Overhaul of fixed assets increase in market value. How to correctly reflect the costs of repairs, modernization and reconstruction of fixed assets
The restoration of an object of fixed assets can be carried out through current, medium overhaul, as well as modernization and reconstruction. Unfortunately, in practice, it is very difficult to distinguish major repairs from modernization and reconstruction based on estimates and actually performed work. Meanwhile, it depends on this whether the corresponding expenses are included in the cost price, or are included in the capital investment accounts.
Definition of works
Work on the current and average repair of fixed assets includes work on their systematic and timely protection against premature wear and tear and maintaining them in working order during the useful life (clause 71 of the Methodological Guidelines for the Accounting of Fixed Assets, approved by order of the Ministry of Finance of Russia dated 20.07. 98? 33n). This does not improve the initial characteristics of the object.
Note that although the Methodological Guidelines were published on the basis of the Accounting Regulations "Accounting for Fixed Assets" PBU 6/97, approved by the order of the Ministry of Finance of Russia dated 03.09.97? 65n, which has been canceled since the beginning of this year, can they be used in a part that does not contradict the current PBU 6/01, approved by order of the Ministry of Finance of Russia dated 03.30.01? 26n).
During the overhaul of buildings and structures, worn-out structures and parts are replaced or replaced with more durable and economical ones that improve the operational capabilities of the repaired facilities, with the exception of the complete replacement of the main structures, the service life of which in this facility is the greatest (stone and concrete foundations of buildings, pipes underground networks, etc.).
During the overhaul of equipment and vehicles, a complete disassembly of the unit is carried out, repair of basic and body parts and assemblies, replacement or restoration of all worn parts and assemblies with new and more modern ones, assembly, regulation and testing of the unit (clause 72 of the Methodological Guidelines).
As mentioned above, the restoration of fixed assets is also carried out through modernization and reconstruction.
Unlike repair work, modernization and reconstruction work leads to an improvement (increase) in the technical and economic indicators of the functioning of fixed assets: the capacity of the equipment increases, the quality of products increases, the useful life increases, etc. their completion can increase the initial cost of objects.
Joint letter of the State Planning Committee of the USSR, the State Construction Committee of the USSR, the Stroybank of the USSR, the Central Statistical Administration of the USSR dated 08/05/84? NB-36-D, 23-D,? 144,? 6-14 (respectively) "On the definition of the concepts of new construction, expansion, reconstruction and technical re-equipment of existing enterprises" defines reconstruction as the reorganization of existing workshops and facilities of the main, auxiliary and service purposes (without the expansion of existing buildings and structures of the main purpose) associated with the improvement production and an increase in its technical and economic level based on the achievements of scientific and technological progress, carried out under a comprehensive project for the reconstruction of the enterprise as a whole in order to increase production capacity, improve quality and change the product range, mainly without increasing the number of employees while improving their working conditions and environmental protection.
During the reconstruction, the following should be provided:
Increase in production capacity primarily by eliminating imbalances in technological links;
Introduction of low-waste, waste-free technologies and flexible production;
Reduction in the number of jobs;
Increase in labor productivity;
Reducing the consumption of materials and production costs;
Increase of capital productivity and improvement of other technical and economic indicators of the operating enterprise.
Accounting and taxation
The question arises: why is it so important to correctly determine whether these costs are related to the repair or modernization, reconstruction of the facility?
The cost of products (works, services) as the cost of maintaining the production process includes the costs of maintaining fixed assets in working order (costs for technical inspection and maintenance, for carrying out current, average and major repairs) (sub. "E" clause 2 Regulations on the composition of costs ..., approved by the Government of the Russian Federation dated 05.08.92? 552). The costs of modernizing equipment, as well as the reconstruction of fixed assets are not included in the cost of products (works, services).
Therefore, depending on the scope of work related to the restoration of fixed assets, their cost may be included in the cost of products (work, services) or should be recorded on capital investment accounts.
Example 1.
The organization contracted overhaul of the production building. The cost of the work performed was 120,000 rubles, including VAT - 20,000 rubles. The funds were transferred to the contractor in full.
The following entries are made in accounting:
Debit 20 Credit 60- 100,000 rubles. - the work performed by the contractor on the overhaul of the production premises is reflected;
Debit 19 Credit 60- 20,000 rubles. - reflected the VAT paid to the contractor;
Debit 60 Credit 51- 120,000 rubles. - funds were transferred to the contractor;
Debit 68 subaccount "Calculations for VAT" - 20,000 rubles. - accepted for deduction VAT paid to the contractor.
Accounting for costs associated with the modernization and reconstruction of fixed assets is carried out in accordance with the procedure established for accounting for capital investments (clause 73 of the Methodological Instructions).
Capital investments, both according to the old and new Charts of Accounts, are accounted for on account 08 “Capital investments” (“Investments in non-current assets”). The change in the initial cost of fixed assets during completion, retrofitting and reconstruction is reflected in the debit of account 01 "Fixed assets" in correspondence with account 08.
Modernization and reconstruction of fixed assets can be carried out by the organization on its own, or it can be carried out by a contractor.
Contractually made capital investments are accounted for in the debit of account 08 in correspondence with the credit of account 60. At the same time, the costs of the organization reflected in the account of capital investments, upon completion of the completion, retrofitting, reconstruction of the fixed assets object or upon completion of work of a capital nature, are written off to debit of the account of accounting of fixed assets.
The amounts of VAT presented by contractors and paid by them during capital construction (recorded on account 19 "Value added tax on acquired values") are subject to deductions (clause 6 of article 171 of the Tax Code of the Russian Federation). Tax deductions are made on the basis of invoices issued by sellers when a taxpayer purchases goods (works, services) (clause 1 of article 172 of the Tax Code of the Russian Federation).
Example 2.
The organization contracted the reconstruction of the production facility. The cost of work under the contract amounted to 240,000 rubles. including VAT - 40,000 rubles. Payment was made after signing the certificate of completion. The amount of depreciation charges on fixed assets, calculated from the beginning of the year to the last day of the previous month, amounted to 30,000 rubles.
Debit 08 Credit 60- 200,000 rubles. - Reflected capital investments for the reconstruction of an industrial building;
Debit 19 Credit 60- 40,000 rubles. - reflected the VAT paid to the contractor;
Debit 60 Credit 51- 240,000 rubles. - funds were transferred to the contractor;
Debit 01 Credit 08- 200,000 rubles. - the initial cost of the production building has been increased due to its reconstruction;
Debit 68 subaccount "VAT calculations" - 40,000 rubles. - accepted for deduction VAT paid to the contractor.
Before the beginning of the current year, the amount of expenses for the reconstruction and modernization of facilities after their completion increased the additional capital of the organization (clause 5.2 of PBU 6/97), with the exception of depreciation (clause 37 of the Methodological Recommendations). Therefore, one more wiring should have been used:
Debit 88 Credit 87- 170,000 rubles. (200,000 - 30,000) - the cost of modernizing the production building is charged to additional capital.
But in PBU 6/01, this norm is absent, and now this posting is not made in the accounting.
If, when performing the modernization of an object of fixed assets, construction and installation work is carried out on its own, then one feature must be taken into account. From January 1, 2001, the object of VAT taxation is the performance of construction and installation work for own consumption (subparagraph 3 of paragraph 1 of article 146 of the Tax Code of the Russian Federation). Such works include construction and installation work performed in an economic way directly by taxpayers for their own needs.
The date of completion of construction and installation work for own consumption is determined as the day of registration of the corresponding object, completed capital construction (clause 10 of article 167 of the Tax Code of the Russian Federation).
When an organization carries out the installation of equipment, reconstruction, modernization of fixed assets on its own, the date of completion of these works for tax purposes will be the day of completion of these works and the preparation of relevant documents confirming this fact.
Example 3.
The organization carries out in an economic way the reconstruction of the production premises. The cost of materials purchased for these purposes amounted to 240,000 rubles, including VAT - 40,000 rubles. Payroll with the accompanying unified social tax and insurance contributions to workers employed in these jobs amounted to 100,000 rubles.
