Additional paid-in capital is included as a separate part in the equity of the joint-stock company. It shows the total ownership of all participants in this enterprise. It is an independent subject of accounting and is separately reflected in accounting. This is due to the fact that a change in the size of the authorized capital in the course of the company’s activity is possible only in case of re-registration of its amount. Therefore, you can change its value by recording not on the main account 80, but on an additional one.
In accounting, additional capital is accounted for in accordance with documents, such as Order of the Ministry of Finance No. 94n dated 10/31/2000 “On approval of the chart of accounts”, order of the Ministry of Finance No. 34n dated 07/29/1998 “On approval of the Regulation on accounting”, the Regulation on Accounting No. 154n of November 27, 2006 and No. 26n of March 30, 2001
Form the additional capital of the enterprise can be from sources such as:
- revaluation of fixed assets and intangible assets;
- funds for targeted financing of organizations aimed at financing basic expenses;
- share premium of the company after the sale of shares at a higher than nominal value;
- differences in rates that were formed during the formation of the authorized capital;
- contributions to property.
In the charts of accounts, additional capital is reflected in account 83. For a loan, it shows the increase in the value of assets identified by revaluation results; the difference between the sale value of shares and the nominal proceeds from the formation of the authorized capital; amounts of targeted financing aimed at financing capital expenditures. For debit, additional capital is taken into account in such cases when it is necessary to reflect the repayment of the amount of the decrease in the value of assets identified as a result of revaluation; send funds to increase the authorized capital (account 75 or 80); distribute the amounts between the founders (account 75).
Additional capital can be used for the following purposes:
- for markdown of intangible assets and fixed assets;
- loss coverage;
- change in the size of the authorized capital due to the property of the company.
In general, it is rather difficult to estimate the shares of participants in society. According to the amendments made to the Tax Code, property contributed to additional capital is not considered as income when income tax is applied. Today it is possible to increase this part of the capital by offsetting the debts of the company to its participants.
Investing property of participants in this part of the capital is recognized as onerous, because it is aimed at increasing the value of net assets. At the same time, the actual value of the shares owned by the participants increases. Therefore, the value of the share for tax purposes during its implementation is also growing.
Investing in additional capital is advisable because it leads to an increase in the value of shares in the capital of LLC. In addition, the contribution of property to the incremental part increases the value of the property that participants can receive when they leave the company.
When determining income tax in the event of a participant withdrawing from an LLC or selling a share, his contribution to the additional part of capital is not considered an expense. The reasons for this are the following: a contribution to property in this case is not a contribution to the authorized capital, a contribution cannot be taken into account as an expense according to the Tax Code. It should be noted that these grounds contradict the positions of the Constitutional Court, according to which an increase in the value of shares when investing in capital does not lead to a change in the nominal shares of participants. Thus, the contribution of participants in order to change the net assets upward, which leads to an increase in the value of their shares, cannot be taken into account in taxation.
Audit of additional capital is carried out in order to verify the correctness of its formation and use. To do this, verify the analytical data with the turnover and balances of synthetic and accounting data with financial statements.