The article analyzes new projects in PBU. An attempt to “adjust” accounting to IFRS standards will not reduce the work of accountants. How this will be implemented in conditions of triple accounting (tax, accounting, management) is not clear...
The Ministry of Finance’s website contains drafts of several new accounting standards: “Organizational Income”, “Accounting for Employee Benefits”, “Inventory Accounting” and “Rent Accounting”. They should be finally approved by the Ministry of Finance by the end of this year. In addition, other draft new PBUs will soon appear on the website of the financial department: “Accounting statements of an organization”, “Accounting for fixed assets”, “Expenses of an organization”. New PBUs are planned to be put into effect starting with reporting in 2013.
Project PBU “Income of the organization”
The organization's income will be taken into account taking into account the time factor, that is, discounted. When selling products, goods, performing work, providing services on deferred (installment) payment terms for a period exceeding 12 months after the reporting date, or for a shorter period established by the organization, the amount of future cash receipts is assessed at their present value. The present value of receipts is taken into account using the comparative approach, that is, it is taken equal to the amount that the selling organization would receive for similar products, goods, works or services, selling them on normal payment terms without providing a deferment (installment plan).
In the event that the price of similar products, goods, works or services when selling them on normal terms of payment without providing a deferment (installment plan) cannot be determined, the present value of future cash receipts is determined by discounting their nominal values using the interest rate at which a similar the buyer can obtain similar debt financing.
For now, only one thing is clear: the tax inspectorate will have an additional reason to fine the organization for an incorrect assessment of the value of revenue. Discounted revenue valuation, especially when it involves the concept of “similar buyer” and “similar debt financing,” is highly subjective.
Project PBU “Accounting for Employee Benefits”
The document establishes the procedure for reflecting employee benefits in accounting and reporting of organizations. And in particular, the procedure for recognizing and determining the amount of employee benefits, the amount of estimated liabilities for them, disclosure of information about the labor costs of employees in maintaining accounting records.
Employee benefits include all types of compensation to employees of the organization and in favor of employees to third parties (including family members of employees) for the performance by employees of their labor functions, regardless of the form of payment (cash, in kind). In particular, these include:
a) wages (employee remuneration), including compensation payments (additional payments and allowances of a compensatory nature, including for work in conditions deviating from normal, work in special climatic conditions and in territories exposed to radioactive contamination, and other compensation payments ) and incentive payments (additional payments and allowances of an incentive nature, bonuses and other incentive payments), as well as other compensation directly related to the employee’s performance of labor functions (paid leave - annual, additional, educational, etc.; temporary disability benefits and etc.);
b) payments to employees and in favor of employees to third parties (including family members of employees), made in connection with the performance of labor functions by employees, not included in wages; in particular:
- expenses for treatment, medical care;
- voluntary health insurance;
- voluntary pension provision and supplements to pensions;
- training, meals, compensation (payment) for utility costs;
- payment (compensation) for interest expenses on credits (loans), etc.;
- funds allocated to trade union organizations;
- for cultural, physical and recreational work.
Employee benefit obligations, according to the new Accounting Standards, are planned to be recognized in accounting while the following conditions are met. First, the organization has an employee benefit obligation that it cannot avoid. Secondly, there is confidence that as a result of the employee’s performance of labor functions, the economic benefits of the organization will decrease (expenses will be recognized). And finally, thirdly, the amount of costs can be reliably and reasonably distributed.
Project PBU "Inventory Accounting"
The scope of the document has been expanded. In addition to raw materials or materials, as well as resources intended for sale in the normal course of business of the organization (goods and finished products), the draft PBU includes assets in the process of production for subsequent sale (performance of work, provision of services) in the course of normal business as inventories. organization, that is, work in progress. The current PBU 5/01 does not regulate the accounting of work in progress, as is directly stated in clause 4 of this standard. The requirements of the draft PBU do not apply to work performed under construction contracts, as well as to financial assets, since these issues are regulated by special documents.
As for the requirements for accounting for inventories that are not owned by the organization, but received for use or disposal, unlike PBU 5/01, they, on the contrary, are outside the scope of the project.
The second feature of the project is determining the moment of recognition of inventories in accounting. They are proposed to be taken into account at the time of transition to the organization of economic risks and benefits associated with the ownership of reserves. Typically, the transfer of risks and rewards coincides with a transfer of ownership or a transfer of assets. It may be that inventory will need to be shown on the balance sheet before ownership changes. We are talking, in particular, about the situation of deferred payment, when, according to the terms of the agreement of the parties, ownership rights pass to the buyer after payment. Organizations are then encouraged to use professional judgment when determining when risks and benefits will transfer. Recognition of inventories held on the balance sheet of the buyer's organization, which must account for inventories from the moment of transfer of the relevant economic risks and rewards, as well as its own professional judgment.
The third significant difference from PBU 5/01 is the procedure for forming the initial cost of inventories. The draft includes a requirement to capitalize in the original (actual) cost of inventories the costs of fulfilling obligations for dismantling, removing inventories and restoring the environment on the site they occupy, incurred over a certain period as a result of the use of these inventories during that period. However, it is not clear from the draft PBU which costs should be capitalized - current or future. It is also unclear whether the corresponding reserve should be accrued. Obviously, this requirement needs additional refinement.
Another innovation: when purchasing inventory on an installment plan, the overpayment, as the difference from the normal cost of inventory used on an immediate payment basis, is recognized as an expense on loans and credits throughout the entire financing period in the manner established for accounting for such expenses. Thus, capitalization of these expenses in the cost of inventories is possible only if the asset is identified as an investment asset, that is, requiring a long period of creation, production, or acquisition.
