In 2011, accounting legislation was changed. The adjustments, in particular, affected the reflection of expenses that arose in one period, but related to several. Such expenses are called RBP. Next, we will consider how deferred expenses are taken into account and what applies to them.
Normative base
The new form of financial reporting was approved by Order of the Ministry of Finance 66n. the line recording deferred expenses (inventories) was removed from it. After this, the next Order 186n made adjustments to clause 65 of the PBU. In the new edition, this document contains provisions on how future expenses are recorded and what currently applies to them. Thus, expenses that are incurred by the organization in the reporting cycle, but related to the following, are included in the balance sheet according to the conditions for recognizing assets. Write-off of deferred expenses is carried out in accordance with the general rules for the disposal of funds of this type.
Accounting concept
In accordance with clause 8.3 of the KBU, an asset in a domestic market economy is recognized as such if it is likely that profit will be received from this asset in the future. Moreover, its value can be measured with a sufficient level of reliability. Clause 7.2 of the Concept states that assets are economic assets that have come under the control of the enterprise as a result of its implementation entrepreneurial activity, and which may bring him profit in future periods. The upcoming economic benefits include the potential of assets to indirectly or directly contribute to the flow of cash. It is generally accepted that funds can bring profit in the future if they:
Classification
In accordance with the new edition of paragraph 65 of the PBU, certain types of deferred expenses must be attributed to certain assets. In some cases, classification is difficult. However, if it is established that the expense complies with the general definition of an asset, then it can be considered other non-current or other current assets in accordance with the write-off period. If it is assumed that the RBP will be disposed of as expenses during the year, then it is shown as part of current assets. If deferred expenses are written off over a period exceeding 12 months, then they are included in non-current assets.
Difficulties in implementing the concept
The above situation has caused certain difficulties for accountants. For example, the question arose about how to make the distribution if insurance payments are included in deferred expenses. The fact is that they cannot be included in any asset. To clarify the situation, the Ministry of Finance issued a letter. In accordance with it, when determining the expenses of future periods (which applies to them in the current cycle and concerns the upcoming ones), if they meet the conditions under which this or that asset is recognized, then they are recorded in the balance sheet as part of it and are disposed of in the manner adopted for this category. In other cases, such costs are shown as BPR. Their write-off is carried out through a reasonable distribution between financial periods according to the rules established in the organization (in proportion to the number of products, for example), during the period to which they relate.
Experts' opinion
Considering the above, we can assume that the procedure for recognizing and subsequently writing off expenses for future periods remains the same. The changes affected only the rules for recording RBP in the balance sheet. According to experts, these adjustments specifically indicate how deferred expenses are shown and what applies to them. In particular, they should include only those costs that actually exist. Their description is contained in PBU 10/99 (in paragraphs 2 and 3). On the other hand, they must relate to future financial periods. In other words, there is and can be established a cycle during which realized costs will bring economic profit to the enterprise.
Deferred expenses: account
When working with it, it is necessary to clearly determine whether the asset has its own disposal rules, or whether these are costs that are recognized as one-time expenses. When carrying out operations, you must adhere to the established algorithm. First of all, you should check whether the current accounting standards provide for a method of uniform distribution of the analyzed costs. If the answer to this question is positive, they remain on the account. 97. Deferred expenses in this case can continue to be distributed. If this method is not provided, it is necessary to determine whether income from these funds is possible in the upcoming financial cycles. The possibility of transferring such expenses to the future is provided for in PBU 10/99 (in paragraphs 9 and 19). If the answer is positive, they should also be distributed.
Other costs
They are subject to either write-off or inclusion in advances issued. In the first case, you should check compliance with all conditions for recognition of costs, which are established in PBU 10/99 (under paragraph 16). In particular, you need to determine that:
- The expense can be realized according to a specific agreement, the requirement of a law or other regulatory act, or business custom.
- The amount of costs can be set.
- There is confidence that when carrying out a specific operation there will be a decrease in the economic profit of the enterprise. In other words, the entity has transferred the asset or there is no uncertainty about its transfer.
If at least one of the specified conditions is not met, then the advance payment issued (accounts receivable) is recorded in accounting. This provision also applies to payment for work (services) when at the time of transfer of funds it is not completed (not provided). In this case, the contract can be terminated at any time with a requirement for a full or partial refund. The remaining costs are included in losses.