The following entries are made in the accounting:
Debit 10 Credit 60- 200,000 rubles. - reflects the cost of materials purchased for the reconstruction of an industrial building;
Debit 19 Credit 60- 40,000 rubles. - reflected the VAT paid to the supplier of materials;
Debit 60 Credit 51- 240,000 rubles. - funds are transferred to the supplier of materials;
Debit 08 Credit 10- 200,000 rubles. - materials for the reconstruction of the production building were transferred;
Debit 08 Credit 70, 69 - 100,000 rubles. - accrued wages, unified social tax and insurance premiums, workers performing reconstruction;
Debit 08 Credit 68- 60,000 rubles. ((200,000 rubles + 100,000 rubles) x 20%) - VAT was charged on construction work related to the reconstruction of an industrial building, performed on its own.
Let's decide on VAT deductions. Deductions are subject to the tax amounts presented to the taxpayer for goods (work, services) purchased by him to perform construction and installation work, as well as the tax amounts calculated by taxpayers when performing construction and installation work for their own consumption (clause 6 of article 171 of the Tax Code of the Russian Federation) ... Therefore, in our example, VAT amounts should be deducted:
Paid for the purchase of materials used in the reconstruction of the premises - 40,000 rubles;
Calculated when performing construction and installation work for own consumption - 60,000 rubles.
This will be reflected in the accounting as follows:
Debit 19 Credit 08- 60,000 rubles. - VAT is reflected calculated on construction work performed on its own;
Debit 01 Credit 08- 300,000 rubles. - the initial cost of the production building has been increased due to its reconstruction;
Debit 68 subaccount "VAT calculations" Credit 19 - 60,000 rubles. - accepted for deduction VAT, calculated on construction work performed on their own.
However, the Government of the Russian Federation (decree of 12/03/2000? 914) and the Ministry of Taxes and Duties of Russia (order of 12/20/2000? BG-3-03 / 447) somewhat differently propose to deduct VAT for construction work performed on their own. In the Rules for maintaining journals of accounting of received and issued invoices, books of purchases and books of sales in calculations for value added tax (clauses 12, 25) and Methodological Recommendations for the application of Chapter 21 "Value Added Tax" of the Tax Code of the Russian Federation "( p. 46) it is determined that not all VAT calculated when performing construction and installation works for own consumption is subject to deduction, but the difference between this amount and the VAT shown for deduction on purchased goods (works, services) used in the performance of these works. This will be reflected in the accounting as follows:
Debit 68 subaccount "VAT calculations" Credit 19 - 40,000 rubles. - accepted for deduction of VAT paid to the supplier of materials.
Debit 19 Credit 08- 20,000 rubles (60,000 - 40,000) - the difference between the calculated VAT on construction work performed on its own and the VAT paid for materials is reflected;
Debit 01 Credit 08- 340,000 rubles. - the initial cost of the production building has been increased due to its reconstruction;
Debit 68 subaccount "VAT calculations" Credit 19 - 20,000 rubles. - accepted for deduction of VAT, calculated according to the Methodological Recommendations.
The contradiction is obvious. Therefore, if you do not accept the position of the tax department (that is, be guided by the Tax Code of the Russian Federation), then it is likely that you will have to defend the calculation of VAT on construction and installation work performed for your own consumption in the courts.
Since January 1, 2001, only construction and installation work performed directly by taxpayers for their own needs are subject to VAT taxation. If the facility is modernized on its own, but in a different way, then VAT should not be charged.
Note that if the duration of the restoration of an object of fixed assets, carried out through repair, modernization or reconstruction, exceeds 12 months, then for this period the depreciation of the object is suspended (clause 23 of PBU 6/01).
Accounting next year
From January 1, 2002, Chapter 25 of the Tax Code of the Russian Federation comes into force, and for tax purposes, the costs associated with the repair of fixed assets will have to be taken into account according to the new norms of the Tax Code of the Russian Federation.
The cost of repairing property, plant and equipment is treated as other expenses. Moreover, for tax purposes, they are recognized in the reporting period in which they were carried out (Article 260 of the Tax Code of the Russian Federation).
But they are recognized in different ways for organizations.
So, the organizations of industry, agro-industrial complex, forestry, transport and communications, construction, geology and exploration of subsoil, geodetic and hydrometeorological services, housing and communal services have the right to refer to other expenses the entire amount of actually incurred expenses for the repair of fixed assets.
For other organizations, the order is somewhat different. In the reporting period, no more than 10% of the original (replacement) cost of the object can be attributed to other expenses. If the actual expenses exceed this amount, then the remaining part is included in other expenses on a straight-line basis over five years or the useful life of the item, depending on the depreciation group to which the item is included.
If the object is included in the first - third depreciation groups (the useful life of objects for these groups is from one to five years), then the excess amount will be evenly included in other expenses during this period.
Example 4.
On the balance sheet of the trade organization there is an object included in the third depreciation group. Its useful life is 4 years. The initial cost of the object is 80,000 rubles. In the reporting period (in the second year of using the object), its repair was carried out, the cost of which was 17,100 rubles. At the end of the reporting period, the facility is to be used for another 26 months.
In the reporting period, the organization can only attribute a part of the expenses incurred. Their amount will be 8,000 rubles. (80,000 rubles x 10%).
The rest is 9,100 rubles. (17,100 - 8,000) included in other expenses on a straight-line basis over the remaining useful life of 26 months. That is, every month it will be possible to refer to other expenses for 350 rubles. (9 100 rubles: 26 months).
For objects included in other depreciation groups, the amounts exceeding are included in other expenses on a straight-line basis over five years. Note that the useful life of the objects included in the fourth to tenth depreciation groups is over five years.
Establishing an absolute figure of five years for the allocation of costs may result in some of the actual costs of refurbishment of the facility not being included in other costs. This will happen on condition that the object is repaired when the remaining useful life of the object is less than five years, and the object is written off at the end of its useful life.
Of course, it would be more logical not to take into account part of the cost of repairing the object when it is written off before the expiration of its useful life - then part of the cost of the object will not be taken into account when calculating income tax. If the object was fully used for this period, then, most likely, all the costs of its repair could also be taken into account in other costs.
Objects assigned to the fourth depreciation group fell out of favor. Their useful life is from five to seven years. Most likely, repairs will be needed in the third or fourth year of their use and the same three to four years remain until the end of their useful life. And it will be necessary to include in other costs the exceeded amount at least five years.
Planning of costs for the restoration of fixed assets
Classification of repair costs
Registration of requests for repairs
Reflection of expenses for repair, modernization, additional equipment in the accounting of budgetary organizations
Each institution has fixed assets on its balance sheet as non-financial assets. During operation, fixed assets wear out; to maintain them in working order, repairs are carried out.
Work on the restoration of fixed assets can be classified according to the nature of the types of work into:
- Maintenance;
- major overhaul;
- modernization;
- reconstruction;
- additional equipment.
Note!
The type of work depends on the reflection of operations in accounting and tax accounting: the costs of current, medium and major repairs of fixed assets are taken into account as part of the current expenses of the institution, and the costs of modernization, reconstruction are attributed to an increase in the initial cost of fixed assets.
Depending on whether the repair or modernization was carried out, the profit tax (provided that the work was carried out at the expense of funds received from entrepreneurial activity) and the targeted use of budget funds are calculated, since the costs of modernization and repair are reflected according to different KOSGU codes. If the fixed asset was acquired through entrepreneurial activity, the costs of repairing these objects reduce the income tax base as part of other expenses (clause 1 of article 260 of the Tax Code of the Russian Federation (hereinafter - the Tax Code of the Russian Federation)).
The institution has the right to dispose of the net profit received from entrepreneurial activity at its own discretion after paying the profit tax to the budget. Therefore, you first need to pay income tax, and the rest of the profit can be used to repair fixed assets.
For your information
During repair, reconstruction and modernization, works of a similar nature can be performed, it is not always easy to distribute them by type, and the inspection bodies find many mistakes made by accountants when reflecting these operations.
It is necessary to determine the types of work in order to plan the budget of expenditures, to correctly attribute the costs to items (sub-articles of KOSGU), to use budgetary and extra-budgetary funds for their intended purpose.