As for the procedure for including general business expenses in the cost of inventories, the issue is not reflected in the draft in sufficient detail. For example, general business expenses not directly related to the production and processing of inventories do not participate in the formation of the initial cost of inventories. In this case, general and other similar expenses directly related to the acquisition of inventories are included in the cost of inventories. A number of questions arise: should the cost of inventory include the wages of purchasing department employees? How to deal with the costs of maintaining warehouses (bases)? After all, one part of these costs (sorting, packaging), according to the project list, is included in the cost of inventories, and the other does not relate to the production and processing of inventories.
Project PBU "Rent Accounting"
This PBU proposes lease accounting focused on ownership:
1. In cases where the lease agreement provides for the tenant to obtain ownership of the leased item at the end of the lease term, the lessee organization accounts for such a lease as the acquisition of the leased item with payment in installments. The asset is valued at the time of recognition at the present value of lease payments (the calculation formula is given in paragraphs 7 or 8 of the PBU). In this case, all payments provided for by the agreement or a related set of agreements are taken into account, regardless of how they are called in these agreements. These payments, along with the rental payments themselves, include payment of the redemption price of the leased item, bank commissions, insurance and other payments that the lessor must make in connection with the conclusion and execution of the lease agreement and related agreements.
Now, for example, a leasing agreement must be accounted for on the balance sheet of the lessee; the recipient must also pay property tax. Lease payments must also be taken into account taking into account the time factor through a comparative approach. The accountant thus slowly but surely turns into an appraiser. If valuation using the comparative approach is not possible, the rent is calculated based on the discounted interest rate.
2. In cases where the agreement does not provide for the tenant to receive ownership of the leased item at the end of the lease term, the lessee organization recognizes its right to use the leased item during the lease period as an asset from the moment it gains access to the use of the leased object.
Of course, based on the economic meaning of the asset, everything is correct. An asset accumulates funds invested by an organization in order to obtain economic benefits. An asset reflects the ability to generate income as a stream. However, in this case, the lease should not be taken into account by the tenant under the heading “fixed assets”, since the latter does not have ownership rights to the leased object.
On the disclosure of information about the risks of the enterprise’s economic activities
According to the draft “On the disclosure of information about the risks of an organization’s economic activity in the annual financial statements,” the accountant is obliged to provide information on the level of risk allowed in the organization in the annual financial statements. It is noteworthy that in Russia, in principle, there is no risk management system capable of giving an adequate assessment of the level of risk of an enterprise’s economic activity.
According to the project, risks can be grouped into the following types:
- financial (market risks, credit risks, liquidity risk);
- country;
- regional;
- reputational;
- other.
The risk gradation should disclose the following information about the qualitative characteristics of the risk:
- the organization's exposure to risks and the reasons for their occurrence;
- risk concentration (description of a specific general characteristic that distinguishes each concentration (counterparties, regions, currency of settlements and payments, etc.);
- risk management mechanism (goals, policies, applied procedures in the field of risk management and methods used to assess risk, etc.); changes compared to the previous reporting year.
It is not clear how accountants will do this. No one has ever taught them this; there are no methods or books on this topic.
Conclusion:
The state, refusing to finance the development of programs for the quality development of risk management and to “grow” competent specialists, intelligently “pushes” these responsibilities onto accountants, who will each reinvent their own wheel, just to submit the next piece of paper to the tax office. The result of fiction, of course, will be fiction.
To summarize, I would like to draw the following conclusions:
1. The functioning of the new law “On Accounting” will not be ensured properly without the adoption of new PBUs. The so-called accounting standards have not yet been developed.
2. According to the new law 402-FZ of December 6, 2011 “On Accounting”, the initiators and developers of accounting standards must be specialists in the accounting field and submit these draft documents for approval to government agencies (the Ministry of Finance). Today, the mechanism does not work; the state itself acts as the developer of the accounting standards, which leads to the ineffectiveness of the documents themselves and disagreement among the accounting community.
3. According to the draft new PBUs, rent will be taken into account on the balance sheet of the enterprise.
4. A technique for discounting long-term flows is introduced.
New draft PBUs expand the scope of required professional competence for Russian accounting workers. If previously an accountant worked in 1C and submitted reports to government agencies, now he will need to analyze the company’s development for the long term. Many Russian accountants will have to improve their professional level. To adapt to new conditions, your company’s accountant must, at a minimum, take IFRS courses.
Publications \ 09.15.2016
Lease with and without transfer of ownership to the tenant. Lease with and without transfer of the main risks and benefits to the lessee. Discounting obligations under a lease agreement. For several years now, the PBU “Rent Accounting” has been in the process of development. Initially, the Ministry of Finance planned to apply the new PBU with reporting for 2013, but the document is still in the draft stage.
The need to create a separate PBU for lease accounting is due to several reasons. Firstly, the basis for regulating rental relations from an accounting point of view is not sufficiently developed. Today, general provisions for leasing are regulated by the Civil Code of the Russian Federation (Chapter 34 “Rent”), Federal Law No. 164-FZ of October 29, 1998 “On financial leasing (leasing)”, which describes the legal features of leasing. The issues of reflecting lease relations in accounting are dealt with in the Order of the Ministry of Finance of Russia dated February 17, 1997. No. 15 “On the reflection in accounting of transactions under a leasing agreement”, and many specific issues of accounting for lease relations are completely described in letters from the Ministry of Finance of Russia and the Federal Tax Service of Russia, which are by-laws and are advisory in nature.