Cost categories by item
According to the new rules, only some deferred expenses are distributed over a certain period. The invoice may contain:
Errors
Often on the account. 97 fix:
- Costs for deferred expenses are reflected in the account. 08 and are shown under the item on which other non-current assets are recorded. After completion of the work, they are included in the account. 04 and are shown under the article “Results of development and research”.
- Costs of subscription to periodicals. These costs are included in the advance payment. The fact is that the company can at any time refuse to receive the following numbers and request a refund of the amount paid.
- Lease payments that are transferred at a time for the upcoming terms. These should also be included in accounts receivable since the services have not yet been rendered.
To eliminate inaccuracies, an inventory of deferred expenses is necessary.
Inclusion in losses
According to the new rules, current costs include:
1C: deferred expenses
At the request of users to the account. 76 the BPO Directory was linked. This is done for those cases when there is a need to distribute insurance evenly, but the user does not consider that it is included in future expenses. Postings in this case are carried out using an account. 76:
- “Contributions (payments) for voluntary insurance in the event of damage to health or death” (76.01.2).
- Deductions for other categories of insurance (76.01.9).
Innovation
One of the innovations related to the changes in legislation described above is a requisite indicating the type of asset. Its meaning is to establish the line of the balance sheet in which certain expenses of future periods will be included. Postings must be made simultaneously with filling out this detail for all RBPs that have a debit balance at the end of the financial cycle. If this information is missing, then the costs are included in the remaining current assets in the balance sheet (line 1260). This detail is not important for writing off and accounting for expenses. The amendments to the law also did not affect the procedure for the recognition and disposal of RBP - it is the same in the program. This means that if there is a need to somehow redefine the types of assets for established expenses of future periods before generating financial statements, the values of the corresponding details can be changed without reposting either the receipt documents or the disposal transactions of the specified costs.
Decoding amounts by balance sheet lines
This can be done using the corresponding button. It is located on the top command line of the report and is called “Decrypt”. During the formation and automatic filling of the balance, the program allows you to determine indicators. To check the correctness of filling out the type of asset in the BPR directory and analyze the way in which expenses will be displayed on the balance sheet, you can use the standard accounting report method “Subconto Analysis”. In this case, you need to configure it first. This is done like this:
- The type of subconto should be used to establish expenses for future periods.
- The first group indicates the BPM, the type of asset.
- In the second group, the actual expenses for future periods are established.
You can configure other report parameters as needed. The result will be a picture that fully reflects the distribution of expenses for future periods between balance sheet assets. In this case, a decoding will be given for each RBP. In a similar way, you can set up the balance sheet for the account. 97.
Independent determination of the accounting procedure
This operation is allowed for expenses that relate to future periods and are not directly indicated in the current PBU as RBP. When independently determining the accounting procedure, the following options are possible:
- Fixing on “costly” items and a one-time write-off in the future to accounting items (p. 90) or other costs and income (account 91).
- Reflection on account 97 (RBP) with distribution to “costs” upon the onset of the period in which they are included.
One more option is allowed. It consists of reflecting expenses in special subaccounts of expenses and subsequent inclusion in accounts that take into account profit from sales (account 90) or other expenses and income. In this case, the requirement of PBU 10/99 (clause 19) will be observed. This requirement provides for the reflection of expenses on the statement of losses and profits through their reasonable distribution across financial periods in the case where the costs determine the receipt of income over several cycles, when the connection between costs and profits cannot be clearly determined or only an indirect establishment is possible. It should be noted that the last two options may be the most convenient for the enterprise. In these cases, it is possible to bring the tax and accounting balances as close as possible. The first provides not for a one-time, but a gradual write-off of expenses that relate to upcoming periods. The specific definition of a particular method of accounting and disposal is carried out within the framework of the financial policy of the organization. The main criterion for the gradual, rather than one-time distribution of certain costs is the receipt of profit, which is associated with them not in the present, but in future cycles.
VAT
As stated above, the amount of expenses for future periods is fixed in the account. 97. "Input" VAT" relating to them is deductible in accordance with the general procedure. This is done after they are shown in accounting, provided that these costs are necessary for the implementation of activities that are taxable, and if there is an invoice from the supplier -texture.
Costs incurred by an organization in a reporting period may relate to both this reporting period and the next or subsequent reporting periods. In accounting, such expenses “for the future” are called “deferred expenses” (clause 65 of Order of the Ministry of Finance dated July 29, 1998 No. 34n). The chart of accounts and the Instructions for its use for accounting for deferred expenses is intended for the active synthetic account 97 “Deferred expenses” (). We will tell you how accounting is done on account 97 in our consultation.
