Reserves for reducing the value of material assets. Reserve for depreciation of material assets: posting and creation Regulatory framework for creating a reserve for depreciation of inventories
(3) position 1C:
A reserve for a decrease in the value of material assets is created for inventories that are obsolete, have completely or partially lost their original quality, or the current market value, the sale price of which has decreased.
Reserve for reduction in the value of material assets
Thus, if the cost of inventories has not decreased, there is no need to create such a reserve.
A reserve is formed for the amount of the positive difference between the current market value and the actual cost of inventories and is reflected in accounting by posting from the credit of account 14 “Reserves for reduction in the value of material assets” to the debit of account 91 “Other income and expenses.”
In the chart of accounts 1C:Accounting 8 to account 14 “Reserves for a decrease in the cost of material assets”, separate sub-accounts are opened for types of assets: 14.01 “Reserves for a decrease in the cost of materials”, 14.02 “Reserves for a decrease in the cost of goods”, 14.03 “Reserves for a decrease cost of finished products" and 14.04 "Reserves for reducing the cost of work in progress". On the first three sub-accounts, analytical accounting is carried out by item units (Nomenclature directory), on the fourth - by item groups (Nomenclature Groups directory). When reflecting in the accounting the accrual of a reserve for a loan entry, the corresponding subaccount of account 14 and the object of analytical accounting are selected, for the reduction in value of which the reserve was created.
Analytical accounting on account 91 “Other income and expenses” is carried out according to the items of other income and expenses, and subaccounts 91.01 and 91.02 are intended for separate accounting of other income and other expenses, respectively. When creating a reserve, the correspondent should select subaccount 91.02, and the object of analytical accounting for this account should be the directory article Other income and expenses with the type of other income and expenses Deductions to valuation reserves and the Acceptance to NU checkbox unchecked.
The accrued reserve is subject to write-off as the values for which it is reserve are released, by posting to the debit of the corresponding subaccount of account 14 and the credit of subaccount 91.01 “Other income” (under the item with the type of other income and expenses Deductions to valuation reserves and the unchecked Acceptance to NU flag).
For the purposes of corporate income tax, the created reserve should not be taken into account, therefore, in tax accounting, in the debit of account 91 “Other income and expenses”, subaccount 91.02.7 “Non-operating expenses”, it is necessary to reflect the permanent difference, which leads to the emergence of a permanent tax liability.
When writing off the reserve in accounting, tax accounting again reflects the occurrence of a permanent difference, but this time in the credit of account 91.01.7 “Non-operating income”. This permanent difference results in a permanent tax asset.
The accrual of reserves of all types in "1C: Accounting 8" is reflected by transactions entered manually.
In relation to the reserve for a decrease in the cost of inventories, on the Accounting tab of the Operation document form (accounting and tax accounting), entries for accrual of the reserve are entered according to the rules described above, after which, using the "Fill" button, tax accounting records are automatically generated, in which tax accounting records are specified on the Tax Accounting tab subaccount account 91.02 to reflect permanent differences. The write-off of the reserve is reflected in the same way as the values on which it was formed are released.
Operations for the formation and write-off of reserves should be entered before performing routine operations in accordance with PBU 18/02, carried out in "1C: Accounting 8" using the Month Closing document. This is necessary for the program to correctly calculate the amount of permanent tax liabilities and permanent tax assets.
Account 14 “Reserves for reduction in the value of inventories” is intended to collect information about reserves created by the organization in order to reflect deviations in the actual value of inventories from the market value.
According to Russian legislation, all organizations applying the general taxation regime must, before drawing up their final annual reports, conduct an inventory of inventories and identify deviations in their actual price from the market price.
Why is this necessary? The fact is that financial statements must give an objective picture of the company’s assets and liabilities, and its financial results. In relation to fixed assets and intangible assets, a revaluation procedure is provided for by law; in relation to inventories, revaluation is not provided for. If their market price is significantly higher than the actual price (accounted for in accounts 10, 20, 23, 41, 43), the accounting department must attribute this difference to the account. 14, thus creating a reserve to reduce the cost of inventories.