Secondly, this is bringing the Russian accounting system into line with the requirements of a market economy and international financial reporting standards. When developing the document, IFRS 17 “Lease” was taken as a basis. Now the objects of accounting will no longer be property, as required by the current accounting concept, but assets - that which brings benefits to organizations.
Rental classification
The new provisions apply to agreements that produce rental relations. The regulation establishes the rules for the formation in the accounting and financial statements of organizations of information about their assets, liabilities, income, expenses and cash flows arising in connection with the participation of organizations in lease agreements. The provision applies to any type of lease, as well as to other agreements providing for the provision of property for temporary use for a fee. Exceptions include concession agreements, loan agreements and other agreements for the gratuitous transfer of property for use.
According to the new provision, leases are classified depending on the terms of the agreement. Below is a visual diagram of the rental classification.
Figure 1. Lease classification
That is, as we see, in addition to the existing division of leases into financial (leasing) and ordinary (operating), a division appears based on an assessment of the risks and benefits associated with ownership of the leased asset. Let's consider each type separately.
Accounting by the tenant of the lease with subsequent receipt of ownership
If the agreement provides for the transfer of ownership to the lessee of the leased item at the end of the lease term, then the lessee organization accounts for such a lease as the acquisition of the leased item with payment in installments.
This procedure applies regardless of whether title is transferred on the basis of a separate purchase and sale agreement or directly on the basis of the lease agreement itself. This procedure is also applicable when the lease agreement provides for the tenant’s right to purchase the leased item at a price significantly lower than the market price at the end of the lease term.
The specified accounting procedure does not apply:
1) if the conclusion of the purchase and sale agreement was an independent event, was not provided for in the lease agreement and did not otherwise follow from the lease agreement;
2) if in order to implement the terms of the agreement on the transfer of ownership to the tenant at the end of the lease term, an additional agreement between the parties is required;
3) if the contract does not define essential parameters, such as the redemption price
In cases where the agreement provides for the tenant to obtain ownership of the leased item at the end of the lease term, the lessee organization accounts for such a lease as the acquisition of the leased item with payment in installments in accordance with the procedure. What happens in the lessee's accounting as soon as he gains access to use the leased item is shown in the figure below.
Figure 2. Rental accounting for the tenant
That is, we can see that on the date of recognition of the leased asset in the lessor’s accounting, an asset is formed at the same time, which is valued at present value, and Accounts Payable for payment of lease payments. It should also be noted that the present value is determined minus payments paid to the lessor before the subject of the lease was placed on the balance sheet. It also does not take into account refundable indirect taxes, fees and duties. If the present value cannot be reliably determined, and the effective interest rate cannot be reliably determined, it can be taken equal to 1.5 of the refinancing rate established by the Bank of Russia.
As for Accounts Payable, it increases over the course of the lease by the amount of accrued interest at the effective rate and decreases by the amount actually paid. The effective interest rate determined upon initial recognition of Accounts Payable does not change unless the parties revise the amount or timing of payments established at the beginning of the lease.
Lessee accounting for lease without subsequent acquisition of ownership
The following rental conditions are subject to the regulation of this section:
1) the contract does not contain a transfer of ownership at the end of the lease term to the lessor
2) the transfer of ownership to the tenant is provided, but an additional agreement is required.
3) the lease agreement does not define the essential parameters of this agreement, such as the purchase price, as a result of which the transfer to the lessee at the end of the lease period of ownership of the leased item cannot be considered secured by the terms of the lease agreement at the start of the lease.
The fundamental difference from the accounting procedure described in the previous section is that the lessee takes on the balance sheet not the asset itself, but the right to use the leased asset during the lease term. Valuation also occurs at present value, however, the procedure for its calculation changes. Below is a calculation diagram.
Figure 3. Determination of the effective interest rate (clause 17)
That is, first the effective interest rate is determined, then the present value of lease payments is calculated by discounting their values according to the payment terms of each payment. Accounting for accounts payable is similar to accounting for leases with subsequent transfer of ownership.
The tenant organization has the right not to apply clause 17 of PBU “Lease Accounting” and evaluate the present value of lease payments in the amount of their nominal values in the following cases (clause 18):
a) under rental agreements;
b) under other lease agreements concluded for a period not exceeding twelve months, the extension of which is not expected.
In this case, interest is not accrued on accounts payable on lease payments.
Accounting by the lessor of a lease with the transfer of the main benefits and risks with the subsequent transfer of ownership
The draft new PBU also considers lease accounting on the part of the lessor and identifies 3 options for lease relations:
1) ownership, main risks and benefits are transferred to the lessee;
2) the main risks and benefits are transferred to the lessee, but there is no transfer of ownership;
3) without transferring ownership, benefits and risks to the tenant.
Let's consider the first case. Below is the diagram:
Figure 4. Accounting for the lessor with the transfer of ownership, the main risks and benefits to the lessee
The present value of lease payments is assumed to be equal to the carrying amount of the asset being written off in any of the following cases:
a) the lease agreement is a financial lease (leasing) agreement in accordance with the legislation of the Russian Federation;
b) the leased item is not a finished product or commodity for the lessor and was purchased less than twelve months before it was leased;
c) the present value of lease payments cannot be reliably determined.
The procedure for accounting for rental transactions by the lessor in accordance with the draft PBU is presented below.