Repair- this is a set of works to eliminate malfunctions, restore the operability of non-financial assets, maintain technical, economic and operational indicators (useful life, power, quality of use) at the initially envisaged level, i.e., this is the restoration of the functions of fixed assets for their further use ... Repair involves preventive measures, elimination of damages and malfunctions, replacement of worn out structures and parts.
Note!
Although during the repair process, individual parts of the fixed asset can be replaced with more modern and durable ones, such an event is not associated with a change in the important technical and economic indicators of the fixed asset.
In terms of the volume and nature of the work performed, repairs can be current and major. They differ in complexity, volume, deadline and frequency.
Maintenance held several times a year, capital - no more than once a year or less. During current repairs, individual parts are replaced, during overhaul, the object is disassembled and defective units are replaced. During routine repairs, minor malfunctions found in the course of the daily use of the fixed asset are eliminated, while the object is practically not retired from service. Routine repairs are works on the systematic and timely protection of environmental facilities from premature wear through preventive measures.
Overhaul restore the lost original characteristics, eliminate malfunctions by replacing worn-out parts and assemblies.
For your information
There are no differences in the budget classification and the procedure for maintaining budget accounting between current and major repairs, so there is no need to differentiate such costs.
Modernization Is a set of works to improve the object of fixed assets, to improve the technical level and economic characteristics of the object by replacing its structural elements and systems with more advanced ones (for example, installing a larger RAM on a computer).
For your information
Modernization involves the replacement of units, while the replaced part must be serviceable before replacement. If a faulty unit is replaced during work, then such work is not an upgrade, but a repair.
Reconstruction- this is a change in the parameters of capital construction objects, their parts (height, number of floors, area, indicators of production capacity, volume) and the quality of engineering and technical support.
The concept of reconstruction is applicable only to capital construction objects (buildings, structures). It involves changing the parameters of the object. Also, the improvement of the quality of engineering and technical support can be attributed to the reconstruction.
Additional equipment- the addition of fixed assets with new parts, parts and other mechanisms that were previously absent, which will form a single whole with this equipment, give it new additional functions or change the performance indicators. Their separate application will be impossible.
Completion- this is the construction of new parts to a fixed asset (usually to real estate objects). In this case, the new parts must be inseparable from the main asset itself without causing damage.
Renovation planning
To determine which category to include expenses (repair, reconstruction, modernization or additional equipment), first of all, you need to find out what type of work needs to be done to restore fixed assets:
- if work is being carried out to restore operability, safety of technical characteristics or external changes that do not affect the change of the object of fixed assets to its original functions, then this is a repair;
- if work is carried out to improve the main characteristics and add new functions to a serviceable object, then this type of work should be attributed to reconstruction, modernization or retrofitting.
In this case, you need to determine the purpose of the operation:
If it is necessary to replace units or parts, this is modernization (reconstruction);
If units and parts are added to the object - additional equipment (completion).
As a rule, in organizations, by order, those responsible for the operation of property are appointed (for example, the head of the laboratory is responsible for laboratory equipment, a metrologist is responsible for measuring instruments, etc.). Their responsibilities include, among other things, drawing up requests for repairs or modernization for the coming financial year.
The organization develops the application form independently.
The head of the institution approves the applications.
Based on the applications, the economic department plans the amount by type of repair in the estimate of income and expenses. Each planned expense must be justified. This will make it possible to draw up a work plan, conclude contracts with suppliers for repair work, systematize the institution's activities for the maintenance and maintenance of property, guarantee the continuity of the production process, and ensure the effectiveness of the institution's main activities.
Fragments of applications by structural unit (laboratory for control of physical and chemical factors) are presented in the table.
Fragments of applications for the repair of fixed assets
Object name |
Application number |
Cause |
Planned activities |
Planned result |
The image on the monitor is not clear, adjustments cannot be eliminated |
Diagnostics and repair, if necessary - by means of a third-party organization |
|||
Automated workplace (computer included) |
Installing a hard drive in the system unit |
System unit repair, hard drive replacement |
Restoring the system unit |
|
Automated workplace (computer included) |
System resources - the amount of RAM - is insufficient to use the Bank-Client program |
Additional equipment with additional RAM |
Ability to use the Bank-Client program |
|
Autoclave AG-1000 horizontal |
System Automated Control System for Autoclave |
Autoclave modernization |
The ability to use the sterilization, indexing mode (time, pressure, temperature) |
|
Copy machine |
The product hums, but does not pick up paper from the tray |
Replacing a worn out roller with a new one |
Restoration of performance |
|
Car VAZ-2107 (Lada) |
Knock when shifting to subsequent gears |
Self-repair |
Restoration of performance |
|
Laboratory building |
Roof leaks |
Partial roof replacement |
Recovery of operational characteristics |
We conclude contracts for the implementation of work on the restoration of fixed assets
When concluding contracts with suppliers and contractors for repair work, it is necessary to determine what type of work for the restoration of fixed assets is provided for by this contract in order to correctly attribute the costs to KOSGU items.
If you are planning actions, measures that will increase the cost of fixed assets (reconstruction, modernization, etc.), you should use code 310 KOSGU "Increase in the value of fixed assets", but if it is said about the repair of a faulty fixed asset - code 225 KOSGU "Works, property maintenance services ".
Within the framework of one contract, various types of work may be envisaged, therefore, in the section "Subject of the contract", the costs of the corresponding types of work should be indicated separately. The contractor must draw up various reporting documents for the work performed.
We reflect the costs of current, average and major repairs in accounting
Expenses for current, average and major repairs of fixed assets are taken into account as part of the current expenses of the institution in accordance with subsection 225 of the KOSGU "Works, services for the maintenance of property". Note that the cost of purchasing spare parts (building materials) is reflected not in sub-article 225, but in sub-article 340 of KOSGU "Increase in the cost of inventories", write-off of consumed materials - in sub-article 272 of KOSGU "Consumption of inventories".
Note!
This rule does not apply if the cost of the materials used is included in the general estimate of the repair and is taken into account by the contractor when drawing up the acceptance certificate for the work performed.
Expenses for the repair of property are reflected on account 0.109.61.225 "Expenses for work, services for the maintenance of property in the cost of finished products, works, services".
If the costs of repairs are uneven throughout the year, they must first be reflected on account 0.401.50.000 "Deferred expenses" with subsequent equal write-off (clause 302 of the Instructions for the application of the Unified Chart of Accounts for accounting for state authorities, local governments, government bodies state extra-budgetary funds, state academies of sciences, state (municipal) institutions, approved by Order of the Ministry of Finance of Russia dated 01.12.2010 No. 157n (as amended on 06.08.2015; hereinafter - Instruction No. 157n)).
The spare parts remaining after repair must be capitalized, in accounting this will be reflected in the following records:
Account debit 0.105.00.000 "Inventories" (for the corresponding analytical accounts) Account credit 0.401.10.180 "Other income".
Costs that increase the cost of spare parts (such as the cost of delivering them to the institution or bringing them to a condition suitable for use) are first accumulated in account 0.106.00.000 "Investments in non-financial assets" (according to the corresponding analytical accounts).
After the final formation of the cost of spare parts, it is debited to the account 0.105.00.000 (according to the corresponding analytical accounts).
Situation 1
The institution entered into a contract for the repair of the copier at the expense of funds from business activities. During the repair, the worn pick-up roller was replaced with a new one.
The transaction costs should be reflected in the following accounting entry:
Account debit 2.109.61.225 Account credit 2.302.25.730.
Replacing a worn-out roller did not affect the improvement of the technical level and technical characteristics of the copier, therefore, equipment repairs are taken into account as part of the institution's operating expenses.
Modernization of fixed assets
During operation, fixed assets are morally and physically worn out. Upgrading is one way to restore them.
If, in the course of modernization, the initial indicators of the functions of the fixed asset (useful life, power or other technical characteristics) are improved or increased, then the costs of them increase the initial cost after the completion of all work.