What is included in account 97?
Current accounting regulations provide for the reflection of two types of costs in deferred expenses (FPR):
- expenses incurred in connection with upcoming work under construction contracts (clause 16 of PBU 2/2008). For example, this may include the cost of materials that were transferred for construction work but have not yet been used, or rent for future periods that were transferred in the reporting period;
- payments for the granted right to use the results of intellectual activity or means of individualization. In this case, these payments must be made in the form of a fixed one-time payment (clause 39 of PBU 14/2007). Here you can list the non-exclusive right to use a computer program, invention, brand name, etc. (Article 1225 of the Civil Code of the Russian Federation).
If an organization has incurred other expenses, the accounting procedure for which is not regulated, and the organization believes that such expenses relate to several reporting periods, they can also be taken into account as RBP and distributed between the reporting periods to which the costs relate, in the manner established by the organization (evenly , proportional to the volume of production, etc.) (Letter of the Ministry of Finance dated January 12, 2012 No. 07-02-06/5). For example, these could be the costs of product certification.
Accounting on account 97
Accounting account 97 is an active account. The occurrence of RBP is reflected in the debit of this account, and their write-off is reflected in the credit.
Depending on the type of costs recognized as deferred expenses, the debit entries in account 97 may be as follows (Order of the Ministry of Finance dated October 31, 2000 No. 94n):
Debit of account 97 - Credit of accounts 10 “Materials”, 60 “Settlements with suppliers and contractors”, 76 “Settlements with various debtors and creditors”, etc.
Accordingly, the write-off of RBP, i.e. their recognition as expenses of current periods, can be reflected as follows:
Debit of accounts 20 “Main production”, 26 “General business expenses”, 44 “Sales expenses”, etc. - Credit of account 97
In the balance sheet, RBP, depending on their nature, can be reflected as part of non-current assets on line 1190 “Other non-current assets” or as part of current assets on line 1210 “Inventories”. Long-term RBP will be reflected when the period of their write-off exceeds 12 months after the reporting date (Letter of the Ministry of Finance dated January 27, 2012 No. 07-02-18/01). If the value of the RBP is significant in the financial statements, they are presented separately (clause 11 of PBU 4/99, Appendix to the Letter of the Ministry of Finance dated January 29, 2014 No. 07-04-18/01).
It may be noted that in cases where the provisions of the Tax Code of the Russian Federation require the gradual recognition of any costs during reporting periods, and the accounting rules do not prohibit taking into account these costs as part of the RBP, in order to bring accounting and tax accounting closer together, such costs can be reflected in account 97.
In this article we will consider the question of how to take into account deferred expenses in 1C 8.3 “Enterprise Accounting 3.0”. RBPs in the 1C Accounting 8.2 program are reflected in the same way, so you can use this instruction for older versions of 1C.
Deferred expenses (FPR) are expenses that we took into account in the current period, but in this regard we plan to receive income in the future. In other words, you spent money today in order to receive income tomorrow.
Such expenses do not necessarily have a direct impact on profits. For example, we bought a domain (domain name) with the goal of deploying a website for our company. The purpose of the site is to attract customers who will generate income for us. Since the site must first be created and then “promoted,” it will begin to generate profit only after some time. The costs of purchasing a domain are deferred expenses.
Write-off of deferred expenses is carried out in three ways:
- monthly, within a certain date range;
- daily (meaning calendar days), within a certain date range;
- in an arbitrary (special) way. As a rule, this means a one-time write-off.
These settings are specified in the reference book of the same name “Future Expenses”.
Let’s start our acquaintance with taking into account future expenses with this reference book and filling it out.
Let's go to the directory. Let's go to the "Directories" menu, then to the "Deferred expenses" submenu. In the list of directory elements, click the “Create” button.
The setup form will open. Let's fill in the following details of Form 1C:
- Name. Let's say we purchased a domain in the “ru” zone. So we’ll enter: “Domain in the “ru” zone.”
- Specify the target type as “Other”.
- Type of asset in the balance sheet: “Other current inventories.”
- Field "Amount": is indicated for informational purposes only. The write-off amount is calculated according to the algorithm indicated below and based on the remaining amount to be written off according to accounting data. We will indicate here the domain purchase amount – 2600 rubles. in a year.
- In the write-off parameters, we will indicate the frequency. For example, “By month”.