If the leased item was purchased by the lessor less than 12 months before the lease:
Debit 91 Credit 01 “Disposal of fixed assets” – write-off of an asset at its residual value
If the leased item was purchased by the lessor more than 12 months before the lease:
Debit 91 Credit 62 – write-off of asset at present value
Debit 62 Credit 91 -percentage income at effective rate
Debit 51 Credit 62 - payment of interest by the tenant at the effective rate
The difference between book value and present value is credited to financial results. If the lease is entered into in the ordinary course of business, the present value is recognized as revenue and the carrying amount is charged to cost of sales. In this case, the lessor reflects the following entries:
Debit 62 Credit 90 subaccount 1 “Revenue” - for the amount of the present value of lease payments
Debit 90 subaccount 2 “Cost of sales” Credit 01 – for the amount of the book value of the asset
If the contract is concluded outside the normal course of business, then the difference between the book value and present value is recognized as other income or expense and is reflected in accounting as follows:
Debit 62 Credit 91 subaccount 1 “Other income” - for the amount of the present value of lease payments;
Debit 91 subaccount 2 “Other expenses” Credit 01 – for the amount of the book (residual) value of the asset;
Debit 91 subaccount 1 “Other income” Credit 91 subaccount 9 “Balance of other income and expenses” - for the amount of other income due to the excess of the present value of lease payments over the book value of the asset;
Debit 91 subaccount 9 “Balance of other income and expenses” Credit 91 subaccount 2 “Other expenses” - for the amount of other expenses due to the excess of the book value of the asset over the present value of lease payments.
Lessor accounting for leases with transfer of major benefits and risks without subsequent transfer of ownership
The accounting for such leases is the same as described in the previous section. The exception is that simultaneously with the write-off of the leased item from the asset, the lessor simultaneously recognizes receivables and a residual asset. The value of the residual asset is determined as:
Share of initial rental cost ×
Thus, accounts receivable are now formed not for the entire value of the asset, which is defined as the current value on the date the asset is leased, but minus the value of the residual asset. In this case, the current value is determined on the basis of information on purchase and sale transactions of this similar asset on nearby dates on the terms of immediate payment, and the present value of lease payments is taken as the current value minus the residual value of the leased asset (clause 36). The disposal of an asset is reflected at the present value of lease payments, which in general is not equal to the book value, therefore the resulting difference between the present value of lease payments and the book value of the asset being written off is included in the financial results of the lessor. As in the previous section, it is first necessary to determine within the framework of which activity the contract was concluded: as part of ordinary activities or not. If the lease is entered into as part of the entity's ordinary course of business, the present value of the lease payments is recognized as revenue and the carrying amount of the asset being written off is charged to cost of sales as follows:
Debit 90 subaccount 2 “Cost of sales” Credit 01 – reflected in the cost of sales, the disposal of an asset in the amount of the book (residual) value;
Debit 01 Credit 90 subaccount 1 “Revenue” – the residual asset in the lease is capitalized in the amount of the calculated value of the residual asset in the lease;
Debit 62 Credit 90 subaccount 1 “Revenue” - accounts receivable for lease payments are reflected in the amount of the present value of lease payments (current value minus the residual asset in the lease);
If the lease agreement is concluded outside the normal course of business of the organization, then the accounting procedure is as follows:
Debit 91 subaccount 2 “Other expenses” Credit 01 – the disposal of an asset in the amount of the book (residual) value is reflected in other expenses;
Debit 01 Credit 91 subaccount 1 “Other income” - the residual asset in the lease was capitalized in the amount of the calculated value of the residual asset in the lease and other expenses were reduced;
Debit 62 Credit 91 subaccount 1 “Other income” - other income is reflected in the amount of the present value of lease payments;
Debit 91 subaccount 1 “Other income” Credit 91 subaccount 9 “Balance of other income and expenses” - other income is reflected due to the excess of the present value of lease payments over the current value of the asset;
Debit 91 subaccount 9 “Balance of other income and expenses” Credit 91 subaccount 2 “Other expenses” - other expenses are reflected due to the excess of the current value of the asset over the present value of lease payments. There is another feature of a lease with the transfer of the main risks and benefits without subsequent transfer of ownership is that when the subject of the lease is returned to the lessor at the end of the lease term, the residual asset in the lease is transferred to the type of asset whose characteristics it corresponds to and is accounted for in accordance with with the accounting procedure for this type of assets. The book value of the residual asset at the time of its return to the lessor upon return from the lease is accepted as the initial cost of the asset (clause 41 of the draft PBU).
Accounting by the lessor of the lease while maintaining the main benefits and risks
In this case, after transferring the asset to the lessee, the lessor does not write off the leased item, but continues to maintain the same accounting records. This procedure changes only when the conditions for using the leased item change. Once the lessor transfers the leased asset to the lessee, it recognizes a lease receivable and a lease liability. The following is the procedure for valuing accounts receivable:
1) the effective rental interest rate is determined, at which the lessee attracts borrowed funds under comparable conditions
2) the present value of lease payments is calculated by discounting their nominal values in accordance with the payment terms of each payment (p45)
The discount formula is as follows:
P = N · (1 – 1/(1 + r/ 100%) t) / r, where:
P – present value of the totality of annuity rental payments;
N – nominal value of one payment from the totality under consideration (amount of money to be paid or received within one payment);
r – interest rate for the period of time between two annuity payments;
t is the number of annuity payments in the population under consideration.