The completion of the restoration work is formalized by an act of acceptance and delivery of the modernized facilities, which indicates data on changes in the technical characteristics and the cost of the fixed asset. On the basis of the act, the costs are written off to increase the value of the fixed asset in the Debit of account 0.101.00.000 "Fixed assets" (according to the corresponding analytical accounts).
2 ways to modernize fixed assets:
1) economic (by the institution's own resources);
2) contract (with the involvement of third-party organizations, entrepreneurs, citizens).
Documenting
All business transactions must be confirmed by primary documents (part 1 of article 9 of the Federal Law dated 06.12.2011 No. 402-FZ "On accounting", paragraph 7 of the Instruction to the Unified Chart of Accounts No. 157n), therefore, an order should be issued signed by the head institutions for the modernization of fixed assets.
In the order, it is imperative to indicate: the reasons, the timing of the modernization and those responsible for its implementation.
After the modernization, an act of acceptance and delivery of the modernized fixed assets is drawn up (according to the form No. OS-3 (0306002)). If the modernization was carried out in an economic way - in one copy, in a contractual way - in two: for yourself and for the contractor.
The act reflects:
- the cost of the fixed asset before the modernization;
- the amount of costs;
- the cost of the fixed asset after the work performed.
Based on the act, the accumulated costs are written off on account 0.106.00.00 "Investments in non-financial assets" and entries are made in the inventory card. The executed act is signed by:
- members of the commission on the receipt and disposal of non-financial assets created in the organization;
- employees responsible for carrying out the modernization of the asset, or representatives of the contractor;
- employees responsible for the safety of the fixed asset after modernization.
The signed act is approved by the head of the institution, after which the act is transferred to the accounting department.
Note!
If the contractor carried out the modernization of a building, structure or premises, these works are related to construction and installation, therefore, in addition to the act, an acceptance certificate should be signed in the form No. KS-2 and a certificate of the cost of the work performed and costs in the form No. KS-3 (approved by the Resolution Goskomstat of Russia dated 11.11.1999 No. 100).
When concluding an agreement on the restoration of a fixed asset, technical documentation and a construction estimate must be drawn up for all work (Article 743 of the Civil Code of the Russian Federation).
We reflect expenses in accounting
The costs of completing, re-equipping, reconstructing and modernizing fixed assets are preliminarily reflected and accumulated according to the debit of account 0.106.00.000 “Investments in non-financial assets” (according to the corresponding analytical accounts). This account reflects all the costs of these works:
- cost of materials consumed;
- depreciation of machinery and equipment that were used for work;
- wages of those employed in completion, reconstruction or modernization and social contributions from it;
- expenses for payment of services of third parties, etc.
After the completion of all work and the delivery of the completed (retrofitted, reconstructed or modernized) fixed asset, these costs are written off to increase its value in the Debit of account 0.101.00.000 "Fixed assets" (according to the corresponding analytical accounts).
Let us consider the procedure for reflecting the costs of modernizing fixed assets in accounting.
Situation 2
In August-September 2016, FBUZ "Center for Hygiene and Epidemiology" carried out the modernization of laboratory equipment "Sterilizer GP" by a contract method using funds received from entrepreneurial activities.
The cost of work performed by the contractor is 70,800 rubles, including VAT - 10,800 rubles.
The acceptance certificate for the work performed was signed in October.
The institution pays income tax on a quarterly basis. Accounting and tax accounting data are the same.
The initial cost of the equipment, at which it was taken into account, is 504,000 rubles. Listed as especially valuable movable property. Upon acceptance for accounting, the useful life was set to 7 years (84 months). Depreciation is charged on a straight-line basis.
For accounting purposes:
- the annual depreciation rate is 14.28572% (1/7 × 100);
- the annual amortization amount is 72,000 rubles. (504,000 rubles × 14.28572%);
- monthly amortization amount - 6,000 rubles / month. (72,000 rubles / 12 months).
Since the modernization lasted less than 12 months, during the period of its implementation the accountant did not stop calculating depreciation on laboratory equipment.
The modernization did not lead to an increase in the useful life of the equipment, therefore, for the purposes of accounting and tax accounting, the useful life of the modernized equipment was not revised.
During the period of modernization of the GP Sterilizer equipment, the following accounting operations should be performed:
in August-September:
Account debit 2.109.61.271 Account credit 2.104.24.410 - 6000 rubles. - accrued depreciation for the modernized equipment;
in October:
Account debit 2.106.21.310 Credit account 2.302.31.730 - 60,000 rubles. (70 800 rubles -10 800 rubles) - the cost of the contractor's work on the modernization of the fixed asset is taken into account;
Account debit 2.210.10.560 Account credit 2.302.31.730 - 10 800 rubles. - VAT included on the cost of the contractor's work;
Account debit 2.303.04.830 Account credit 2.210.10.660 - 10 800 rubles. - VAT is accepted for deduction;
Account debit 2.302.31.830 Account credit 2.201.11.610 - 70 800 rubles. - payment was made for the work of the contractor;
Credit account 18 (code KOSGU 310) - 70 800 rubles. - the outflow of funds from the institution's account is reflected;
Account debit 2.109.61.271 Account credit 2.104.24.410 - 6,000 rubles. - accrued depreciation for the modernized equipment;
Debit of account 2.101.24.310 Credit of account 2.106.21.310 - 60,000 rubles. - the initial cost of the equipment was increased by the amount of the cost of works on its modernization.
The initial cost of the equipment, taking into account the costs of modernization, will be 564,000 rubles. (504,000 rubles + 60,000 rubles).
For accounting purposes:
- the annual amortization amount is 80,571.46 rubles. (564,000 rubles × 14.28572%);
- the monthly amortization amount is 6714.29 rubles / month. (80,571.46 rubles / 12 months).
From October, the accrual of depreciation will be reflected by the entry:
Account debit 2.109.61.271 Account credit 2.104.24.410 - 6714.29 rubles. - accrued depreciation for the modernized equipment.
The costs of modernization must be reflected in the primary documents for accounting for fixed assets and in the inventory card for accounting for fixed assets.
Question by topic
Repair or modernization?
The organization purchased new monitors to replace the old inoperative ones. How to take into account such costs - as upgrades or as repairs?
Purchased parts of computer equipment (including monitors) cannot be separate items of fixed assets, since they perform their functions only as part of an associated set. Computers are counted as single inventory objects (letters of the Ministry of Finance of Russia dated 02.06.2010 No. 03-03-06 / 2110, 06.11.2009 No. 03-03-06 / 4/95). This procedure applies to both tax and accounting.
Spare parts required for the repair and replacement of worn-out parts in equipment and machines are classified as inventories, which means that the cost of purchasing them is attributed to article 340 of KOSGU "Increase in the cost of inventories."
It follows from this that the operation of replacing an inoperative monitor should be regarded as the repair of computer equipment, the costs of which do not increase the initial cost. Consequently, the cost of spare parts that were used in the repair process is attributed to the institution's expense accounts 0.106.61.000, or 0.106.71.000, or 0.109.81.000, or 0.109.91.000 under code 272 KOSGU "Consumption of inventories".
If the repair work is performed by a third-party organization, the costs of paying for its services should also be taken into account on expense accounts under code 225 KOSGU "Works, services for the maintenance of property"
The same rules apply to other parts of computing hardware: network cards, DVD drive, motherboard, etc.
______________________
The accounting procedure for replacing old, but functional parts of a fixed asset with new and more modern ones is not defined by legislation. As a rule, if such a replacement leads to an increase in the technical characteristics of the object, then the work is considered as an upgrade and the cost of the expended parts, the costs of their installation are included in the initial cost of the computer (for example, replacing an old monitor with a new one with a larger screen area, increasing RAM or hard memory) ).
If, as a result of the work, there is no improvement in the technical characteristics of the fixed asset, the costs of the work are considered as repair costs, reflected in the cost accounting accounts.
Situation 3
FBUZ replaced the old monitor with a new one with a larger screen area and improved technical characteristics. The work was carried out at the expense of funds from entrepreneurial activities.
The cost of a new monitor is 31,860 rubles. (including VAT 4860 rubles).
Delivery costs by a transport company - 1180 rubles. (including VAT 180 rubles).
The original cost of the old monitor is 10,000 rubles, depreciation is 8,000 rubles.
