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Abstract

Сontents

Introduction

The rational exploitation of fixed assets is an important factor in the cost of production, that is, the total costs of production, and enterprise taxation directly affects the final financial result of operations. At this stage, accounting of operations with fixed assets contains a number of shortcomings, which will be investigated in this work.

1. Relevance of the topic

The master's work is devoted to the actual scientific task of properly accounting for operations related to fixed assets in connection with problematic aspects of accounting and the imperfection of the legislative base. The topic is particularly relevant in regions with extractive and processing industries, where ensuring the pace of development and improving production efficiency is largely due to the condition of fixed assets, their reproduction and effective use.

2. Goal and tasks of the research

The purpose of the study is to identify problems, shortcomings and contradictions in accounting for operations with fixed assets and to develop recommendations for improving the accounting and control of indicators.

The main objectives of the study:

  1. Expand the essence of fixed assets as an object of accounting
  2. Show legislative regulation of fixed asset accounting
  3. To highlight the state of the problem in the accounting of fixed assets and make recommendations for improving accountingы

Object of study: theoretical and practical aspects of accounting for fixed assets.

Subject of study: a set of theoretical and practical issues related to the accounting of fixed assets in the enterprise.

3. Review of research and development

The study of the accounting of fixed assets involved such domestic and foreign scientists as: К. Marx [1], V.A. Gavrilenko [2], F.F. Butunets [3]. on the topic of accounting for fixed assets, many scientific articles have been written by such authors as: V.A. Gavrilenko , L.A. Leonova [4], V.V. Sopko [5] and others, on the formation of the initial cost of fixed assets, depreciation, tax accounting of fixed assets, revaluation of fixed assets.

Despite the fact that many scientists have worked on these problems, many questions remain unresolved.

The study examines the current processes of reproduction of fixed assets, identified problems and developed recommendations to address them. The issues of major repairs, which should be capitalized, and not related to the costs of the period a lump sum, as the service life of the overhaul may increase, in contrast to the current repairs. Also, the paper considers the revaluation of fixed assets. The problem of occurrence of tax differences on the basis of different accounting in accounting and tax accounting is revealed.

4. The essence of fixed assets and accounting problems

As you know, fixed assets are used in the work of all enterprises, they are part of the property of the organization and are used as a means of labor for a long time, being an integral part of the process of economic activity. From their composition and condition depends on the efficiency of any enterprise, the quality of services, works, therefore, improving the efficiency of the use of fixed assets and capacity of enterprises is Central.

Accounting is regulated by the law of the Donetsk people's Republic on accounting and financial reporting, which was adopted By the resolution of the People's Council of 27.02.2015 [6]. The order of accounting of fixed assets in the DPR is regulated by the Regulation (standard) of accounting 7 "Fixed assets" (hereinafter–P (C)BU 7), adopted on may 18, 2000 [7].

According to P (C)BU 7 the essence of fixed assets is defined primarily as a tangible asset that the enterprise contains for the purpose of use in the production or supply of goods, provision of services, leasing to other persons or for the implementation of administrative and socio–cultural functions, the expected useful life (operation) of which is more than one year (or operating cycle, if it is more than a year).

Criteria for recognition of fixed assets:

  1. Designed for use in the production or supply of goods and services for rental.
  2. The value of the asset can be reliably determined.
  3. Service life more than 1 year.

For accounting purposes, fixed assets are classified into the following groups:

In accordance with N (C)BU 7 purchased (created) fixed assets are credited to the balance sheet at cost.

Initial cost – historical (actual) cost of non-current assets in the amount of cash or fair value of other assets paid (transferred), spent for the acquisition (creation) of non-current assets. The initial cost of an item of property, plant and equipment consists of the following expenses: amounts paid to suppliers of assets and contractors for construction and installation works (without indirect taxes); registration fees, state duty, amounts of import duty; amounts of indirect taxes in connection with the acquisition (creation) of fixed assets (if they are not reimbursed to the enterprise); costs of insurance of risks of delivery of fixed assets; other costs directly related to bringing fixed assets to the state in which they are suitable for use for the planned purposes.

Already at this stage we are faced with contradictions. According to N (C)BU 7 the initial cost of object of fixed assets increases with simultaneous creation of providing on reasonable calculation the amount of the obligation which according to the legislation arises at the enterprise on dismantle, movement of this object and reduction of the parcel of land on which it is located, to the condition suitable for further use (in particular on the reclamation of the broken lands provided by the legislation), i.e. repair, dismantling and other expenses are used to increase the initial cost of fixed assets. This is not correct, because such costs do not improve the original properties of the equipment. Such costs should be used to increase the residual value.

Further, during the use of the fixed asset, it is subject to wear, change its original properties, etc.it is Required to carry out maintenance and overhaul. With regard to major repairs, paragraph 15 P (C)of BU 7 States: "the Costs incurred to maintain the facility in working order (technical inspection, supervision, maintenance, repair, etc.) and to obtain an initially determined amount of future economic benefits from its use are included in the costs."This is not quite true, because: you can not mix the current and overhaul; it is impossible to refer expenses on capital repairs directly to structure of production expenses in the current period since the equipment, during implementation with it capital repairs, does not participate in production process, and therefore the income and expenses will be formed after commissioning of equipment that will not contradict the principle of compliance of the income and expenses P(C)BU 1. The cost of capital repairs should be attributed to capital investments.