The lessor has the right not to apply this calculation procedure in two cases:
1) under rental agreements
2) under other lease agreements, if they are concluded for a period of less than 12 months and their renewal is not expected
As for interest and rental income, they are included in revenue or other income of the lessor, depending on what activity of the organization - ordinary or other - the asset is leased. In conclusion, we note that the current rules for accounting for leases differ in many respects from those described in the proposed draft PBU “Lease Accounting”. The new PBU contains a large number of innovations that require additional explanations for practicing accountants. Despite the fact that the draft document has been under development since 2010, the need to create a new PBU is still relevant today.
The Russian Ministry of Finance has developed a new Federal Accounting Standard (FSBU) “Lease Accounting”. Draft Standard posted for public comment in the public domain. In this article V.V. Priobrazhenskaya, Ph.D. (Ministry of Finance of Russia), introduces readers to the features of the development of this FSBU, tells who should apply it, new terms and definitions, and the classification of accounting objects.
The procedure for developing federal accounting standards
An accounting standard is a document that establishes the minimum necessary requirements for accounting and acceptable methods of conducting it. Federal standards are approved by regulatory legal acts of the Ministry of Finance of Russia (orders), are mandatory and are applied regardless of the type of economic activity of the organization. In fact, federal accounting standards now refer to documents previously called accounting regulations (PBU). In the long term, it is expected that federal standards will completely replace PBUs. However, PBU and other rules for maintaining accounting and preparing financial statements approved by the Ministry of Finance of Russia continue to be in force until the entry into force of federal standards containing the relevant norms. Moreover, in connection with the adoption of amendments to the Federal Law of December 6, 2011 No. 402-FZ “On Accounting” (introduced by the Federal Law of July 18, 2017 No. 160-FZ), the status of these PBUs has been changed. The provisions approved by the Ministry of Finance of Russia in the period from 10/01/1998 to 01/01/2013 are recognized as federal accounting standards. Thus, from July 19, 2017 (from the date of entry into force of these changes), the accounting provisions are considered federal accounting standards.
As part of the new stage in the development of domestic accounting methodology, state-public regulation of accounting is in effect. This means that part of the functions of regulating accounting, which previously belonged to the state, is now transferred to the public in the form of non-state regulatory entities. An important role in this system is given to the issuance of accounting standards, which includes the following stages.
Stage 1- approval or revision of the Program for the development of federal accounting standards (hereinafter referred to as the Program). The program is adopted in order to ensure compliance of federal standards with the needs of users of accounting (financial) reporting, IFRS, and the level of development of accounting science and practice. The program is a list of federal standards that are subject to development, amendment or recognition as invalid. Currently, the developers are guided by the Program for the Development of Federal Accounting Standards for 2017-2019. .
Stage 2- development of a draft standard in accordance with the Program. Accounting legislation stipulates that draft federal standards are developed by non-governmental bodies. However, if no subject of non-state regulation of accounting undertakes to develop a federal standard, then the corresponding standard is developed by the Ministry of Finance of Russia. Thus, the developer of the FSBU project “Lease Accounting” is the Ministry of Finance of Russia.
Stage 3- public discussion of the draft standard and adoption of its final version based on the results of public discussion. At this stage, the developer must make the draft standard publicly available on its website for public comment. Any interested parties can send comments to the developer on the draft standard in writing. The minimum period for public discussion of the standard is three calendar months.
Stage 4- examination of the draft standard. After the end of the public discussion of the FSBU draft, the developer, if necessary, finalizes the text of the draft taking into account the comments received. The final version is sent for consideration to the Accounting Standards Council, created under the Ministry of Finance of Russia and consisting of representatives of subjects of state and non-state regulation of accounting. At this stage, the Council can make either a positive or negative decision. In addition, if the draft standard, in the opinion of the Council, can be accepted for approval, but there are technical or editorial comments on the text of the draft, the Council makes appropriate corrections. The list of such changes is sent to the Ministry of Finance of Russia along with the conclusion.
Stage 5- approval of the relevant regulatory legal act. If, based on the results of the examination, the Council came to the conclusion that it is advisable to adopt the FSBU draft, and this draft complies with Russian legislation, then it is approved by the Russian Ministry of Finance in the prescribed manner.
Currently, the FSBU project “Lease Accounting” is at the third stage of issuing standards. The FSBU project “Lease Accounting” developed by the Ministry of Finance of Russia is posted on the official website for public discussion. The website also contains a comment submission form, through which any interested party can send their suggestions and comments to the developer. The expected completion date for the public discussion of the FSBU “Lease Accounting” is 10.10.2017.
Features of the development of the FSBU “Lease Accounting”
According to the Federal Law “On Accounting”, the basis for the development of federal standards is International Financial Reporting Standards (IFRS). In this regard, FSBU “Lease Accounting” was developed on the basis of the new IFRS for leases - IFRS (IFRS)16 “Rease”.
Compared to the previous edition of the lease standard (IAS 17 Leases), the new standard involves a significant change in the way leases are disclosed in the lessee's financial statements. In particular, IFRS excludes the division by the lessee of lease agreements into operating and financial. It is intended that all leases should be reflected on the lessee's balance sheet in a manner similar to that previously applied to finance leases. An increase in the number of assets recorded by lessees will also entail an increase in the volume of liabilities, which, in turn, will lead to changes in a number of financial indicators.