The market price of the old monitor at the date of the modernization work is 3,500 rubles.
Let's reflect the cost of modernization:
Account debit 2.106.24.340 Account credit 2.302.34.730 - 27,000 rubles. - reflects the cost of purchasing a monitor and accounts payable to the supplier;
Account debit 2.210.10.560 Account credit 2.302.34.730 - 4680 rubles. - "input" VAT on the cost of a new monitor is taken into account;
Account debit 2.302.34.830 Account credit 2.201.11.610 - 31,860 rubles. - the payment for the purchased new monitor was made from the personal account of the institution in the treasury;
Account debit 2.106.24.340 Account credit 2.302.22.730 - 1000 rubles. - reflects the cost of delivery of the monitor and accounts payable to the transport company;
Account debit 2.210.10.560 Account credit 2.302.22.730 - 180 rubles. - "input VAT" on transport services has been taken into account;
Account debit 2.302.22.830 Account credit 2.201.11.610 - 1180 rubles. - expenses for delivery of the monitor have been paid;
Account debit 2.105.26.340 Account credit 2.106.24.340 - 28,000 rubles. (27 000 + 1000) - the initial cost of the monitor is taken into account as part of inventories;
Account debit 2.303.04.830 Account credit 2.210.10.660 - 4860 rubles. (4680 + 180) - accepted for deduction of VAT on the cost of the monitor and the cost of transport services;
Account debit 2.104.24.410 Account credit 2.101.24.410 - 8000 rubles. - depreciation of the old monitor has been written off;
Account debit 2.401.10.172 Account credit 2.101.24.410 - 2000 (10,000 - 8000) rubles. - the residual value of the old monitor has been written off;
Account debit 2.105.36.340 Account credit 2.401.10.180 - 3500 rubles. - the old monitor was capitalized at the market price;
Account debit 2.106.21.310 Account credit 2.105.26.440 - 28,000 rubles. - the cost of a new monitor was written off to increase the cost of a computer, an increase in investments in fixed assets;
Debit of account 2.101.24.310 Credit of account 2.106.21.310 - 28,000 rubles. - the cost of upgrading the computer is included in the original cost.
conclusions
The institution should have an internal regulatory document (eg. Regulation), which will define what is considered a major overhaul and what is current.
Determine the types of work for the restoration of fixed assets for the correct allocation of costs to the corresponding items of KOSGU should be at the initial stage of planning the budget of expenditures.
The types of repair work must be delimited, any type of work must be justified and documented.
Costs should be correctly reflected in accounting: expenses for current, average and major repairs of fixed assets are taken into account as part of the current expenses of the institution; the costs of additional equipment, reconstruction, modernization are capital, therefore, the costs of them are written off to increase the initial cost of fixed assets.
S. S. Velizhanskaya,
Deputy Chief Accountant of FFBUZ "Center for Hygiene and Epidemiology in the Sverdlovsk Region in the Oktyabrsky and Kirovsky Districts, the city of Yekaterinburg"
Is it legal to attribute the cost of the work of the contractor for the overhaul of the air intake to the increase in the initial cost of fixed assets in tax and accounting?
The company has entered into a contract for a major overhaul. Is it possible to attribute the cost of work to an increase in the cost of OS - read the article.
Question: Our organization has entered into an agreement with a contractor for the overhaul of the water intake unit (VZU). In fact, these works are not related to major repairs, but reconstruction, in accordance with the departmental building standards "(VSN) No. 58-88 (r)" Regulations on the organization and implementation of reconstruction, repair and maintenance of buildings, communal and socio-cultural facilities " approved by the Order of the State Committee for Architecture and Construction under the USSR Gosstroy No. 312 dated November 23, 1988. There is no reconstruction project, but there is only an estimate for the overhaul, which is an integral part of the contract with the contractor. , we entered into an agreement with GAU MO "Mosoblgosexperiza", the services of which are paid. Question: Is it legal to assign the cost of the work of the contractor for the overhaul of the air intake, technical supervision services and services of GAU MO "Mosoblgosexperiza" to increase the initial cost of OS in tax and accounting department couple?
Answer: To determine whether the restoration of real estate is repair, reconstruction or modernization, be guided by the following documents: Regulations on preventive maintenance of industrial buildings and structures MDS 13-14.2000, approved by Resolution of the USSR State Construction Committee of December 29, 1973 No. 279; Departmental building standards (VSN) No. 58-88 (R), approved by the order of the State Committee for Architecture under the USSR State Construction Committee of November 23, 1988 No. 312; by letter of the Ministry of Finance of the USSR dated May 29, 1984 No. 80.
The purpose for which the work is carried out matters. The purpose of the reconstruction: to reorganize the facility so that its capacity increases, the quality of products improves or its range becomes wider (paragraph 3, clause 2, article 257 of the Tax Code of the Russian Federation). The purpose of the repair: to eliminate the malfunction that interferes with the operation of the facility, to restore operability. This does not change the properties of the object.
The attribution of the cost of the work of the contractor for the overhaul of the air intake, technical supervision services and the increase in the initial cost of fixed assets in tax and accounting is legitimate if, as a result of the work carried out, the capacity of the facility has increased.
Justification
How does repair differ from reconstruction and modernization
Since repairs, reconstruction and modernization in accounting and taxation are reflected in different ways, it is important to correctly classify them. The cost of restoration work does not matter to distinguish between such concepts. The purpose for which such work is carried out is important here (see table below):
Type of work | Target |
Repair | Eliminate the malfunction that interferes with the operation of the facility, restore operability. At the same time, the properties of the object do not change (letter of the Ministry of Finance of Russia dated March 24, 2010 No. 03-03-06 / 4/29) |
Modernization | Change the technological and service purpose of the object, improve some of the properties of the fixed asset. For example, in order to work with him it was possible with increased loads (paragraph 2 of clause 2 of article 257 of the Tax Code of the Russian Federation) |
Reconstruction | Rebuild the facility so that its capacity increases, the quality of products improves or its range becomes wider (paragraph 3, clause 2, article 257 of the Tax Code of the Russian Federation) |
To determine if the restoration of a property is a renovation, reconstruction or modernization, refer to the following documents:
Regulations on the Preventive Maintenance of Industrial Buildings and Structures MDS 13-14.2000, approved by Resolution of the USSR State Construction Committee of December 29, 1973, No. 279;
This is also stated in the letters of the Ministry of Finance of Russia dated March 24, 2010 No. 03-11-06 / 2/41, dated February 25, 2009 No. 03-03-06 / 1/87 and dated November 23, 2006 No. 03-03-04 / 1 / 794.
Does the initial cost of fixed assets change after reconstruction or modernization?
As a rule, after reconstruction or modernization:
The initial cost of the fixed asset changes (clause 2 of article 257 of the Tax Code of the Russian Federation);
The organization has the right to increase the useful life of the fixed asset. This is possible if, after reconstruction or modernization, the characteristics of the fixed asset have changed in such a way that this will allow it to be operated longer than the previously established period (clause 1 of article 258 of the Tax Code of the Russian Federation).
Note that the initial cost of the object can change only if the organization incurred the costs of reconstruction or modernization. If the reconstruction (modernization) works are performed free of charge, there is no reason to increase the initial cost. At the same time, the cost of capital investments will have to be included in the structure of non-operating income (clause 8 of article 250 of the Tax Code of the Russian Federation). Determine the amount of income in accordance with market prices. Such clarifications are contained in the letter of the Ministry of Finance of Russia dated September 1, 2015 No. 03-03-06 / 1/50225.
As for the useful life, it can be increased only within the depreciation group to which the fixed asset belongs. If the maximum useful life was set for the fixed asset before the reconstruction (modernization), it cannot be increased. This is stated in paragraph 1 of Article 258 of the Tax Code of the Russian Federation.
