non-current assets) are established according to the rules provided for revaluation.
Other costs are transferred to the account of losses and profits, unless otherwise provided for in the legislation or in the accounting rules.
Cost recognition conditions
In accordance with RAS 10/99, expenses can be reflected in the account if:
- They are carried out under the terms of a specific contract, in accordance with the requirements of the law, other normative act or business customs.
- Their size can be accurately and reliably determined.
- There is confidence that a specific business transaction will result in a decrease in economic benefits when an entity transfers an asset or there is no uncertainty regarding the forthcoming transfer of an asset.
If at least one condition is not met, accounts receivable are reflected in accounting.
As established by the PBU, depreciation expense is accounted for on the basis of deductions determined on the basis of the value of depreciable property, its useful life and calculation methods established by the organization’s financial policy.
Features of cost reflection
In accordance with RAS, expenses are recognized regardless of:
- the company's intentions to receive revenue, operating or other income;
- cost forms (in kind, cash).
Costs are recognized in the period in which they were incurred. The time of actual payment (in cash or other property) does not matter.
If an enterprise, in the cases established by law, adopts a procedure for recognizing profits from the sale of goods not upon transfer of the right to use ownership and orders for delivered objects, but after receipt of payment, then the costs are reflected after the debt is paid off.
The specified procedure until 01.01.2000 was valid exclusively for small enterprises. The basis was Model Recommendations approved by Order of the Ministry of Finance No. 64n of 12/21/1998. In accordance with paragraph 20 of this document, the costs associated with the release and sale of products, services, works should be reflected in the account. 20 only in the amount of paid values, paid earnings, accrued depreciation and other repaid debt. This reflection method is referred to as cash.
For other business entities using the method of "payment", the cost of work, products, services decreased in proportion to the actual profit received by the settlement method. Explanations on these issues were given by the Sun. In a decision dated 09.12.1998 No. GKPI 98-655, the court stated the following: “The method for determining the proceeds of sale" by shipment "or by payment" affects the rules for determining the cost of goods sold. When using the principle of "payment" it includes the costs of the period to which they relate, in accordance with the terms of the contract and the actual settlements made. "
Profit and Loss Statement
According to RAS, expenses are recognized in the report:
- Given the causal relationship between costs and revenues. It is especially important to keep records of expenses and income for all types of activities that are significant. We are talking about cases where profit exceeds 5% of the total income of the company. The report reflects not only the gross revenue and the cost of goods corresponding to it, but also the amounts received by type of activity and the cost price corresponding to them. Such a distribution of indicators will allow stakeholders (reporting users) to form an idea of the profitability of the business areas of the enterprise.
- Through their reasonable distribution between periods when costs determine the flow of funds at different time intervals, and the relationship between costs and revenues is either not clearly defined or is determined indirectly.
The distribution of costs by periods can be made in accordance with regulatory enactments. If such legal documents are not available, then the calculation procedure is established by the enterprise independently.
Selling and management costs
In accordance with RAS, the accounting of expenses for commercial and managerial needs can be carried out as part of the cost of the sold works, goods, services in full in the reporting year as expenses for the ordinary activities of the company. However, this does not mean that the company can reflect these types of costs that are not related to the sold products. The moment of recognition of these costs is the moment of recognition of income, i.e., sale.
In accordance with RAS, the organization’s expenses for packaging products and their transportation, referred to the group of commercial costs, are charged to the cost of the goods in a direct way. , , , , . .
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Please note that non-operating and operating costs may not be shown in detail in the report regarding the corresponding income if:
- Accounting rules do not require or do not prohibit such a reflection of costs.
- The costs and revenues associated with them arising from the same business transaction do not significantly affect the characteristics of the financial condition of the enterprise.
All other expenses of the enterprise for the reporting year, not credited to the account of losses and profits, should be disclosed separately in the statements.
The article provided information about the features of the use of PBU 10 from 1999, the rules for maintaining and recording various expenses depending on the status of the organization and classification of costs.