Attention! Account 14 is intended not only for creating inventories for reducing the price of inventories (account 10), but also for other current assets: work in progress (account 20, 23), finished goods (account 43), goods (account 41.)
Reserves for reduction in the value of material assets
14 is active-passive, that is, at the end of the year it can form both a debit and a credit balance. In general, it behaves as passive, which is typical for reserve accounts: according to Kt they show an increase in the reserve, according to Dt - a decrease.
Attention! Account 14 does not participate in tax accounting, that is, it does not change the base for property tax or profit tax, but it affects the formation of accounting profit or loss.
Normative base
The procedure for using the account is described in the Instructions of the Ministry of Finance to the Chart of Accounts,
PBU 5/01 “Accounting for inventories” (clause 25), Methodological guidelines for accounting for inventories (clause 20).
Subaccounts
The instructions for using the Chart of Accounts do not specify which subaccounts need to be created for account 14, however, an organization can independently develop a working chart of accounts that suits its specifics. Example:
14/1 - according to MPZ;
14/2 - for work in progress;
14/3 - for finished products
Attention! Analytical accounting by account. 14 is shown in the context of each material. It is permissible to create a reserve for individual groups of assets similar in price and properties (for example, cement, brick, etc.), but it is unacceptable for such large groups as building materials, finished products manufactured in 2016, etc.
Basic Operations
1. Creation of a reserve.
This is done if the following facts are revealed for certain types of materials:
- loss of consumer properties, moral or physical obsolescence;
- their market value has decreased (confirmation of information from objective sources is necessary: stock exchange reports, commercial offers, Rosstat data, etc.).
At the end of the reporting year, a reserve is created for each type of inventory by reducing financial results (account 91/2 - “Other expenses”):
Dt 91/2 Kt 14.
Attention! When creating a reserve, it is necessary to take into account the relationship between the market price of finished products (works, services), in the creation of which these reserves are used, and its cost. It is created only when the actual selling price is lower than the cost of the finished product.
The size is calculated as the difference between the market price of the inventory and the actual price, multiplied by the number of goods. Accounting is carried out without VAT.
2. Reducing the reserve.
This may happen for the following reasons:
- increase in the market value of inventories;
- disposal of inventories (write-off to production, sale, natural loss).
In such cases, reverse entries are made, only subaccount 91/1 “Other income” is applied:
Dt 14 Kt 91/1.
Victor Stepanov, 2016-12-06
Questions and answers on the topic
No questions have been asked about the material yet, you have the opportunity to be the first to do so
Reference materials on the topic
Dt 131 Kt 10
2. The residual value of the missing item is written off to the guilty party
Dt 375 Kt 10
However, the amount of damage caused by the guilty party is calculated not at the level of the residual value, but according to the “Procedure for calculating damage in connection with shortages and damage to objects”
∑ damage = *K,
where AC is the excise tax,
K – multiplicity factor, depending on the type of property.
Creating a reserve for reducing the cost of material assets
The difference between the amount of damage and the residual value of the object is reflected as enterprise income
Dt 375 Kt 716.
4. Accounts receivable are reduced by the amount actually reimbursed by the guilty party
Dt 301 Kt 375
However, the income recorded under the credit of account 716 is subject to distribution between the enterprise and the budget. The amount of VAT and AC is subject to transfer to the budget as part of the damage
Dt 716 Kt 641
If the repayment of material damage is extended over several periods, then the amount recorded under 716 should be attributed to deferred income.
5. Income in the amount of damage minus VAT and AC is written off as deferred income
Dt 716 Kt 69.