Since January 1, 2017, the useful lives of some fixed assets have changed (Decree of the Government of the Russian Federation of July 7, 2016 No. 640). However, the procedure for revising the term after reconstruction or modernization remained the same. The useful life can be increased within the limits of the depreciation group in which the object was included when registering. This also applies to those fixed assets for which the reconstruction was carried out after January 1, 2017. Such clarifications are contained in
We have renovated the office space: changed windows, doors, electrical wiring, heating devices. Is it possible to qualify such work as a major overhaul? Are such works expensed to reduce profits, or do they add value to the asset? I would like to receive a more accurate answer regarding the renovation of buildings.
The accounting treatment for such transactions depends on whether such works are recognized as capital or not. Depending on the frequency and complexity, repairs are current and major. As a rule, current repair refers to the maintenance of fixed assets to maintain them in working order. Overhaul involves the replacement of basic elements (parts, structures, etc.). The organization independently determines which repair works are current and which are capital (letter of the Ministry of Finance of Russia dated January 14, 2004 No. 16-00-14 / 10). To determine whether the repair or reconstruction (modernization) includes restoration work on buildings, structures and other real estate, you can be guided by the following documents:
- Regulations on the scheduled preventive maintenance of industrial buildings and structures MDS 13-14.2000, approved by the USSR State Construction Committee of December 29, 1973, No. 279;
- Departmental building standards (VSN) No. 58-88 (R), approved by order of the State Committee for Architecture and Construction under the USSR State Construction Committee of November 23, 1988 No. 312;
- letter of the USSR Ministry of Finance dated May 29, 1984 No. 80.
This is stated in the letters of the Ministry of Finance of Russia dated February 25, 2009 No. 03-03-06 / 1/87 and dated November 23, 2006 No. 03-03-04 / 1/794.
In your case, the repair is current in nature, the costs of which are related to the current expenses of the organization (paragraph 2, clause 67, clause 13 of PBU 10/99). Except for the costs of repairing fixed assets, the initial cost of which has not been formed (i.e., which are not accounted for on account 01 (03)). In this case, include the repair costs in the initial cost of such fixed assets (clause 8 PBU 6/01).
The rationale for this position is given below in the materials of the Glavbukh System
During operation, fixed assets are morally and physically worn out. You can restore them by carrying out:
- repair;
- reconstruction;
- modernization.
Repair of fixed assets can be performed:
- by economic means (that is, by the organization's own forces);
- by contract (i.e. with the involvement of third-party organizations (entrepreneurs, citizens)).
The difference between renovation and reconstruction and modernization
Since in accounting and in taxation operations for the restoration of fixed assets are reflected in different ways, it is important to correctly classify them. This can be done based on the purpose of the restoration work.
The main purpose of the modernization is to change the technological and service purpose of the fixed asset (paragraph 2, clause 2, article 257 of the Tax Code of the Russian Federation). And the reconstruction leads to an improvement in the quality of products (works, services), a change in its nomenclature, as well as an increase in production capacity (paragraph 3, clause 2, article 257 of the Tax Code of the Russian Federation). Unlike modernization and reconstruction, the main purpose of repair work is to eliminate malfunctions, in the presence of which it is impossible to operate the fixed asset. At the same time, the cost of work to differentiate these concepts does not matter (letter of the Ministry of Finance of Russia dated March 24, 2010 No. 03-03-06 / 4/29).
Depending on the frequency and complexity, repairs are current and major. As a rule, current repair refers to the maintenance of fixed assets to maintain them in working order. Overhaul involves the replacement of basic elements (parts, structures, etc.). The organization independently determines which repair works are current and which are capital (letter of the Ministry of Finance of Russia dated January 14, 2004 No. 16-00-14 / 10).
To determine whether the repair or reconstruction (modernization) includes restoration work on buildings, structures and other real estate, you can be guided by the following documents:
- Regulations on the scheduled preventive maintenance of industrial buildings and structures MDS 13-14.2000, approved by the USSR State Construction Committee of December 29, 1973, No. 279;
- Departmental building standards (VSN) No. 58-88 (R), approved by order of the State Committee for Architecture and Construction under the USSR State Construction Committee of November 23, 1988 No. 312;
This is stated in the letters of the Ministry of Finance of Russia dated February 25, 2009 No. 03-03-06 / 1/87 and dated November 23, 2006 No. 03-03-04 / 1/794. *
Situation: is it possible to classify restoration work as repair work if, as a result, the characteristics of the fixed asset have improved. Before the restoration work, the main asset was defective (mod = 112, id = 52087)
The answer to this question depends on the nature of the improvements.
One of the main conditions for classifying restoration work as repair work is the failure of the fixed asset. However, if the characteristics of the fixed asset have improved, then the restoration work can be recognized as reconstruction or modernization. In this case, when distinguishing between reconstruction (modernization) and repair, it is necessary to determine whether the improvement in the characteristics of the fixed asset has resulted in:
- to change the purpose and workload of the fixed asset. For example, before the restoration work, the premises were used as a warehouse, and then as an office. In this case, restoration work during a tax audit can be recognized as modernization (paragraph 2 of clause 2 of article 257 of the Tax Code of the Russian Federation);
- to improve the technical and economic indicators of the fixed asset. For example, after restoration work, labor productivity increased, material consumption and production costs decreased. In this case, restoration work is recognized as reconstruction (paragraph 3, clause 2 of article 257 of the Tax Code of the Russian Federation, paragraph 12 of the letter of the USSR Ministry of Finance dated May 29, 1984, No. 80);
- to increase the number of manufactured products, improve quality and change the range of products. For example, during the restoration work, partitions were demolished, and in this regard, the area of the room increased. Or, thanks to the replacement of a broken engine with a new one with better characteristics, the equipment began to produce not 100 parts per day, but 150. In these cases, restoration work during a tax audit can be recognized as reconstruction (paragraph 3, clause 2, article 257 of the Tax Code of the Russian Federation).
The purpose of the repair work is to maintain the object of fixed assets in working order. If the purpose, workload and technical and economic indicators of the fixed asset, as well as the quality and range of products (works, services) have not changed, then such works are recognized as repair works. Otherwise, the cost of the refurbishment will not meet the criteria for the cost of the refurbishment.
A similar point of view is reflected in the letters of the Ministry of Finance of Russia dated April 22, 2010 No. 03-03-06 / 1/289, dated December 29, 2009 No. 03-03-06 / 1/830, dated October 9, 2006 No. 03 -03-04 / 4/156 and dated May 27, 2005 No. 03-03-01-04 / 4/67.
This position is also shared by the courts. So, if the work led to changes in the technical and economic indicators of the object and its purpose, then they cannot be considered repair (see, for example, the definition of the Supreme Arbitration Court of the Russian Federation of March 3, 2011 No. VAS-173/11). At the same time, the replacement of faulty parts of a fixed asset object with more powerful (perfect) ones, in the opinion of the judges, is not a modernization. If, as a result of such a replacement, the technological or production purpose of the object has not changed, then, despite the improvement in its operational characteristics, the costs of replacing faulty components (assemblies) should be qualified as the cost of repairing a fixed asset (see, for example, the resolution of the Federal Antimonopoly Service of the Central District of 9 February 2010 No. A14-14803 / 2008/500/24, of the North-Western District of August 21, 2007 No. A56-20587 / 2006, of the Moscow District of August 14, 2006 No. KA-A40 / 7489-06, Uralsky District of June 7, 2006 No. F09-4680 / 06-C7).
Documenting
The need for repair work is documented (Art. 9 of the Law of December 6, 2011 No. 402-FZ). Such a document may be an act of identified faults (defects) of the fixed asset (defective statement). For some industries, unified forms of such documents are provided. For example, for registration of the identified defects in the handling equipment of commercial seaports, a defective statement is used, approved by the decree of the Ministry of Transport of Russia dated January 9, 2004 No. 2. Defects of the main elements of pipelines of thermal power plants are reflected in the list of pipeline defects (approved by the Resolution of the Gosgortekhnadzor of Russia dated June 18, 2003 No. 94).
If a unified form of a document confirming the detected defects is not established, use a self-developed form, for example, an act on identified faults (defects) of an item of fixed assets. The main thing is that your own form contains all the mandatory details listed in part 2 of article 9 of the Law of December 6, 2011 No. 402-FZ. In the act, it is necessary to indicate the malfunctions of the fixed asset and proposals for their elimination.
