According to the Regulation that governs the maintenance of accounting records, assets are recognized as those balance items that imply expenses of the reporting period related to future ones. Such changes were first noted in the 2011 financial statements. In addition, the wording “deferred expenses” is not contained in the documentation. But, despite this, accountants are actively using this phrase in their professional activities. We will examine in more detail this question: the concept as a whole and the nuances associated with determining the composition and organization of accounting for such expenses.
The legislation states the following
Previously, expenses incurred in the reporting period were related to subsequent ones and were called expenses that related to upcoming periods. The law found this reflection in paragraph 65 of the Regulation, which governs the accounting of enterprises.
The Ministry of Finance of Russia issued an order that this definition be subject to change. Paragraph 65 shows such expenses in the balance sheet of the organization in accordance with the basic rules for the recognition of assets, which were established by legal acts under the rules of accounting. Writing off such items is necessary in the manner that is recognized for the respective asset. However, this does not mean that this item was canceled, since no changes have occurred in the chart of accounts, and the account “deferred expenses” still exists.
In addition, the rules according to which this paragraph is accounted for as expenses of the reporting period relating to future ones have a requirement that remains unchanged. Only the interpretation of this paragraph has changed, but in general the content has remained the same. This phenomenon can be associated with the fact that it is necessary to bring accounting in Russia under certain rules, and there the concept of the same name with the article of such expenses is simply absent.
Cost Inventory
Currently, there are no rules that could organize the company’s actions in relation to the remaining balances that are on account 97. For travel agencies, an inventory is recommended, as well as an audit of how the expenses recorded in the asset meet the characteristics of the asset. Among the expenses of the organization may be those costs that can be written off evenly in accordance with accounting rules or applicable instructions.
If the organization uses score 97 “Deferred expenses”, the accounting department is obliged to take an inventory of these indicators. The procedure and timing of the inventory should be reflected in accounting policies company. After checking all previously considered amounts, an act is compiled on the results of the reconciliation in the developed form. However, the company can reflect the results of the inventory and in a self-approved form, this right has been given to organizations since 2013. Deferred expenses in the balance sheet at lines 1210 and 1230 must correspond to the debit balance of account 97.
Expenses recorded in 97 accounts
Prepaid expenses include:
- One-time or lump-sum payments that provide the opportunity to use the results of intellectual activity, however, there is a condition that such payments are made on the basis of license agreements, as well as other agreements that have a certain validity period.For example, when a travel company receives intangible assets for which only the licensor has rights. For the use of this asset, a travel company must make a one-time payment, which will be reflected in the column “deferred expenses”.
- Costs stipulated by the accounting rules: interest on bonds, additional items of expenses, interest that accrues on the bill of exchange amount.
- The cost of preparatory work in seasonal production.
If we are talking about a travel agency, then it is necessary to take into account on account 97 the costs of developing a new route and other innovations.
What amounts cannot be taken into account on account 97
Different types of prepayments should not be attributed to BPOs, since there is a risk of the need for the return of such costs. Return conditions are usually specified in contracts with counterparties for a periodic subscription, insurance and other services. The fact is that advance payments are not expenses per se, but only increase accounts receivable.
Therefore, it is necessary to reflect such amounts on accounts of settlements with counterparties, that is, use 60 or 76. In this way, most advance transfers should be reflected in accounting. However, there are agreements under which a refund is not provided under any circumstances, for example, with an advance payment for licenses and patents, respectively, such costs can be attributed to the BPO.
How to reflect deferred expenses in the balance sheet
Depending on the period in which expenses are written off, they can be displayed in the first or second section of the balance sheet. If the period exceeds a calendar year, then there will be a display in the line “non-current assets”, if it does not exceed, then in the line “current assets”.
The items under consideration do not include such items as the listed prepayment for the services of other organizations, third-party companies that provide assistance. And also the cost of insurance policies does not apply to such expenses. It is very important to take into account the fact that when a travel company develops a new route, costs are generated that will necessarily relate to costs in future periods. If we are talking about the amounts spent on redeeming seats on charters, this is again an advance payment.
Thus, when preparing and filling out the accounting documentation, it is necessary to understand what type of expenses these or those expenses of future periods belong to; in this case, posting will not be difficult to write correctly and correctly, using one or another account.
The accountant must document the validity of assigning various costs to the BPO. In the balance sheet, such expenses must be reflected in the corresponding items of assets. For example, long-term licenses are accounted for as inventory and included in the amount to be shown on line 1210 of the accounting form.
Tax Code of the Russian Federation
In chapter 25 of the Tax Code there is no concept of "deferred expenses and income". However, there is an indication that expenses are displayed in the reporting period when they occurred. Their occurrence may be provided for in various transactions. For example, the contract indicates the period during which the entity can use some property. This may be an insurance contract or subscription. In this case, expenses will be debited in equal parts during the specified period specified in the contract. The same method exists in accounting.
If it is not in the contract and it is impossible to determine the relationship between income and expenses, then the taxpayer can independently distribute these expenses. For example, a subject has acquired a computer program for use.The operational term of the software product is not specified in the contract, therefore, on the basis of a manager’s order, the cost of this program can be added to other expenses, which at the same time reduce profit in taxation.
If according to the terms of the contract the income will come from several reporting periods and there is no concept of phased delivery of goods (services or works), then during these reporting periods the taxpayer will independently distribute these expenses. In this case, the principle of proportionality or uniformity applies, as in the financial statements. Also, the Tax Code contains a certain amount of expenses that are taxable not from the moment they occur, but according to certain rules. These costs are for R&D, that is, for the development of natural and other resources.
How to remove deferred expenses from accounting
The write-off of such expenses is organized under the same conditions as the write-off of the value of the assets themselves. The cost of acquiring software will be written off over the entire period of the licensing agreement. This rule applies when the entire amount has been paid for the intellectual property. If the payment is made in several stages, in parts, then they should be considered as current expenses.