In the event that the culprit is not identified, the write-off of missing objects is reflected in such postings
1. Depreciation written off
Dt 131 Kt 10
2. The residual value of the object is written off as an enterprise expense
Dt 947 Kt10
3. The amount of the shortage is reflected in off-balance sheet accounting
Dt 072
An inventory of fixed assets can be carried out if the manager decides to revaluate fixed assets. Only those objects that, according to the data recorded during the inventory, actually existed at the enterprise are subject to revaluation. Revaluation can be carried out in the form of revaluation or markdown.
Revaluation of fixed assets is bringing the residual value of fixed assets to their fair value.
According to P(S)BU No. 7 “Fixed assets”, revaluation is carried out provided that on the balance sheet date the residual value differs by more than 10% from the fair value.
The decision to conduct a revaluation is made by the enterprise independently.
Factors influencing this decision are:
1. When revaluing one object, all objects belonging to this group are revalued.
2. Revaluation is carried out on the balance sheet date (January 1) or on the date of each quarter.
3. Information about changes in the initial cost and the amount of depreciation is entered into the register of analytical accounting of fixed assets.
4. The amount of change is calculated on the basis of the revaluation index, which shows how many times the fair value of the object has increased (decreased) in relation to the residual value.
Revaluation index = Fair value / Residual value
The accounting treatment of revaluations depends on the results of the previous revaluation. If it was not, then the amount of the revaluation is included in additional capital, and the depreciation is included in the expenses of the enterprise.
In this case, accounts 423 – “Additional valuation of assets”, 975 – “Revaluation of non-current assets and financial investments” are used.
1. The first production of this group was made at the enterprise
a) write-down of fixed assets.
Dt 975 Kt 10- the difference in initial costs.
Dt 131 Kt 975- the difference in depreciation amounts before and after markdown
b) revaluation of fixed assets.
Dt 10 Kt 423- the difference between the amounts of initial costs before and after the assessment.
Dt 423 Kt 131- the difference in the amounts of wear and tear before and after the assessment.
In the case of an additional valuation of an object that was previously discounted, the additional valuation within the limits of the amounts of the previous discount written off as expenses is included in the income of the reporting period.
In the case of a depreciation of an object that was previously overvalued, the amount of the depreciation (within the previous value before the valuation, is reflected in additional capital) is written off to the debit of subaccount 423 “Additional valuation of assets”.
An enterprise that has once started revaluation must regularly monitor changes in the ratio of fair and residual value, and if it exceeds 10%, then carry out a revaluation.
1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19 | 20 | 21 | 22 | 23 | 24 | 25 | 26 | 27 | 28 | 29 |
Account 14 “Reserves for reduction in the cost of material assets” is intended to summarize information about reserves for deviations in the cost of raw materials, supplies, fuel, etc. values determined on the accounting accounts, from the market value (reserves for a decrease in the value of material assets).This account is also used to summarize information about reserves for reducing the value of other assets in circulation: work in progress, finished products, goods, etc.
The formation of a reserve for a decrease in the value of material assets is reflected in accounting as a credit to account 14 “Reserves for a decrease in the value of material assets” and a debit to account 91 “Other income and expenses.” At the beginning of the period following the period in which this entry was made, the reserved amount is restored: an entry is made in the accounting to the debit of account 14 “Reserves for reduction in the value of material assets” and the credit of account 91 “Other income and expenses”.
Analytical accounting for account 14 “Reserves for reduction in the value of material assets” is carried out for each reserve.
The introduction of account 14 “Reserves for reduction in the value of material assets” should be recognized as fundamentally new.
Regulatory acts regulating the accounting of materials (Regulations on accounting and financial reporting in the Russian Federation, PBU 5/01) provide for the reflection in the balance sheet of an enterprise of material assets at the current market value if it turns out to be lower than the actual cost of materials due to the following reasons (one or several):
1) inventories are obsolete;
2) inventories have completely or partially lost their original quality;
3) the current market value of material assets has decreased.
