Account 83 - Additional paid-in capital

Account 83 is used to record data on the amount of additional paid-in capital and its changes during the period. These are amounts that are part of the organization’s sources, but cannot be accounted for in any other account. In the article we learn about the concept of additional capital, how it is formed and what are the rules for its accounting.

What is surplus capital?

According to RAS, additional paid-in capital is part of the organization’s sources, which are the sums of the increase in the value of assets for reasons independent of its activities. Some positive differences that are not directly related to entrepreneurial activity are written off as part of additional paid-in capital. It is customary to include the amounts:

• revaluation of fixed assets and other property;
• share premium;
• exchange rate differences;
• other income of a similar type.

Additional paid-in capital is not divided into shares, such as authorized capital. Its amount is considered the common property of all investors and the enterprise as a whole. Information about him is accumulated on the account. 83, which is part of the group of capital accounts.

Application of account 83

Use a particular accounting account should be in accordance with its purpose. Erroneous reflection of information can entail serious consequences. Account 83 “Additional paid-in capital” is designated for the bookkeeping of the amounts that are added to or deducted from the amount of additional paid-in capital. Due to the fact that capital is the source of the enterprise, and data about it is displayed in the liabilities side of the balance sheet, the account has a passive structure.

It is recommended that the following amounts be reflected in the credit of account 83:

• an increase in the value of property that was identified as a result of its revaluation;
• the difference between the actual value of the shares and their par value, formed as a result of their sale at a cost exceeding the nominal, in correspondence with the account. 75;
• differences in foreign exchange transactions arising from settlements with the founders of the organization in correspondence with the account. 75;
• the amount of the additional contribution to the property by the shareholder;
• the value of the property received, if the receipt is associated with targeted financing;
• the amount of retained earnings deducted as additional paid-in capital (with account 84).

Debit Operations

Usually, the amounts credited to account 83 are not debited. But there are a number of cases in which debit entries are made:

• repayment of the reduced value of property as a result of its revaluation;
• the allocation of additional paid-in capital to increase the authorized capital;
• distribution between the shareholders (founders) of the amounts accumulated in the account;
• directing funds to pay for uncovered loss.

The implementation of such operations is a rare phenomenon, but it still happens. Possible correspondence of accounts confirms the statement that additional paid-in capital is part of the enterprise’s equity. Its amount can cover some types of losses that arise for reasons independent of the organization’s activities, or combine it with the authorized capital.

Analytical accounting

Analytical accounting for the additional capital account is based on the use of accumulated funds and the nature of their income. Magazine warrant No. 12 contains detailed consolidated information on its credit turnover, with an indication of offsetting accounts. The instructions for the use of accounts do not contain data on which sub-accounts should be opened in the context of 83 accounts. This item should be decided by the accounting policies of a single organization.

In a general manner, sub-accounts such as:

• 83/1 - “Increase in property value”;
• 83/2 - “Share premium”;
• 83/3 - “Differences in the exchange rate”.

This is not a complete list, but it describes common situations that affect account 83 in accounting. It should be remembered that the analytical records are kept so that then, based on them, data are entered into the annual reporting form No. 3.

Asset revaluation results

One of the first situations leading to the relationship of a loan or debit of account 83 with accounts of non-current assets is the result of a revaluation of the property of the enterprise. Recall that this category of assets includes fixed assets, intangible assets, and construction in progress. Revaluation of property is carried out at most once a year by recalculating its residual value. Data is reflected in the balance sheet at the beginning of the annual reporting period.

It should be borne in mind that the revaluation amount is always debited to the credit of 83 accounts. But the markdowns can be indicated in debit 83 only if the opposite was the case before. In other words, only the negative difference in the revaluation of assets that was previously allocated to 83 accounts in the form of a positive difference is repaid from the sums of additional capital. In another case, the markdown is reflected in the portion of the uncovered loss.