- Let the cost account be 26.
- - "Other expenses".
- All that remains is to indicate the period for which the expenses should be completely written off. Let's say we plan to launch and make our website popular in 4 months. We will indicate the start date and end date of the write-off, respectively.
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Now you can click the “Record and close” button and proceed to registering the accounting of future expenses:
Accrual of deferred expenses in 1C 8.3
We complete the registration using the document “” on the “Services” tab.
We fill out the header of the document as usual upon admission (described more than once). There shouldn't be any questions here.
Let's move on to filling out the tabular part. Let's add a new line, select an item, indicate the quantity and amount.
The column “Accounts” is of interest. In it you need to delete what the program offers by default and click the account selection button. In the window that opens, indicate:
- Accounting cost account: 97.21.
- We will indicate the first subaccount of our account in the directory “Future Expenses”, namely “Domain in the zone “ru””.
- For completeness of analytical accounting, we will also indicate the division.
Tax accounting is set up in the same way.
Here is an example of setting up accounting accounts:
Example of a completed document:
Let's look at the accounting entries that the 1C program generated for us:
We make sure that the expenses are credited to account 97.21 and will be recorded there until they are completely written off. You can always view the balance to be written off by creating a balance sheet for the account.
Write-off of deferred expenses in transactions when closing the month
In the article we will tell you which transactions should be reflected in the accounting account “Deferred Expenses”, and we will also define typical accounting entries with account 97.
What will we talk about
If in a company’s activities there are costs incurred in the reporting period, but affect several future periods, such costs in accounting are called deferred expenses, account 97 for drawing up entries. Such expenses must meet special conditions:
- costs can be recognized in accounting as an asset;
- its effect affects several reporting periods.
In accordance with the current provisions of PBU 2/2008, two key areas of spending have been established that can be recognized by an organization as deferred expenses (FPR):
- Costs incurred in connection with planned (upcoming) work under construction contracts. For example, a company purchased construction materials that will be used in the future to carry out construction work. That is, the cost of building materials can be attributed to RBP.
- Payments made by an economic entity for the provision of rights to use the results of intellectual activity or objects and means of individualization. For example, a trademark, company name, non-exclusive rights to software.
If in the economic life of an economic entity there are expenses, the recognition procedure for which is not determined by current legislation, then such expenses can be recognized as part of the RBP. However, such a decision, as well as the procedure for recognition and write-off (in equal shares in proportion to production volumes), must be regulated in the accounting policy. For example, expenses for certification.
Some experts believe that account 97 “Future expenses” was canceled in 2017. No, there are no changes that would exclude this accounting account from Order of the Ministry of Finance No. 94n. Therefore, accounting for expenses that affect several reporting periods must be kept in the prescribed manner.
Typical transactions: account 97 in accounting
We will determine how to reflect future expenses, which account to use and which accounting accounts to correspond with.
First of all, we note that the occurrence of RBP should be reflected in the debit of accounting account 97, but their write-off is already on credit. Also, accounting for special account 97 should be kept by type of costs incurred.
To detail accounting, it is possible to open sub-accounts:
- 97-1 - to reflect the BPM for personnel remuneration;
- 97-2 - for accounting for transactions on voluntary insurance of employees;
- subaccount 97-21 - for other expenses.
Accounting entries:
Example
Vesna LLC purchased non-exclusive rights to the software in the amount of 600,000 rubles. The software is planned to be used for 5 years. The accountant made the following entries:
Account 97: where is reflected in the balance sheet and reporting
In accordance with Letter of the Ministry of Finance dated 06.06.2013 No. 07-01-06/21876, BP expenses are taken into account in reporting only on debit balances that remain at the end of the reporting period. 97 account in the balance sheet is reflected in lines in accordance with the types of costs incurred. That is, if the BPM is adopted for inventories, then such expenses should be reflected in line 1210 “Inventories”. If the expenses were related to intangible assets, then the amount of the RPB should be taken into account in line 1110 of the balance sheet, for fixed assets - line 1150.
Deferred expenses include preparatory costs associated with income that will or may be received in the future, for example, for seasonal work. Methods for writing off deferred costs should be sought in several accounting regulations. For example, payments for the right to use the results of intellectual activity carried out on the basis of a license agreement are reflected as deferred expenses and written off during the term of this agreement (clause 39 of PBU 14/2007). As a rule, write-off occurs evenly.