Previously, the difference in prices was written off to the financial results of the organization. Now it is adjusted by a special entry in account 14 “Reserves for reduction in the value of material assets.” And although this account is called a reserve, in fact it is a regulatory contractual account that refines the assessment of the value of material assets shown in the asset.
Reserves are created in order to anticipate emerging expenses. For example, during the upcoming reporting period, expenses are expected, the true value of which can be revealed later (natural loss, doubtful debts, telephone conversations, warranty repairs, etc.), these expenses are no longer reflected in the cost accounts, but are written off earlier accrued reserve.
According to all accounting rules, assets must be shown on the balance sheet at cost, i.e. at the cost of invested capital. True, the trends associated with the transition of our accounting to international standards are such that they allow for the revaluation of assets and introduce the concept of “fair price”. These and other deviations from the principle of a permanent enterprise allowed accountants in a number of cases to abandon cost as a universal method for valuing assets.
The adoption of the principle of prudence in our country is another step in this direction.
According to this principle:
If the selling (current) value of an asset is higher than its cost, then the balance sheet should reflect this asset at cost;
If the realizable value of an asset is lower than its cost (the difference is the resulting loss), the balance sheet should show this asset at its realizable (current) value.
In essence, the principle assumes that in the event of a depreciation of material (by the way, also intangible) assets, they are written off as losses. The compilers of the Chart of Accounts wanted to preserve all accepted estimates in current accounting, and show these values in the balance sheet in another estimate (current value).
Therefore, before preparing reports, the accountant must obtain from operational workers an inventory of materials indicating their
cost and new assessment.
For the difference, an entry is made (this is one of the procedures for compiling a balance sheet): D-t account. 91-2 “Other expenses”
K-t sch. 14 “Reserves for reduction in the value of material assets.”
Thus, account 91-2 “Other expenses” shows the potential (possible) loss from a decrease in valuation1, and the value of the asset is reduced by the amount of credit turnover in account 14 “Reserves for reduction in the value of material assets”.
After this, the balance of materials reflected in the balance sheet will be determined as follows: the balance of account 10 “Materials” minus the balance of account 14 “Reserves for reducing the value of material assets.” This procedure is performed without creating a transaction.
At the beginning of the period following the reporting period in which the reserve was recorded, the reserved amount is restored by posting:
Dt sch. 14 “Reserves for reducing the value of material assets” Set of accounts. 91-1 “Other income”.
It remains unclear which period the compiler of the Chart of Accounts had in mind. The Regulations on Accounting and Financial Reporting refer to the year. However, there are no contraindications for the formation of reserves for reducing the value of material assets during the year, and adjustments can be made at the end of the year.
A fundamentally different procedure for accounting for the use (write-off) of this reserve is provided for by the Methodological Guidelines for Accounting for Inventories. According to clause 20 of the Methodological Instructions, the reserve is closed in two cases: the use of inventories or changes in market value.
1. As inventory related to the reserve is released, the accrued reserve is written off to increase financial results:
Dt sch. 14 “Reserves for reducing the value of material assets” Set of accounts. 91-2 “Other income”.
1 In the financial statements, the administration reflects a loss that may not actually occur.
2. If in the year following the reporting year the current market value of inventories, for the reduction of the value of which a reserve was created in the reporting period, increases, then the corresponding part of the reserve is included in the reduction of the value of material expenses recognized in the period following the reporting period:
Dt sch. 14 “Reserves for reduction in the value of material assets”
Set of accounts 20, 23, 25, 26, 29, 44, etc. We have looked at the operation of the prudence principle in relation to materials accounting, but it applies to any type of current assets, and therefore this procedure should be used as often as the value of the asset needs to be reduced in valuation.
According to the law, fixed assets and intangible assets can be revalued. But this does not apply to material values. For them, it is provided for the creation of a reserve for reducing the cost of materials in accounting account 14. That is. in case of partial or complete loss of the original qualities of materials, their obsolescence, or a decrease in their market or sales value for materials, a reserve can be created, and at the end of the year such materials are taken into account in the balance sheet minus the reserve for their depreciation (clause 25 of PBU 5/ 01).