As for lessors, the reporting procedure for them does not change noticeably. Under IFRS 16 Leases, lessors will continue to be required to classify subdivided leases into operating and finance leases. However, IFRS 16 “Leases” has significantly revised the concept of lease itself, and therefore some of the transactions that were previously classified and reflected by both the lessee and the lessor as leases will not be considered leases in accordance with the new IFRS. In addition, special attention is paid to agreements that, along with leases, contain significant service components. The standard requires that the cash flows from such arrangements be separated and that lease transactions be recorded separately from service transactions.
The listed changes in the procedure for reflecting leases according to IFRS, according to the developers of international standards, should lead to a more reliable reflection of assets and liabilities, as well as to greater transparency when reporting information on leasing activities.
Scope of application of FSBU “Lease Accounting”
The standard should be applied by all organizations (except for public sector organizations) that receive or provide material assets (property) for temporary possession and (or) temporary use. We are talking, in particular, about the parties to lease agreements and lease agreements for certain types of property (rental, rental of vehicles, rental of buildings and structures, financial lease (leasing)). The Standard also applies to various types of sublease agreements. At the same time, the Standard should be applied regardless of the terms of financial lease (leasing) agreements, which provide for the accounting of property on the balance sheet of the lessor or lessee.
In addition, the Standard applies to gratuitous use agreements and lease agreements concluded on preferential terms, as well as when reflecting leaseback transactions.
The standard does not apply when providing:
1) subsoil plots for the purpose of developing natural resources;
2) for temporary possession and (or) use of material assets related to biological assets for accounting purposes;
3) for temporary use of material media in which the corresponding results of intellectual activity or means of individualization are expressed;
4) rights of ownership and use of the object of the concession agreement.
Terms and definitions in FSBU “Lease Accounting”
The Standard contains a section on terms and definitions that is atypical for the domestic accounting regulatory system.
The conceptual apparatus was introduced into the Standard in accordance with established requirements. The Standard states that terms defined in other regulatory legal acts on accounting and preparation of accounting (financial) statements are used in the Standard in the same meaning as they are used in these regulatory legal acts.
Additionally, the Standard defines meanings for the following terms:
- actual cost of the right to use the lease;
- rental period;
- useful life (SPI) of the leased item;
- economic life of the leased item;
- fair value;
- incentive payments;
- current replacement cost of the leased item;
- liquidation value of the leased item.
The listed terms will be discussed in more detail below, when presenting the relevant issues.
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Classification of lease accounting objects
One of the main points in applying the Standard is determining whether lease accounting items arise as part of the execution of concluded contracts. For recognition of lease accounting objects the following conditions must be simultaneously met:
1) the lessor provides the lessee with the leased item for a certain period;
2) the subject of the lease can be identified. In this case, the leased item is identified if it is defined in the lease agreement, and the lessor does not have the opportunity to replace the leased item at any time during the lease period that is economically beneficial for him;
3) the lessee has the right to receive substantially all economic benefits and benefits from the use of the leased asset during the lease term;
4) the lessee has the right to determine the method of use of the leased item during the lease period. It is considered that such a right belongs to the tenant if at least one of the following conditions is met:
a) the tenant has the right to determine the procedure for using the leased item, that is, how and for what purpose the leased item is used; or
b) the procedure for using the leased item is predetermined in the agreement, but the lessor has no right to further change such procedure for use during the lease term. In this case, the lessee has the right to determine the parameters of production or use of the leased item, for example, to change the type of product, production period, decision on product release; or
c) the procedure for the tenant’s use of the leased item is predetermined, but not due to the restrictions imposed by the lessor, but due to the uniqueness of the leased item for use by the tenant. For example, in the case when the leased item is created, designed or brought into a state determined specifically for the order of use by the tenant.
If the listed conditions are met, then the objects are classified as rentals.
If such conditions are not met, then in accounting the corresponding transactions are reflected as the provision of services.
Initially the classification is made on lease start date, which is the earlier of two dates:
- date of conclusion of the lease agreement;
- the date the parties assumed obligations regarding the basic terms of the lease.
Reclassification of lease accounting objects is carried out only when the corresponding lease agreement is changed.
The date on which the leased item becomes available for use by the lessee is defined as rental start date. From this date is calculated rental period. The lease term is the non-cancellable period during which the lessee has the right to control the leased item or the number of units of production or similar units expected to be obtained from the use of the leased item. The specified period is determined based on a combination of factors, in particular:
- terms and conditions established by the lease agreement (including periods that do not provide for lease payments);
- opportunities and intentions to extend or shorten the terms established by the lease agreement when the costs associated with such changes are not significant.
The lease term is revised by the lessor in the event of a change in the lease agreement, and by the lessee after the start date of the lease in the event of a significant event that is within the control of the lessee and affects the change in the data that was taken into account when determining the lease term.
Particular attention should be paid to the concept and structure of rental payments.
Lease payments are payments that condition the tenant’s right to use the leased item and do not include capital expenses. For the purposes of the Standard, lease payments include, in particular:
1) payments determined in a fixed amount and made periodically or at a time. In this case, it is necessary to exclude incentive payments, which means payments made by the lessor in favor of the tenant in connection with the execution of the lease agreement, or reimbursement by the lessor of the tenant’s expenses;
2) variable payments that depend on the income or products received as a result of using the leased item, on the consumer price index or other indicators and are determined as of the start date of the lease;
3) the fair value of other consideration determined at the commencement date of the lease. In this case, fair value is determined in the manner prescribed by IFRS, in particular, IFRS 13 “Fair value measurement”;
4) payments related to the extension or reduction of the lease term established by the lease agreement, when the possibility and intention of such a change are taken into account when determining the lease term;
5) payments related to the right to purchase the leased item by the tenant, in the case where the tenant intends to exercise such a right;
6) the liquidation value of the leased item, guaranteed by the lessee or another party not related to the lessor. The salvage value of the leased asset is the estimated amount that the lessor expects to receive from disposal (specifically, sale) of the leased asset at the end of the lease term, less the estimated disposal costs.