The number of copies of the report on the identified malfunctions (defects) of the fixed asset (defective statement) will depend on who owns the property and who will do the repairs. If the company decides to repair fixed assets on its own, one copy is enough. If the work will be performed by a third-party organization, it is better to fill in the act (defective statement) in several copies according to the number of companies involved in the repair. In this case, the documents must be signed by representatives of all parties involved.
If new equipment is being repaired, the malfunction of which was detected during its installation (that is, before being registered as a fixed asset), an act on revealed equipment defects (form No. OS-16) is used.
When transferring a fixed asset for repair to a special unit of the organization (for example, a repair service), an invoice for internal movement should be drawn up in the form No. OS-2. If the location of the fixed asset does not change during the repair, there is no need to draw up an invoice. This procedure follows from the guidelines approved.
If the organization does not perform repair work on its own, a work contract must be concluded with the performers (Article 702 of the Civil Code of the Russian Federation).
The chief accountant advises: if a fixed asset is transferred to a contractor for long-term repairs, draw up an act of acceptance and transfer of the object of fixed assets for repair. In case of loss (damage) of a fixed asset, the signed act will allow the organization to demand from the contractor compensation for damages caused (Art. And Civil Code of the Russian Federation). In the absence of such an act, it will be difficult to prove the transfer of the fixed asset to the contractor.
Upon completion of the repair work, an act of acceptance and delivery of the repaired fixed assets is drawn up in the form No. OS-3. It is filled in regardless of whether the repair was carried out by an economic or contractual method. Only in the first case, the organization draws up a form in one copy, and in the second - in two (for itself and for contractors). The act is signed:
- an acceptance committee created in the organization;
- the employee responsible for the repair of the fixed asset (or the contractor's representative);
- the employee responsible for the safety of the fixed asset after repair.
After that, the act is approved by the head of the organization and transferred to the accountant. Upon receipt of the act, reflect the information about the repair carried out in the inventory card of the fixed asset in the form No. OS-6 (OS-6a) or in the inventory book in the form No. OS-6b (intended for small businesses). This is stated in the instructions approved by the decree of the State Statistics Committee of Russia dated January 21, 2003 No. 7.
If the contractor carried out repair work of the building (structure or premises), which are recognized as construction and installation, then in addition to the act in the form No. OS-3, an acceptance certificate in the form No. KS-2 and a certificate of the cost of the work performed and costs in the form No. KS-3, approved by the decree of the State Statistics Committee of Russia dated November 11, 1999 No. 100.
Situation: is it necessary to draw up an act in the form of OS-3 when replacing spare parts in the main tool (mod = 112, id = 52088)
No, it is not necessary if the location of the fixed asset does not change during the repair.
This is explained by the fact that drawing up an act according to the form No. OS-3 is mandatory when accepting and handing over the fixed asset from the customer to the contractor (instructions for filling out the form No. OS-3, approved by the decree of the State Statistics Committee of Russia dated January 21, 2001 No. 7). For example, if the fixed asset was transferred for repair to a contractor or to the organization's repair service.
If, during the repair, the location of the object does not change (that is, it was not transferred to the contractor or to the repair service), then the transfer and acceptance of the fixed asset does not occur. However, in this case, the replacement of the part must be documented (part 1 of article 9 of the Law of December 6, 2011 No. 402-FZ). To do this, you can draw up an act on the replacement of spare parts in the object of fixed assets. There is no standard form for such a document, so it can be drawn up in any form.
The chief accountant advises: in order to simplify the workflow, acts on the replacement of spare parts in fixed assets can be drawn up at the end of the month for each contractor.
Situation: is it necessary to indicate the cost of materials used by the contractor to repair the fixed asset in the act according to the form OS-3. The organization handed over to the contractor spare parts for the repair (mod = 112, id = 52089)
Accounting
The organization is obliged to keep records of fixed assets according to the degree of their use:
- in operation;
- in stock (reserve);
- under repair, etc.
Accounting for fixed assets according to the degree of use can be kept with or without reflection on account 01. So, in the case of long-term repairs, it is advisable to take into account fixed assets on a separate subaccount "Fixed assets under repair". This approach is consistent with clause 20 of the Methodological Guidelines approved by order of the Ministry of Finance of Russia dated October 13, 2003 No. 91n.
Debit 01 subaccount "Fixed assets under repair" Credit 01 subaccount "Fixed assets in operation"
- the fixed asset was handed over for repair.
At the end of the repair work, make the wiring:
Debit 01 subaccount "Fixed assets in operation" Credit 01 subaccount "Fixed assets under repair"
- fixed asset taken from repair.
The transfer of a fixed asset for short-term repairs on the accounting accounts need not be reflected. Instead, it is recommended to rearrange the inventory cards for such fixed assets into a separate group "Fixed assets under repair". Upon receipt of a fixed asset from repair, the inventory card is returned to its original place. This is stated in clause 68 of the Methodological Instructions approved by order of the Ministry of Finance of Russia dated October 13, 2003 No. 91n.
The costs of repairing fixed assets are related to the current expenses of the organization (paragraph 2, item 67 of the Methodological Instructions approved by order of the Ministry of Finance of Russia dated October 13, 2003 No. 91n, item 13 PBU 10/99). With the exception of the costs of repairing fixed assets, the initial cost of which has not been formed (i.e., which are not accounted for on account 01 ()). In this case, include the cost of repairs in the initial cost of such fixed assets (clause 8 PBU 6/01).
If a fixed asset breaks down through the fault of an employee, repair costs can be deducted from his salary.
Reflection in the accounting of expenses for the repair of fixed assets depends on the way in which - contractual or economic - they are performed.
In-house repair costs are:
- from the cost of spare parts and consumables. Consider spare parts and materials purchased for repair as part of the MPZ;
- from the salary of employees who performed the repair;
- from insurance premiums assessed from employees' salaries, etc.
If a repair service has been created in the organization, then reflect the costs of these works by wiring:
Debit 23 Credit 10 (16, 69, 70 ...)
- Reflected expenses for the repair of fixed assets.
After the fixed asset is completely repaired (that is, an act in form No. OS-3 is signed), write off the expenses recorded on account 23 to cost accounting accounts, depending on the purposes for which the fixed asset is used. As a rule, these are accounts that reflect depreciation on the repaired fixed asset:
Debit 20 (25, 26, 29, 44 ...) Credit 23
- the costs of repairing the fixed asset have been written off.
If there is no repair service in the organization, then do not take into account the costs of repairing the fixed asset on account 23 in advance. As they arise, do the wiring immediately:
Debit 20 (25, 26, 29, 44 ...) Credit 10 (16, 69, 70 ...)
- costs for the repair of the fixed asset are taken into account.
This procedure follows from the instructions to the chart of accounts (account 23).
If the organization carries out the repair of fixed assets with the involvement of a contractor, then reflect the costs of paying him remuneration by posting:
Debit 20 (25, 26, 29, 44 ...) Credit 60
- costs for the repair of a fixed asset performed by a contract method are taken into account.
This procedure follows from paragraphs,,, PBU 10/99.
An example of the reflection in accounting of expenses for the repair of fixed assets carried out by a household method. No repair service has been created in the organization
OOO "Trading Firm" Hermes "carried out on its own the current repairs of the refrigerating chamber. A repair service has not been created in the organization. The organization does not create a reserve for the repair of fixed assets. The entity uses an accrual basis and pays income tax on a quarterly basis.
Before carrying out the repair, an act was drawn up on the identified malfunctions (defects) of the refrigerating chamber. According to the act, the compressor is out of order. Since the compressor cannot be restored, it was decided to replace it.
To do this, in January, the organization purchased a compressor in the amount of 3,540 rubles. (including VAT - 540 rubles) and handed it over for repair work. The organization keeps accounting of the cost of materials without using accounts 15 and 16. In January, the refrigerating chamber was repaired. The accountant received the certificate of replacement of the compressor.
The cost of labor remuneration (salary and insurance premiums from it) of employees who performed the repairs amounted to 2,000 rubles.