Example
In January of the reporting year, Aktiv CJSC acquired the right to use the computer program. The license agreement states that the software must be used for three years. The cost of paying for the right to use the program amounted to 18,000 rubles. (one-time payment).
When paying, the Aktiva accountant made the following entry:
Debit 60 Credit 51
18,000 rub. – payment has been made under the license agreement;
Debit 97 Credit 60
– 18,000 rub. – a fixed one-time payment for using the program is included in deferred expenses;
Debit 012
– 18,000 rub. – the right to use an intangible asset is reflected in off-balance sheet accounting.
Every month during the validity of the agreement for the use of the program, the Aktiva accountant must make the following entries:
Debit 20 (26, 44, …) Credit 97
– 500 rub. (RUB 18,000: 3 years: 12 months) – part of the fixed payment has been written off.
For 12 months of the reporting year, 6,000 rubles will be written off. (500 rubles * 12 months). In the balance sheet for the reporting year, line 1210 must reflect the unwritten off portion of expenses in the amount of 12,000 rubles. (18,000 – 6000).
Expenses under a construction contract incurred in connection with upcoming work are also taken into account as deferred costs (clause 16 of PBU 2/2008).
To do this, two conditions must be met:
- costs can be reliably determined;
- in the reporting period in which the costs arose, it is probable that the contract will be concluded.
If these conditions are not met, expenses are recognized in the period of their payment (clause 15 of PBU 2/2008). And costs incurred for upcoming work under the contract are not included in the amount of costs incurred as of the reporting date (clause 21 of PBU 2/2008).
Example
CJSC Stroitel is preparing for a tender for the construction of the facility. The tender is scheduled for November of the reporting year.
The development of a feasibility study is carried out by a design organization. The feasibility study was received in November and its cost is 708,000 rubles, including VAT - 108,000 rubles. The construction contract was concluded in December of the reporting year. The work was handed over to the customer in April of the year following the reporting year.
The costs of the feasibility study can be included in the costs of the contract, since at the time of their implementation there is a probability that the tender will be won and the contract signed.
These costs are incurred in connection with upcoming work, so their amount must be attributed to deferred expenses. They are written off at a time: in accounting - after completion of work under the contract (clause 21 of PBU 2/2008), and in tax accounting - on the date of the feasibility study acceptance certificate.
In November, Stroitel’s accountant must make the following entries:
Debit 97 Credit 60
– 600,000 rub. (708,000 – 108,000) – the cost of work on the development of technical and economic documentation is charged to deferred expenses;
Debit 19 Credit 60
– 108,000 rub. – reflected “input” VAT;
Debit 68 subaccount “VAT calculations” Credit 19
– 108,000 rub. – based on the invoice of the design organization, “input” VAT is accepted for deduction;
Debit 60 Credit 51
– 708,000 rub. – the cost of design work has been paid;
Debit 68 “Calculations for income tax” Credit 77
– 120,000 rub. (RUB 600,000 * 20%) – deferred tax liability is reflected.
At the end of the year, the amount of 600,000 rubles will be reflected in the balance sheet on line 1210.
In April next year, the accountant will make the following entries:
Debit 20 Credit 97
– 600,000 rub. – the cost of the feasibility study is included in the costs under the contract;
Debit 77 Credit 68 “Calculations for income tax”
– 120,000 rub. – the deferred tax liability is repaid.
In addition, deferred expenses are mentioned in PBU 15/2008. According to this standard, the following can be taken into account as deferred expenses:
- additional costs for loans and credits (clause 8 of PBU 15/2008);
- accrued interest on the bill amount (clause 15 of PBU 15/2008);
- accrued interest or discount on the bond (clause 16 of PBU 15/2008).
Finally, there is mention of deferred expenses in two accounting guidelines.
Thus, paragraph 94 of the “manual” for accounting for inventories (Order of the Ministry of Finance of the Russian Federation dated December 28, 2001 No. 119n) states that the cost of materials released for production can be attributed to deferred expenses in the following cases:
- carrying out preparatory work in seasonal industries;
- mining preparation works;
- start-up costs (development of new enterprises, production facilities, workshops and units);
- preparation and development of new industries and new technologies;
- land reclamation.
And in paragraph 16 of the “manual” on the preparation of financial statements when reorganizing a company (order of the Ministry of Finance of the Russian Federation dated May 20, 2003 No. 44n) it is said that deferred expenses include the costs of acquiring a license to carry out activities, the rights to which are not transferable in the order of succession.
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