The article outlines the main aspects of the development of the federal accounting standard “Lease Accounting”, as well as general issues of the draft of the specified FSB.
In addition to these issues, the draft FSBU also contains the procedure for accounting for leases by the lessee and the lessor, features of accounting for sublease, leaseback, lease on preferential terms (free use or lease at a price significantly lower than the market value). In addition, the project pays special attention to the disclosure of information about leases in the accounting (financial) statements of the lessee and the lessor.
The listed issues are expected to be considered in the following articles.
Please note that the FSBU project “Lease Accounting”, posted for public discussion, represents a new format for methodological accounting documents. However, a large period of time is allotted for studying the document and setting up the corresponding accounting process: according to the Program, the project in question should come into force in 2020.
Literature:
1. Federal Law “On Accounting” dated December 6, 2011 No. 402-FZ.
2. V.V. Priobrazhenskaya. Methodology, theory and practice of accounting: neoclassical approach to the scientific organization of activities // Audit statements, No. 5-6, 2017.
3. Order of the Ministry of Finance of Russia dated 06/07/2017 No. 2017 No. 85n “On approval of the program for the development of federal accounting standards for 2017-2019.” and on the recognition of the order of the Ministry of Finance of the Russian Federation of May 23, 2016 No. 70n as invalid„
On approval of the program for the development of federal accounting standards for 2016-2018."
"(valid from 07/10/2017).
4. Order of the Ministry of Finance of Russia dated December 14, 2012 No. 145n “On the Council for Accounting Standards.”
5. International Financial Reporting Standard (IFRS) 16 “Rease” was put into effect on the territory of the Russian Federation by Order of the Ministry of Finance of Russia dated June 11, 2016 No. 111n.
6. Order of the Ministry of Finance of Russia dated May 16, 2016 No. 62n “On approval of the Requirements for the preparation of draft accounting standards” (valid from July 12, 2016).
7. IFRS 13 “Fair value measurement” was put into effect on the territory of the Russian Federation by order of the Ministry of Finance of Russia dated December 28, 2015 No. 217n, taking into account amendments to IFRS documents put into effect on the territory of the Russian Federation by orders of the Ministry of Finance of Russia dated June 27, 2016 No. 98n; dated July 11, 2016 No. 111n.
During the meeting, problems and issues related to the taxation of leasing operations were discussed. Special attention was paid to the features of the project of the new PBU “Rent Accounting”.
Accounting and tax accounting for leasing will partially converge, which may bring tax benefits
Almin Rabinovich began with the fact that the Russian Ministry of Finance published on its website a draft of a new PBU “Rent Accounting”. It is unlikely that it will be adopted in the first quarter of 2013. Since this provision is based on the principles of IFRS, as required by the Federal Law of 06.12.11 No. 402-ZF “On Accounting”. And a draft amendment has also been prepared for International Financial Reporting Standard (IAS) 17 “Leases”. Therefore, most likely, officials will approve the new PBU only after changes are made to this standard.
The presenter drew attention to the fact that the new provision is beneficial for lessees in terms of paying property taxes. “PBU “Rent Accounting” changes the procedure for forming the tax base, and not in favor of the budget,” the lecturer noted. After all, it is according to accounting data that the amount of property tax payable to the budget is determined. Let us remind you that if the property is taken into account on the balance sheet of the lessee, then its initial cost is formed based on the total amount of debt to the lessor under the agreement, excluding VAT (clause 8 of the Instructions approved by order of the Ministry of Finance of Russia dated February 17, 1997 No. 15). That is, it includes the cost of the object for the lessor, his income and other actual costs associated with the acquisition of a fixed asset.
Whereas in paragraph 13 of the draft new PBU it is stated that if the agreement provides for the transfer of ownership to the lessee, then the initial cost from him is taken equal to the amount that he would pay for the object, acquiring it into ownership on the terms of immediate payment. That is, the specified value is taken to be equal to the price of acquisition by the lessor of the property from the supplier on the terms of immediate payment. Similar rules are contained in tax accounting (paragraph 3, paragraph 1, article 257 of the Tax Code of the Russian Federation). And the purchase price from the supplier is always less than the amount of leasing payments, and the tax base for property tax will decrease accordingly. “Since in practice there are not as many transactions related to leasing and rental as transactions related to accounting for fixed assets, officials, presumably, will be willing to accept small budget losses,” the lecturer noted.
“One of the important differences between the new situation and the current situation is that financial lease (leasing) is not distinguished as a separate type of lease,” Almin Rabinovich drew the attention of listeners. If, at the end of the lease agreement, ownership passes to the lessee, then this is reflected for both parties to the transaction as a sale and purchase with deferred payment.
At the same time, with the adoption of PBU “Lease Accounting”, the parties to the agreement will not be able to decide on whose balance sheet the leased asset will be accounted for. Based on the literal interpretation of paragraphs 21, 24, 25 of the draft, it follows that if at the end of the lease period the ownership right passes to the lessee, then the property from the moment of actual transfer for use is taken into account on its balance sheet. Therefore, he is the payer of property tax. In the case of a lease without transfer of ownership, the tax will most likely be paid by the lessor. Note that the condition on whose balance sheet the property will be taken into account is very important. After all, many tax saving methods are built on it. In particular, at present, it will be the party that takes the object into account on its balance sheet that will charge depreciation with the acceleration factor (clause 10 of Article 258, subclause 1 of clause 2 of Article 259.3 of the Tax Code of the Russian Federation).