Thus, account 14 “Reserves for reduction in the value of material assets” contains information about reserves for changes in the actual cost of materials, raw materials, fuel and other assets taken into account in the company’s accounting records in relation to their market value.
How to create a reserve?
The reserve is the difference between the actual cost of materials and their market value. If the market value of finished products made from materials is greater than or equal to its actual cost, a reserve is not formed (clause 20 of the Guidelines for accounting for inventories).
The reserve is formed either for each unit of materials separately, or for their group, homogeneous in composition. The calculation of the market value of materials must be documented. No reserves are created for larger groups (for example, materials for construction or auxiliary materials).
The creation of the reserve is accounted for in the credit of account 14 “Reserves for reduction in the value of material assets” and corresponds with account 91 “Other income and expenses”.
D-t 91 K-t 14 - creation of a reserve
Example 1.
Lakokraska LLC lists homogeneous materials (yellow pigment) on account 10-1. The initial cost of materials was 590,000 rubles. (including 90,000 rubles - VAT). At the end of the year, an inventory was carried out, the results of which revealed that the market price for yellow pigment had decreased and amounted to 300,000 rubles. Lakokraska LLC decided to create a reserve.
Determine the reserve amount:
590,000 – 90,000 – 300,000 = 200,000 rubles.
The receipt of materials into the warehouse and their posting is reflected by the following transactions:
D-t 19 K-t 60 = 90,000 – input VAT upon receipt of materials
D-t 10 K-t 60 = 500,000 – materials are received into the warehouse
D-t 68 K-t 19 = 90,000 – input VAT is accepted for deduction
The creation of a reserve for impairment of materials is reflected by posting
D-t 91-2 K-t 14 = 200,000
In the balance sheet, the cost of materials will no longer be shown as 500,000 rubles, but as 500,000 – 200,000 = 300,000 rubles.
Write-off of the provision for impairment of materials.
If the market value of materials increases, the reserve amount is revised. In this case, the difference that has formed between the accrued reserve and the amount calculated taking into account new prices is reflected in the composition of other income in account 91 “Other income and expenses” subaccount 1 “Other income”.
The reserve is also written off for retired assets that have already been sold to third parties, released into production, or have lost their original qualities as a result of natural loss.
As materials are written off from the reserve, in the next reporting period the amount of the reserve is restored by reverse posting
D-t 14 K-t 91 – write-off of the reserve
Analytical accounting for account 14 is carried out separately for each reserve.
Example 2.
Let's add conditions to the previous example 1. Let's assume that at the end of the next reporting period after the reserve creation period, the market price of materials increased and amounted to 450,000 rubles.
Then the reserve amount is calculated as follows:
590,000 – 90,000 – 450,000 = 50,000 rubles.
Let's determine the difference between the old and new reserve
200,000 – 50,000 = 150,000 rubles.
We write off the excess amount of the reserve:
D-t 14 K-t 91-1 = 150,000
In the balance sheet, the cost of materials will then be 450,000 rubles - this will be their market price.
500,000 – 50,000 = 450,000 rubles.
Free book
Go on vacation soon!
To receive a free book, enter your information in the form below and click the "Get Book" button.
The reserve for reducing the cost of material assets (MT), first of all, is needed for correct analysis. In particular, assets that are in direct circulation, if their average market value turns out to be less than their actual value. Typically, such inventories are created once every 12 months, during or before the formation of the annual balance sheet. The balance sheet indicates the size of the MC without taking into account the amount of organized reserves.
Why do you need a reserve?
All types of MC that have fallen in price over 12 months or have lost their original properties and are no longer relevant in annual reporting should be reflected at the average market price. For commercial enterprises, the difference between actual and average market value refers to income. For businesses that do not have a commercial purpose, the difference increases costs.