How to allocate expenses affecting several tax periods
Now we’ll take a closer look at how expenses are distributed evenly over several tax periods and expenses that have a certain procedure for writing them off.
The distribution of income and expenses occurs in equal parts according to the terms of the contract, which is valid for more than one reporting period.
It often happens that an organization enters into an agreement to carry out work that begins and ends in different reporting periods, for example, scientific, construction, geological and others.
Expenses and income that arise in several reporting periods are independently distributed by the organization in equal amounts.
When carrying out production over a long cycle. If the work is carried out over a long cycle, the taxpayer will independently distribute income in equal parts according to the credentials. But this procedure is provided when the terms of the phased delivery of work or services are not specified in the contract. The Tax Code of the Russian Federation determined that the organization should fix the method of distribution of income from sales in accounting policies.
New Organization Costs
For newly created organizations, it may happen that they incur expenses on office rent, wages, and others, but their income will appear over the next tax period. The Tax Code of the Russian Federation states that expenses that occur in the current tax period are among the expenses of the same period. This means that expenses will be recognized in the period in which they appeared.
And the costs of the new organization should be justified and documented, and their goal should be to make a profit. Thus, expenses are recognized regardless of whether the entity has revenues in a given period, but expenses must be allocated in order to make a profit in the future. According to tax reporting, a new organization may incur a loss. In this case, the loss must be transferred to the future, it must be done from the next reporting period.
Expenditures for the development of natural resources
Accounting for deferred expenses for the development of natural resources is provided for in Art. 261 and Art. 325 of the Tax Code of the Russian Federation. Based on paragraph 2 of Art. 261 of the Tax Code of the Russian Federation, such expenses are added to the remaining expenses. But these works should be financed by own or borrowed funds of the taxpayer, but not by means of the budget and state funds.Expenses of this kind are recognized in tax reporting from the beginning of the next month in which all work or a certain stage is completed. There is a certain procedure for accounting for such expenses. The display depends on their type:
- Uniform parts for 12 months. This includes expenses for the search and exploration of minerals, as well as for the acquisition of certain information from other persons, as well as from government bodies.
- Equal parts for five years, but not more than the very life of the unit. These costs are associated with preparatory work, which is necessary to comply with all safety rules, as well as to protect the subsoil, land and expenses aimed at compensation for damage in case of land acquisition, but not for the purpose of agricultural production. All of these costs are open.
R&D expenses
The costs aimed at scientific research include the costs associated with the creation of new or improvement of manufactured goods. The conditions and rules of this article apply only to those enterprises that are R&D customers, except those that carry out these works on order. These kinds of expenses are displayed in tax accounting from the first day of the month after which the studies are completed and the parties sign the acceptance certificate.
Accordingly, all R&D expenses are displayed in tax reporting with certain restrictions. If R&D expenses do not have a positive result, then in the financial statements they are recognized as non-operating expenses of the reporting period. The taxpayer may reduce the current base of the tax period by part of the amount of the resulting loss or by the whole amount.
Example of deferred expenses calculation
The cost of the object is 36,000 rubles, the contract is signed for a year. From the available data we get that the accountant needs to write off 1,000 rubles each month (36,000 / 3/12 = 1,000).
In cases where it is a construction contract, costs should be reflected in the quarter in which they were actually incurred. At the same time, the amounts of the actually performed work are subject to accounting as production costs, and the organization’s expenses in connection with the planned work - as BPO. According to the current Regulation, such expenses will be written off as income from work performed is received. The company has the right to independently distribute expenses in cases where the date of the act is beyond the reporting period or the contractor reports in stages.
How to organize accounting in 1C: Accounting
So, deferred expenses include expenses of the current period, but which are directly related to future periods.
So that such expenses are not difficult to reflect in the balance sheet, first you need to add them to the appropriate directory in the program 1C. First, select “Income and expenses” in the menu, and then, accordingly, the item “Deferred expenses”. We introduce the names of expenses, while indicating its type, method of recognition according to the Tax Code, the time of debiting, as well as the correspondent account and its analytics.
After entering the data, a new element “Asset Type” will appear, to which various values are set, such as: inventories and fixed assets, receivables, other current and non-current assets. The section and line of the balance sheet in which the expenses of future periods will be reflected depends on what type of asset the costs are attributed to. 1C 8.2 also has standard settings, for example, if the accountant does not indicate the type of asset, the program will automatically enter such values in the balance line under the name “Other current assets”.
1C developers customize accounting program in accordance with applicable regulations. So, account 97 is used, deferred expenses on which are reflected as subconto. In addition, they are used as analytics on account 76.
Write-off of expenses of future periods does not require the participation of an accountant, since in 1C: Accounting this happens automatically using a regulated operation.
revenue of the future periods
Income and deferred expenses, asset or liability? There are such income of the organization, which it received in the reporting period, but require its reflection only in the future. Among such income, the expected receipt of funds can be noted, and they are reflected on the loan of the corresponding account. Deferred expenses 1C are recorded and recorded similarly to income.
Types of income:
- Rent.
- Payment for utilities.
- Use of communications.
- Gratuitously received assets recorded at market value.
- Amounts shortages.
Analytical accounting on account 98 is organized according to the following sub-accounts:
- Type of income.
- Each individual gratuitous receipt of values.
- Type of shortage.
- Every single missing value.
Simplified Accounting Costs
How are expenses and deferred incomes reflected when applying STS? The accountant of such an organization should reflect them in the book of accounting. A company located on such a system has the right to reduce the calculated single tax by the amount of the BPO. However, there is one subtlety: this can be done only if the company has chosen as the tax base the difference between its income and expenses.