But in order to put the new PBU into effect, it is necessary to repeal Article 31 of the Federal Law of October 29, 1998 No. 164-FZ “On Financial Lease (Leasing).” The corresponding bill “On amendments to certain legislative acts of the Russian Federation in connection with the adoption of Law dated December 6, 2011 No. 402-FZ “On Accounting”” has already been prepared by the Ministry of Finance. But it has not yet been submitted to the State Duma for consideration.
During the meeting, listeners had questions:
— Tell me, how will income and expenses under the leasing agreement be reflected?
— The difference between the price of immediate payment, reflected as proceeds from the sale of the leased asset, and the amount of lease payments, the lessor will reflect in accounting as interest income during the term of the leasing agreement. Consequently, the lessee will have interest expense for the same amount.
— How will this affect tax accounting? Will the provisions of Article 269 of the Tax Code of the Russian Federation apply to such interest?
— According to today’s standards of the Tax Code of the Russian Federation, this is not interest. But we cannot exclude the possibility of introducing changes to Chapter 25 of the Tax Code of the Russian Federation. After all, even now, during audits, tax authorities are trying to reclassify leasing agreements as purchase and sale agreements with deferred payment. Nevertheless, no one changes the concept of leasing in Federal Law No. 164-FZ of October 29, 1998, as in civil (Article 665 of the Civil Code of the Russian Federation) and tax (subclause 10, paragraph 1, Article 264 of the Tax Code of the Russian Federation) legislation.
— How will it be necessary to reflect transactions under leasing agreements concluded before the entry into force of the new PBU?
— I think that transitional provisions will apply. In addition, there are retrospective rules, that is, data in the balance sheet as of December 31 of previous reporting periods must be recalculated according to the new rules. But this will not affect the amount of property tax paid in previous periods. Because the tax base for this tax is not determined based on balance sheet data for previous years.
If you divide the leased asset into parts, depreciation can be written off as expenses much faster
The lecturer raised a very important question about what is the unit of accounting if the lessee acquires complex fixed assets. In accounting there is such a concept as a structurally articulated object (clause 6 of PBU 6/01). Moreover, each item can perform its functions only as part of the complex, and not independently. If one object has several parts, the terms of use of which differ significantly, each such part is taken into account as an independent object. They could be, for example, an aircraft engine and the aircraft itself or a car and a trailer.
Previously, officials were of the opinion that it was legal to take such property into account as separate inventory items in tax accounting (letter of the Ministry of Finance of Russia dated February 20, 2008 No. 03-03-06/1/121). Thus, aircraft engines are accounted for as independent depreciable assets. Consequently, depreciation on them will be written off as expenses much faster. After all, the useful life of an aircraft body is 15-20 years, while the useful life of an engine is only five years. Therefore, in this case, accounting and tax accounting coincide. “If something is not clear in the code, then you need to go to another area where these terms are explained (clause 1 of article 11 of the Tax Code of the Russian Federation). This is what the Russian Ministry of Finance thought, calling this area PBU 6/01,” the presenter noted.
Now, according to the Ministry of Finance, such property must be taken into account as a single object (letter dated March 10, 2011 No. 03-03-10/18). In addition, the write-off of part of an object must be reflected as a partial liquidation with a decrease in the value of the object (clause 2 of Article 257 of the Tax Code of the Russian Federation).
What tax risks arise with uneven leasing payments?
The leasing agreement may provide for uneven leasing payments. Often, in this way, lessees deliberately inflate the costs taken into account when calculating income tax. In practice, uneven lease payments are possible when the property is used seasonally.
“The lessee puts the leasing payment minus depreciation on a monthly basis as expenses (subclause 10, clause 1, article 264 of the Tax Code of the Russian Federation). However, if payments are uneven in certain periods, such payment may be less than depreciation. As a result, taking into account both the amount of depreciation and the lease payment in expenses, the lessee will take into account in total for the entire period of the contract more expenses than the amount of depreciation,” the lecturer said. The point here is that the Tax Code of the Russian Federation does not provide for negative values as a result of subtracting depreciation from the lease payment.
For example, the monthly depreciation amount is 100 units, and the lease payment is 150 units. With equal payments, the lessee will include 100 units in expenses each month. depreciation and 50 units each. leasing payments. Total 150 units. However, if, for example, in the first half of the contract period the payment is 250 units, and in the second - 50 units, tax expenses if they are incorrectly accounted for will amount to 100 units. depreciation and, respectively, 150 and 50 units. leasing payments. Total per month on average 200 units. ((250 150) : 2), which is 50 units. more than with equal payments.
Until 2012, fiscal officials, pointing out that uneven payments initially also included an advance payment, believed that they were recognized as justified for the purpose of taxing profits subject to the criteria of Article 40 of the Tax Code of the Russian Federation (letter of the Federal Tax Service of Russia dated August 17, 2009 No. 3-2- 13/179@). Now, when only prices for transactions with interdependent parties are subject to control, in order to make such claims, tax authorities will have to prove the receipt of an unjustified tax benefit (letter of the Ministry of Finance of Russia dated October 26, 2012 No. 03-01-18/8/149), which is much more difficult.