In connection with the foregoing, § 15, P(C)BU 7 requires revision.

An entity must revalue an item of property, plant and equipment if the residual value of the item differs materially from its fair value at the balance sheet date.

According to p. 17 (C) BU 7 revaluation of fixed assets – bringing the residual value of the property, plant and equipment in accordance with its fair value. The revalued initial cost and the amount of depreciation of an item of property, plant and equipment is determined by multiplying, respectively, the initial cost and the amount of depreciation of the item of property, plant and equipment by the revaluation index. The revaluation index is determined by dividing the fair value of the object that is revalued by its residual value. An exception to this rule is when the residual value of the asset object is zero. In this case, the revalued residual value is determined by adding the fair value of the object to its original (revalued) value without changing the amount of depreciation.

Depending on the direction in which the value of the residual value of the asset differs from its fair value, the company may carry out either a revaluation or a revaluation of the original value of the asset and the amount of accrued depreciation.

The amount of the revaluation of the residual value of the property, plant and equipment is included in the additional capital and the amount of the revaluation is included in the expenses.

In the case of availability (on the date of the regular (last) revaluation surplus on property, plant and equipment) over the previous mark-downs of the facility and losses from reduction of its utility over the sum of the previous gooseneck residual value of this object and benefit from the recovery of its usefulness, the amount of the regular (last) revaluation surplus, but not more than said excess is included in the income of the reporting period, and the difference (if the sum of the regular (last) revaluation surplus is greater than the specified excess) is directed to increase other additional capital.

If there is (at the date of the next (last) markdown of fixed assets) excess of the amount of the previous revaluation of the object and the benefits of restoring its usefulness over the amount of the previous markdown of the residual value of the object and the losses from reducing its utility, the amount of the next ( last) markdown, but not more than the specified excess, is directed to reduce other additional capital, and the difference (if the amount of the next (last) markdown is more than the specified excess) is included in the expenses of the reporting period.

There are a number of problems. It is not clear why the valuation should be reflected in other comprehensive income, and the valuation of fixed assets attributed to the expense, because the company does not bear real costs, such as production, which leads to an artificial overstatement of costs. All this contradicts N (C)BU–1 [8-9].

Wear and tear is a mandatory operation and an integral part of the life cycle of fixed assets in the enterprise. Depreciation should go to Finance, primarily fixed assets, technical upgrading and modernization of equipment of the enterprise, depreciation is also part of the cost of production, and therefore the cost of production, which is why it is necessary to improve the accounting of depreciation of fixed assets, search and determination of the best methods of depreciation is very important and relevant.

At the production stage, fixed assets transfer their value to finished products. This stage is accompanied by depreciation, which is considered as a separate economic category. Accumulation is expressed in the accumulation of funds received from the sale of products, representing the income (revenue) of the enterprise. The update is characterized by the use of funds for the acquisition (creation) of fixed assets. At this stage, capital investments (investments) of the enterprise are carried out.

Depreciation is transferred to cash. The depreciation cost is written off as an expense. The problem is the control of depreciation cost. The fact is that after receiving the profit, it goes to: tax costs, production costs, sales costs and the cost of reproduction of fixed assets (depreciation Fund), which means that the company is almost impossible to track the movement of these funds and direct to the reproduction of fixed assets. It is offered to do it on the off-balance account 09 "depreciation charges".

Inaccurately disclosed the operation on the disposal of fixed assets, which is reflected in paragraph 34 of P(C)BU 7 "fixed assets". It is only the General approach in the assessment of financial results from the disposal of fixed assets. The essence is revealed as follows: the liquidation of fixed assets by the decision of the enterprise occurs, as a rule, as a result of non – compliance of the object of fixed assets with the established criteria for recognition of the asset, for example-due to physical and moral aging, unsuitability for subsequent operation. In case of liquidation of fixed assets by the decision of the enterprise, or under circumstances independent of it, or the enterprise, is forced to abandon the use of these fixed assets as a result of the threat or inevitability of their replacement, destruction or liquidation, in the reporting period in which such circumstances arise, the enterprise increases the costs by the amount of amortized cost, minus the accumulated depreciation of a separate object of fixed assets [10]. Not subject to depreciation and fully included in the expenses for the reporting period, the cost of liquidation of fixed assets.

Conclusion

In this paper, the essence of fixed assets as an object of accounting was disclosed. Legislative regulation of accounting of fixed assets is shown. Some of the main problems in accounting of operations on fixed assets are revealed. An attempt was made to provide recommendations for improving accounting:

  1. The cost of repairs, dismantling and other improvements to property, plant and equipment should be used to increase the residual value rather than the original value.
  2. It is impossible to mix current and capital repairs, and also when carrying out capital repairs it is impossible to carry out expenses on them directly to structure of production expenses in the current period, and it is necessary to carry out the cost of capital repairs on capital investments.
  3. Operations on the valuation and revaluation of fixed assets should not unreasonably lead to an increase in costs and revenues, respectively, they should not contradict the principles of income and expenses and unreasonably increase retained earnings.
  4. It should be better to control the depreciation cost on separate accounts, because these funds are not spent for their intended purpose, and do not have time to accumulate for the reproduction of fixed assets.

References

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