Reserve for reducing the value of material assets: posting and creation

Reserves - one of the sources of the enterprise necessary to cover losses in connection with the depreciation of goods and materials. Usually they form at the end of the year. At the same time, the book value of the property for which the insurance fund is being created is changing. In order to collect information on accounting transactions, the amounts are reflected in account 14. Let us consider in detail the process of formation and use of the amounts of this fund.

general characteristics

Reserves - this is part of the sources of the enterprise, grouped by purpose in special insurance funds. The main goal of their education is the recognition by the enterprise of the possibility of an unfavorable financial situation: the excess of expenses over income. In particular, a reserve for reducing the value of material assets is created when their market evaluates property below the cost of its actual cost. Most often this happens due to damage to property or its physical and moral obsolescence.

The value of the asset in the balance sheet is shown net of the amounts taken as a reserve for the reduction in the value of material assets. The posting at creation looks like this: the account for other expenses is debited, the account 14 is credited.

Reservation Rules

One of the main documents regulating accounting at the enterprise is the accounting policy. It contains detailed information about:

• Is there a possibility of creating reserves and which;
• how often to reassess goods and materials;
• what sources of information on current prices to rely on when calculating;
• and other specific and general rules for the formation of this reserve.

Let's analyze an example of the main part of the accounting policy regarding this fund:

1. The provision is made on the basis of the property balances at the end of each quarter after its revaluation, which must be completed no later than the 25th day of the month following the reporting date.
2. The check for loss of value of assets is carried out only for those funds whose value at the date of the report is more than 250 thousand rubles.
3. For the accuracy of determining the market value of goods and materials, the following can be used: prices of similar assets purchased in recent deliveries, the average value of the property value in the region, data from the latest resource calculation for similar values. If additional costs are required for the sale of valued inventories, their value should be subtracted from market value.
4. Based on the data obtained, a reserve is created for each item number or group of similar property for a decrease in the value of material assets. The posting is used as follows: account 91.2 is debited, account 14 is credited. A prerequisite is a positive difference between the first and second indicators.
5. Expenses and incomes created as a result of the creation and liquidation of the reserve give rise to a permanent liability in the form of a tax or tax asset.

Compliance with the requirements of the accounting policies for the creation of the fund is a mandatory requirement for an accountant.

Accounting Entries

Account 14 was created to collect such information. This is an active-passive account with a one-way balance, the data of which is used in calculating the balance sheet line “Inventories”. When creating a reserve, the amount is indicated in the loan. Write-off is made by debit. Closing the account assumes that all balances will be spent for the next reporting period. The synthetic accounting data is reflected in the order journal No. 10-1. Analytical records are kept for each unit of goods and materials (by item number or category of similar property).

Creation Rules

A provision for reducing the value of material assets is a method of analyzing and grouping impaired property. It should be created only when the cost of its possible sale falls or falls below the actual cost. At the same time, large categories of property should not be discounted. For example, you cannot write off all fixed assets or materials to the reserve.

The company undertakes to provide a calculation of the cost of funds for the amount of which an insurance fund is created. The reserve for reducing the value of material assets is formed due to the financial results of the enterprise.

Reserve calculation

As a rule, the accountant resorts to the creation of reserves before reporting at the end of the year. In the course of revaluation of inventories and the detection of depreciation of a certain property, it becomes necessary to write off the amount to the reserve for reducing the value of material assets. The posting describing this process consists of a debit account 14 and a credited account 91.

The total value of the property transferred to the reserve is determined by the formula: P = C _market. - With a _fact. where:

• With the _market. - the market value of the asset;
• C _fact. - the actual cost of property.

If it turns out that the value of the actual unit cost of goods and materials is greater than the market value, the accountant does not have the right to create a reserve. The values ​​used in the calculation should be taken from relevant and reliable sources containing official data on exchange and market processes.

An example of the formation of a reserve in the enterprise

Consider how a reserve is formed for reducing the value of material assets: at the end of 2014, the organization’s balance sheet contains materials of a similar nature by 2 million 120 thousand rubles (including VAT in the amount of 120 thousand rubles). The next inventory showed that assets can only be sold for 900 thousand. A decision was made to form an insurance fund based on these materials. Create a reserve for the required amount and arrange the transaction with the appropriate transaction.

To begin with, we will calculate the amount by which a reserve will be formed for reducing the value of material assets in 2014:

• 2 120 000 - 120 000 - 900 000 = 1 million 100 thousand rubles

Then you need to create an account assignment: account 91.2 is debited, account 14 is credited for the identified amount. Now, when preparing the annual financial statements, the market balance will indicate the market value of the depreciated materials, equal in this case to 900 thousand rubles.

Reserve recovery

Amounts previously sent to a separate fund for a decrease in value can be restored if:

• property is disposed of for any reason;
• the market value of reserved assets has increased.

Property returned to circulation is reflected at market value, and the difference between the value of the created reserve and the increased price is written off to other income. The posting is carried out as follows: account 14 is debited, account 91.2 is credited. The same write-off scheme applies if property is written off for production or sale.

An example of registration of the disposal of property from the reserve

We will fully consider the process of creating and further writing off amounts from the fund for reducing the cost of goods and materials. As a basis, we take the following condition: at the end of the reporting year, the enterprise’s warehouse had 170 m of cotton material worth 62 rubles per meter. But the market price has changed since the acquisition and became equal to 50 rubles. Management decided to create a reserve. At the beginning of next year, 120 m of cotton fabric of 62 p. per meter. Calculate the amount of the reserve at the time of creation and after the sale of the material and make postings.

Perform the steps:

1. Determine the amount of reserve: 62 × 170 - 50 × 170 = 2040 p. - the amount that should be written off to the reserve for reducing the value of material assets. Posting: account 91.2 is debited, account 14 is credited.
2. The proceeds from the sale of the material amounted to: 62 × 120 - 50 × 120 = 1440 p. This amount is debited: account 14 is debited, account 91.2 is credited.
3. The amount of the residual value of the reserve will be equal to: 2040 - 1440 = 600 rubles.

On account 14, the operations performed will be reflected as follows:

To the bang. at the end of the month, 50 m of the material left in the reserve will be reflected at market value, i.e., at 62 rubles. per meter, which will be 3100 p.

Reflection in tax accounting

The reserve for reducing the value of material assets in tax accounting as such does not exist. But the write-off of the amounts leads to the formation of a permanent tax asset from the amount of the difference between the market and actual value, and the formation of the reserve to the liability. In this regard, the creation of a fund for reducing the cost of goods and materials is accompanied by additional posting: Dt "Profit and loss" Kt "VAT", and write-off - Dt "VAT" Kt "Profit and loss". The amount of the tax asset or liability is calculated at the interest rate, which is multiplied by the difference between market prices and cost.

Reserves for reducing the cost of goods and materials are a prudent way to wait out the period of depreciation of property and get out of the situation with the least losses. Creation and write-off of amounts should be carried out strictly in accordance with the Accounting Regulations and accounting policies of the enterprise. Do not forget about the tax obligations that accompany the process of forming a reserve fund.