Creating a reserve is the direct responsibility of commercial companies. The legislative basis for calculation is laid down in clause 25 of the Accounting Regulations 5/01. The method of determination is prescribed in advance in the company's accounting policy. According to the methodology for organizing reserve funds, the formation of reserves of financial resources is necessary for each item related to inventory.
What rules should you follow?
It is allowed to organize reserves according to types of similar and interrelated inventories. It is prohibited to organize reserves by large-scale types. For example, leading and additional materials, manufactured products, goods, inventories in various areas. The current average market price of inventories is taken into account based on the current state. During the recalculation, it is worth taking into account the following details:
- Changes in average market and actual prices that occurred after the submission of reports, proving the existence of a situation in which the organization was forced to conduct its business activities.
- Purpose of materiel resources.
- The current average market value of manufactured products, during the creation of which the organization’s resources were used.
The company is obliged to provide evidence when requesting tables with calculations of the current average market value of inventories. In this situation, the average market value refers to the amount of monetary resources that the company can gain upon sale. Information about current market prices is obtained from magazines and newspapers, online markets, trading exchanges and raw materials platforms.
Basic postings
For reserves and all transactions on them, account 14 “Reserves for reduction in the value of material assets” is used. At the end of the reporting period, the following entry is made in accounting:
Debit 91 (“Other income and expenses”), Credit 14
In the coming reporting period, when writing off MTs that have reserve funds under them, the pledged amount will be restored in accounting in reverse.
The same entry is relevant if there was an increase in the average market value of inventories with reserves, and after 12 months, if the reserve money was not fully spent. If this is required, new reserves are again formed, based on the parity of the actual and average market value of the inventories as of the date of collection of information for the report. Accounting 14 is maintained for each reserve for all types of insured valuables. Line 211 of the balance sheet asset “Material resources and values” is indicated at the current average market price. The same line in the passive remains empty.
Reserved financial resources are classified as operating expenses. The income statement transforms operating expenses into losses from reducing the size of the MC. Positive revaluation of inventories will become operating income. Information about organized reserves is indicated in the reference section of the profit and loss statement in the corresponding line. Information about the amount and movement of frozen funds is required to be disclosed in the accounting reports to the extent of materiality.
Ch. 25 of the Tax Code of the Russian Federation does not contain instructions to reduce the tax base by the amount of reserves formed. Clause 4 of PBU 18/02 confirms that the amount of the organized reserve reduces profit in accounting and does not take part in creating the tax base. This value is considered a constant difference.
During the preparation of annual reports, a constant difference appears. The company must then recognize a tax liability. This definition is usually understood as the amount of tax that led to an increase in tax deductions on profits. This is considered a permanent tax asset (the income tax rate is multiplied by the permanent difference). The accounting reflection will take the following form:
Debit 99, subaccount “Fixed tax liabilities (assets)”, Credit 68
When assets that involve the presence of reserved money are written off, the company takes into account the permanent difference. This inevitably leads to the appearance of a tax amount. The difference reduces the amount of income tax. In accounting, the reverse of the above entry is made.
The fundamental goal of forming reserves for reducing the value of material assets is forethought and insurance for a correct study of the current state of financial resources, projected income, and correct accounting of expenses from the depreciation of inventories. The principle applies throughout the world, not excluding our country. Actually, for this reason, MCs on the balance sheet have the lowest price of all possible.
Reserves represent one of the most important parts accounting statements. The decisive role is played by the correct assessment, in accordance with which they are recorded and subsequently reflected in the reporting.
In this regard, in international practice there appear new approaches to determining the value of assets. One of them is the formation of appropriate reserves for reducing the cost of material assets. They are reflected by account 14 accounting.
Account 14 “Reserves for reduction in the value of material assets” is used to summarize information about reserves for deviations in the cost of raw materials, supplies, and fuel resources from the actual market indicator. This direction is also used to summarize information about reserves for reducing the cost of other assets - work in progress, finished products, commodity items, etc.
