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Introduction

Today it is well known that capital, especially foreign require transparency of the financial information on the company's activities and it’s reporting to investors. As long as the foreign investor will not be able to follow up and see through the financial statements how to use the available capital, the country will remain a high risk area and, consequently, will lose to other countries in attracting financial resources from international markets. Improvement of investment attractiveness, expanding the scope and forms of participation of foreign and domestic capital in the activities of business entities, access to international financial markets require the development and improvement of adequate methodological support on the part of accounting and thus closer to the international financial reporting standards. A necessary condition for the development of the economy is high investment activity. It is achieved by increasing the realized investment resources and their most effective use in the priority sectors of material production and social sphere. This is the investment form the production potential for new scientific and technical basis and determines the competitive position of countries on world markets.

1. Theme urgency

A necessary condition for the development of the economy is high investment activity. It is achieved by increasing the realized investment resources and their most effective use in the priority sectors of material production and social sphere. This is the investment form the production potential for new scientific and technical basis and determines the competitive position of countries on world markets. Therefore there is a need to improve accounting methodology and financial analysis of a firm's investments in the transition to international financial reporting standards (IFRS).

The problems of understanding the nature, classification, measurement and accounting of financial investments is dedicated to the research of many scientists. Their work has included the analysis of primary, synthetic, analytical accounting of financial investments and problems associated with their account and suggest measures that could improve the situation. However, they have not managed to solve this problem, because many contradictions are not only preserved but intensified. For example, given the long-term financial investment method in equity on adjustments of the current financial investment is not achieved balancing decisions. This requires further improvement of this indicator.

2. The purpose and research tasks, planned results

Research object: organization of investment activity at the enterprise..

Research subject: theoretical, methodological and practical issues of accounting on operations with financial investments.

The goal of this work is to identify inconsistencies in the accounting of financial investments and the development of specific recommendations for addressing them.

Achieving this goal has necessitated the followingtasks:

  1. to summarize the theoretical aspects of accounting for financial investments;
  2. to study the conceptual basis and the environment of the standardization of accounting for financial investments;
  3. to identify problematic aspects of accounting policies formation of the tax base of financial investments;
  4. to reveal the organization of accounting of financial investments in the conditions of the enterprise;
  5. to consider the theoretical and normative aspects of the organization of audit of financial investments;
  6. to develop a plan and program of audit of financial investments at the enterprise;
  7. to develop recommendations for improving the organizational and methodological principles of accounting and auditing of financial investment.

The survey allowed the domestic and foreign scholars, as well as by the state Laws, National standards, the Provisions of accounting for accounting of financial investments and International financial reporting standards.

The results obtained in the course of performing this master thesis, can be used in the development of accounting standards to eliminate and prevent in the future a number of contradictions and shortcomings which may lead to distortion of the financial statements of the company.

3. Methodological basis of accounting for financial investments

Among the main documents regulating the accounting at enterprises are the DNR Law "Law on the tax system" [2], national regulations (standards) of accounting: UNAS-1 "General requirements to financial reporting"[1], etc. So to account for financial investments provides accounting standards-12 "Financial investments" [3]. Investment activities except for accounting standards is governed by many other laws which define and explain the basic aspects that you need to know when solving problems arising in the course of the accounting of investment activities.

In accounting, depending on the period for which involves financial investments are classified into long-term (longer than 12 months.) and short-term (less than 12 months.) financial investments. While the financial investment in certain securities have no set maturity or maturity, for example stocks, which are inherently indefinite [3].

According to the requirements of UAS 12 long-term financial investments granting the right of ownership, as current financial investments are initially valued and recorded at cost, which comprises purchase price, Commission remunerations, duty, taxes, fees, mandatory payments and other expenses directly attributable to the acquisition of financial investments. But further, in contrast to current financial investments, accounting for long-term financial investments depends on the degree of influence and control of the investor over the operating and financial policies of the company, which invested the capital [3].

In turn, the influence and control depend on the number of shares with voting rights owned by the company-the investor in relation to the total number of issued shares of the company-object of investment, i.e. the share capital.

In the case of recovery of current financial investments by exchanging them for securities of its own issue, their cost is determined by the fair value of the transferred securities. If the acquisition of financial investments is carried out by exchange of other assets, its cost is measured at the fair value of these assets According to the requirements of UAS 12 current financial investments should be shown in the balance sheet at their fair value. The evaluation and accounting of financial investments is carried out for each financial investment separately [4]. The amount of the increase or decrease of the carrying value of financial investments at the balance sheet date is recognized respectively, in other income or other expenses normal activities.