Posting revaluation results

The process of valuing non-current assets, which directly affects the amount of additional paid-in capital, is reflected in the following types of transactions:

1. Dr “OS” (“NMA”) CT “Additional paid-in capital” - as a result of revaluation, the value of the asset increased, revaluation is reflected in additional paid-in capital.
2. Dt “Additional paid-in capital” CT “Depreciation of fixed assets” (“Depreciation of intangible assets”) - is executed simultaneously with the first account assignment. It characterizes the amount of the adjustment for depreciation accrued for revalued property.
3. Dt “Additional paid-in capital” Kt “OS” (“intangible assets”) - the amounts are written off to cover the markdown of the asset (not more than the amount of the previous revaluation made).
4. Dt "Depreciation of fixed assets" ("Depreciation of intangible assets") Ct "Additional capital" - adjusted depreciation in the reduction of property (at the same time posting No. 3).

Consider a small example: as a result of revaluation of non-current assets, an object worth 150 thousand rubles was allocated, subject to revaluation with an index of 1.2. The depreciation amount is 95 thousand rubles. The accountant will make the following postings:

1. Dr "OS" CT "Additional capital" in the amount of 30 thousand rubles (150,000 × (1.2 - 1)).
2. Dr "Additional capital" CT "Depreciation of fixed assets" in the amount of 19 thousand rubles (95,000 × (1.2 - 1)).

A similar situation is observed during the revaluation of intangible assets. Only 04 is used instead of account 01, and 05 instead of 02. If, after a year, after repeating the procedure, it turns out that the property that was revalued in the example will lose its value, then it can be discounted using account 83, but within the calculated amount (30 thousand R.).

Score 83: correspondence from bills 75 and 84.

Amounts that were previously attributed to the increase in additional paid-in capital (on credit 83) are mandatory deducted from the account when the property is disposed of as retained earnings. The transaction is as follows: Dt “Additional paid-in capital” "Retained earnings". It is carried out during the liquidation or donation of assets that were previously accounted for in the number of additional capital of the enterprise. The written-off amounts in the number of retained earnings are recognized as accounting profit and may be paid to the founders in the form of dividends.

You can go another way, immediately distributing additional capital between shareholders, bypassing the stage of writing off it to retained earnings. This action is permitted by the instructions for applying the standard chart of accounts. The transaction is compiled: Dt “Additional paid-in capital” Kt “Settlements with founders”.

Income from the sale of shares at an increased cost

Such an operation is possible only in joint-stock companies and in the event that a profitable sale of their shares is performed. The amount in excess of the nominal value of the shares shall be credited to subaccount 83.2 by posting Dt “Settlements with founders” Kt “Issuing income”.In this case, the debit of account 75 indicates nominal cost, and in the loan - actually paid. As a result, a credit balance is formed, which is completely “extinguished” by the posting with account 83.

The accounting of account 83 will contain the following entries in recognition of share premium:

• Dt “Settlements with founders” Kt “Authorized capital” - the nominal value of shares is taken into account.
• Dt "Settlement account" (property or cash accounts) Ct "Settlements with founders" - paid shares.
• Dt “Settlements with the founders” Kt “Share premium” - share premium is recognized as share premium.

Exchange difference in settlements with founders

According to PBU (Clause 14), exchange differences arising on settlements with shareholders or founders on contributions to the authorized capital are credited to account 83 as an increase or decrease in additional paid-in capital. The situation assumes that a contribution is made in the form of property, the value of which is determined in currency.

By posting Dt “Settlements with founders” Kt “Authorized capital”, the debt of the founder on a deposit in rubles is recorded. With the actual receipt of funds, the transaction Dt “Currency account” CT “Settlements with founders” in rubles. Based on the difference between the two amounts, the exchange rate difference is determined, which is then debited to account 83: account 75 in debit, and 83 in credit - with a positive difference, and vice versa otherwise.

Additional paid-in capital is an integral part of the enterprise’s own capital, which is formed for reasons beyond its control. As a rule, these are differences arising as a result of revaluation of property, sale of shares, settlements with founders to pay the authorized capital in foreign currency. Changes in the amount of additional paid-in capital are annually indicated in financial statements (form 3), which requires special care when maintaining the account on account 83.