The formation of the corresponding reserve is directly reflected in account 14. Here it is accounted for as a loan, and next to it in double entry it usually stands debit 91, which means other deductions and receipts.
In the next reporting period, as the material assets for which the reserve was formed are written off, the amount is restored and a reverse entry is made Dt 14 Kt 91. The operation is displayed in a similar way in the case of an increased market value of material assets.
Analytical accounting within the operation is carried out separately for each of the reserves. When an enterprise records materials, goods, and finished products, this does not at all indicate the need to create a reserve. It does not occur in all cases, but only in the presence of certain factors.
Conventionally, they can be attributed to the following directions:
- the fact of inventory obsolescence;
- significant damage;
- reduction in sales costs.
An important role in the accounting process is played by the costs of purchasing inventories, which include the following groups:
- cost at purchase prices;
- customs duties, payment of duties, etc.;
- remuneration to intermediaries;
- costs of preparation and delivery of inventories;
- transportation and procurement costs.
While inventories are not used by an organization, their actual market price may be subject to change. And if there is a decrease in it, the actual cost cannot be changed.
Accounting Features
The net realizable value of inventories is subject to revision in each subsequent period. If the net realizable value of inventories that were previously marked down subsequently becomes greater, the amount that was previously written off is reversed to the extent of the initial markdown so that the new cost corresponds to the minimum actual cost.
At the end of the reporting year, in the process of writing off materials, the reserved value is restored, and an entry appears in the accounting Dt 14 Kt 99. As for the restoration of the amount of the reserve in the process of disposal of inventories, it is reflected through the transaction Dt 14 Kt 90.
Postings with examples
The creation of reserve points is traditionally carried out before preparing the annual balance sheet. The amount is usually calculated for each item number or name, and sometimes for groups of similar values.
Reserve amount = (US - TS) * CMC, where
US– accounting cost indicator, TS– current value, KMC– number of material assets.
Reserves are not created if the actual cost is high at the reporting date. The account is active-passive. The formation of the reserve is subject to reflection on the credit of the account. Below are discussed main transactions for this account:
Creating a reserve with an example
The reserve, as already noted, represents difference between actual cost and market price. If the second parameter in relation to a product created from materials is greater than or equal to the physical cost, a reserve is not formed, as stated in the relevant Guidelines for accounting for inventories.
The fact of creating a reserve is recorded according to Kt 14. Let's look at the process of its formation step by step using practical examples and using existing postings.
The organization Fomich LLC has homogeneous materials in its calculation - pigment. Starting price – 600,000 rubles, including 100,000 rubles. – VAT. At the end of the reporting period, an inventory process took place, and in the end it was found that the market price had decreased and was equal to 300,000 rubles. The company decided to create a reserve.
This operation will be recorded as follows (to simplify accounting):
600,000 – 100,000 = 500,000 rub.
Dt 19 Kt 60 = 100,000 rub.– input parameter of value added tax in the process of receipt of materials.
Dt 10 Kt 60 = 500,000 rub.– direct receipt of materials to the warehouse.
Dt 91 Kt 14 = 300,000 rub.– acceptance of input VAT for deduction.
Regulatory acts
In the process of regulating management activities on reserves, various types and forms of documentation. It is divided into several levels.
- Decrees, orders adopted by the President of the Russian Federation, as well as regional government bodies.
- Local regulations of the enterprise.
- Methodical instructions.
- Accounting documents (invoices, delivery notes, accounting certificates, etc.).
- Other forms of documentation that are relevant in the process of accounting activities.
Thus, account 14 in the accounting department is relevant and used quite often. The creation of reserves is necessary in a large number of practical situations, since not only the convenience of accounting operations, but also the transparency of transactions depends on it.
It is necessary to achieve competent preparation of transactions in all directions and signing of correct and rational amounts for them, since the fact of fulfillment of obligations depends on them.