Investments in bonds are considered in UAS 12 separately because required a specific approach to their valuation at the balance sheet date. The investor buys bonds, usually with the objective of earning profits on temporarily invested funds and ensure less risky compared to shares, the receipt of income in the form of interest [3]. Long-term bonds provide for periodic payment of interest in accordance with the nominal interest rate and the reimbursement of owners of nominal value at maturity. At the time of purchase is essential to the market value of the bonds can differ from nominal (either higher or lower), then a bond is purchased with a premium or discount. For evaluation of debt investment (bonds) at the balance sheet date is provided a method of evaluating the amortized cost of financial investments (AFI).

The amount of depreciation of financial investments is determined as the difference between income at a fixed rate and the product of the effective interest rate (ESB) and cost of investments at beginning of period [5].

ESB can be determined by the formula:

Еffective interest rate


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RSB - the amount of interest on the bonds;

RSD, RSP - the discount and prize divided by the number of periods for the retention of investments;

RVO - cost of investment;

NVO - the amount of investment maturity.

The amortization amount of discount or premium is accrued simultaneously with the accrual of interest (income from financial investments), subject to, and is included in other financial income or other financial expenses with a simultaneous increase or decrease in the carrying value of financial investments, respectively [5].

Thus, the investor is required annually until maturity of the bonds to amortize the amount of the premium or discount that will reduce the cost (in the case of the amortization of premiums) or increase (in the case of discount amortization). So the cost of the bonds is gradually brought to the nominal value and at maturity will reach corresponding value. [5].

International practice provides for two methods of depreciation — straight-line method and effective interest rates. In Ukraine, the advantage goes to the latter because it is considered more accurate and methodologically correct.

Conclusion

The concept of financial investment is multi-faceted, because they are in economic relationships that are expressed by it, is very complicated, plus they are constantly changing and evolving, which finds its expression in new forms of existence and specifics of accounting of financial investments. The world has witnessed a trend of decline and the rise of investment activity is influenced by various economic factors. A variety of approaches to the classification of financial investments, the lack of clear regulations specified position in the regulatory field of regulation of investment activities has led research to the systematization of available options and their analysis. Due to the specificity of the object of accounting of transactions with securities are little known in modern economic literature. Therefore, there is a pretty big risk that the accountant properly reflects the accounting for such operations, and prepares the wrong statements. The problem of enhanced control of financial investment requires consideration of the main factors that have a direct impact on the reality and reliability of the inventory results and reflect them in the accounting. As a result of the study showed that their composition include: the state of the investment object; and the form of securities; the method of evaluation and accounting of financial investments.

From the above it follows that due to the fact that today there are significant differences between national and international requirements for the evaluation of financial investments there is an objective need for rapprochement of the regulatory framework of accounting to international accounting legislation. All this will give the opportunity to companies to increase the confidence of foreign investors by increasing the transparency and reliability of financial statements. As the contradictions that have arisen when accounting for financial investments according to the method of participation in the capital in accounting, adversely affect the financial activities of the company, and entail the display of double-counting of income in accounting. And accounting in the aisles of outdated scientific literature and underdeveloped economy, causes difficult for the development of the exchange market and the stock. This situation has a tendency to become more complicated every year. This requires further improvement in this direction.

References

  1. Національне положення (стандарт) бухгалтерського обліку 1 «Загальні вимоги до фінансової звітності» зі змінами внесеними наказами Мінфіну від 27.06.2013 р. №627 від 08.02.2014 р. №48 [Електронний ресурс] // Режим доступу:http://buhgalter911.com/Res/NPSBO/NPSBO1.aspx
  2. Закон о налоговой системе № 99-IHC от 25.12.2015, действующая редакция по состоянию на 19.08.2017 [Электронный ресурс] // Режим доступа:http://dnrsovet.su/zakon-o-nalogovoj-sisteme-donetskoj-narodnoj-respubliki/
  3. Положення (стандарт) бухгалтерського обліку 12 «Фінансові інвестиції», затв. наказом Міністерства фінансів України №91 від 26.04.00 р. з ізм. від 27.06.13 р. [Електронний ресурс] // Режим доступу:http://zakon2.rada.gov.ua/laws/show/z0284-00
  4. Онищенко В. Актуальные вопросы применения метода участия в капитале в соответствии с П(С)БУ 12 «Финансовые инвестиции» / В.Онищенко // Бухгалтерский учет и аудит. – 2006. - №11. – С. 15-22.5.
  5. International Accounting Standard 39 Financial Instruments: Recognition and Measurement EC staff consolidated version as of 18 February 2011 [Електронний ресурс] // Режим доступу:http://ec.europa.eu/internal_market/accounting/docs/consolidated/ias39_en.pdf