The Hermes accountant made the following entries:
Debit 10-5 Credit 60
- 3000 rubles. (3540 rubles - 540 rubles) - a compressor was purchased;
Debit 19 Credit 60
- 540 rubles. - VAT included on the cost of the compressor;
- 540 rubles. - VAT is accepted for deduction;
Debit 60 Credit 51
- 3540 rubles. - funds are transferred for the compressor;
Debit 44 Credit 10-5
- 3000 rubles. - decommissioned the compressor installed during the repair of the refrigerating chamber;
Debit 44 Credit 70 (69)
- 2000 rubles. - the costs of remuneration of employees who repaired the refrigerator are taken into account.
An example of the reflection in accounting of expenses for the repair of fixed assets performed by a contract method
LLC "Trading Firm" Hermes "" carried out repairs of the refrigerating chamber with the help of the contracting organization CJSC "Alpha". The cost of the work was 8260 rubles. (including VAT - 1260 rubles) The organization does not create a reserve for the repair of fixed assets. The entity uses an accrual basis and pays income tax on a quarterly basis.
In April, upon receipt of the act in the form OS-3, the Hermes accountant made the following entries:
Debit 44 Credit 60
- 7000 rubles. (8260 rubles - 1260 rubles) - costs for the repair of the refrigerating chamber are taken into account;
Debit 19 Credit 60
- 1260 rubles. - VAT included on the cost of repair work;
Debit 68 subaccount "Calculations for VAT" Credit 19
- 1260 rubles. - VAT is accepted for deduction;
Debit 60 Credit 51
- 8260 rubles. - funds were transferred to Alfa for the repair of the refrigerating chamber.
Situation: is it possible in accounting to reflect the costs of repairs of fixed assets unevenly made during the year as part of deferred expenses (mod = 112, id = 52090)
Yes, you can.
Deferred expenses are reflected in the asset of the balance sheet according to the rules that are provided for a specific type of costs by regulatory legal acts (clause 65 of the Accounting Regulations). The current PBU does not contain a direct mention of repair costs. However, for expenses that determine the receipt of income over several reporting periods, there is a rule - they are distributed between reporting periods when reflected in the Statement of Financial Performance. The same rule applies when the relationship between income and expenses cannot be clearly defined. This is stated in clause 19 of PBU 10/99.
In addition, the costs of unevenly made repairs of fixed assets are directly mentioned in the Instructions to the chart of accounts - this document prescribes to take them into account on account 97 "Deferred expenses".
Based on the totality of these provisions, the following conclusion can be drawn: the costs of repairs made unevenly during the year can be accounted for on account 97 "Deferred expenses" to ensure a uniform reflection of their write-off in the Statement of Financial Results.
In this case, reflect such expenses by posting:
Debit 97 Credit 10 (16, 60, 69, 70 ...)
- costs for the repair of fixed assets are taken into account.
The chief accountant advises: if the organization intends to take into account the costs of repairing fixed assets as part of deferred expenses, then reflect this provision in the accounting policy (paragraph and PBU 1/2008).
Situation: how to reflect regular large costs for capital repairs of fixed assets in accounting. Repairs are carried out at intervals of more than 12 months (mod = 112, id = 58533)
Reflect such costs as deferred expenses.
Overhaul expenses do not increase the initial cost of fixed assets, but are reflected in the accounting as part of the costs of the reporting period to which they relate (clause 27 PBU 6/01). The procedure for reflecting the costs of capital repairs is set out in the annex to the letter of the Ministry of Finance of Russia dated January 9, 2013 No. 07-02-18 / 01. According to the explanations of the financial department, the costs of regular expensive capital repairs with long intervals between their carrying out should be reflected in the balance sheet as a separate indicator, clarifying the data on line 1150 “Fixed assets”. For a better understanding of the reporting indicators, such costs can be shown on a separate line, for example, "Long-term costs of maintaining fixed assets". Capital expenditures should be repaid in the time interval between expensive repairs, that is, until the next repair. The remaining useful life of the fixed asset after the overhaul does not change. Continue to depreciate based on the previously set period.
To evenly reflect the expenses of the current reporting period that relate to future reporting periods, use account 97 "Deferred expenses" (Instructions to the chart of accounts). Proceeding from this, in accounting, reflect the significant costs of overhauls upon their implementation on account 97. And then write off evenly to cost accounting accounts.
In accounting, reflect these transactions by postings:
As of the date of capital repair costs:
Debit 97 Credit 10 (60, 69, 70 ...)
- costs for capital repairs of fixed assets are taken into account.
Reflect the uniform write-off of expenses to expense accounts by posting:
Debit 20 (23, 26) Credit 97
- part of the cost of capital repairs of fixed assets was written off as expenses.
An example of the reflection in accounting of the costs of carrying out regular overhaul of a fixed asset
High-tech equipment is on the balance of CJSC "Alpha". According to the technical documentation, periodic overhaul of the equipment must be carried out every 2 years during the period of its operation. The first major overhaul was completed in November 2013. Guided by the explanations of the Ministry of Finance of Russia, the Alpha accountant wrote off these costs evenly within 2 years from the date of the first repair.
Overhaul was carried out by the contractor. Its cost was 1,180,000 rubles. (including VAT - 180,000 rubles).
Alpha's accountant made such entries in the accounting.
In November:
Debit 97 Credit 60
- 1,000,000 rubles. - Reflected the cost of capital repairs;
Debit 19 Credit 60
- 180,000 rubles. - VAT included on the cost of capital repairs;
Debit 68 subaccount "Calculations for VAT" Credit 19
- 180,000 rubles. - VAT is accepted for deduction;
Debit 60 Credit 51
- 1,180,000 rubles. - funds were transferred to the contractor.
From November for 24 months:
Debit 20 Credit 97
- 41 667 rubles. (1,000,000 rubles: 24 months) - a part of the equipment overhaul costs was written off.
In the balance sheet for 2013, the cost of capital repairs of equipment was reflected in the line “Long-term costs of maintaining fixed assets”.
Explanations |
Indicator names |
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ASSETS |
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Fixed assets |
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Including: |
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Equipment |
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Long-term maintenance costs of fixed assets |
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Total for Section I |
Sergey Razgulin,
Full State Counselor of the Russian Federation, 3rd Class
In addition to bringing the cost of fixed assets to match the market situation, which is a revaluation, the organization may need to change the qualitative characteristics of an individual object.
Most often this is due to the emerging opportunity to increase or change the technical and economic indicators of the fixed asset.
This is achieved by replacing obsolete elements with more technological ones or by including new ones that have not been previously used. In addition, in the process of operation, there is a need to restore the gradually lost functionality of the object, or even the need to eliminate malfunctions that impede the normal performance of the main means of its direct purpose.
The solution of these issues in everyday economic activities is carried out by various sets of measures. These include repairs of various categories, reconstruction, modernization, retrofitting and partial liquidation of the facility.
Despite the fact that they all have different economic content, they are united by one thing.
Fixed assets in respect of which it is planned to carry out these measures are not subject to depreciation throughout the entire period of their retirement from the production cycle. In addition, with the exception of repairs, the results of their implementation are reflected in the value of the fixed asset.
from the listed activities is the conservation of property. This mechanism is similar to the aforementioned in that during the conservation period, the object is not depreciated. At the same time, conservation does not in any way affect the cost and technical characteristics of the facility.
Repair of fixed assets
The only activity in relation to fixed assets, which is not precisely defined in the regulatory legal acts, is repair. In order to understand the economic essence and the impact on fixed assets of the repairs carried out in relation to them, one will have to turn to indirect data.
Such data can be found in sectoral instructions, methodological recommendations of the Ministry of Finance for budgetary organizations (letter of the Ministry of Finance of Russia dated 05.02.2010 No. 02-05-10 / 383), building standards (order of the State Committee on Architecture under the State Construction Committee of the USSR No. on the organization and implementation of reconstruction, repair and maintenance of buildings, communal and socio-cultural facilities ").
Summarizing the descriptive characteristics and definitions available in these documents, we can formulate the concept of "repair of a fixed asset" as follows:
Repair is such an action in relation to a fixed asset, as a result of which the functionality of the object is restored and the existing faults and shortcomings that hindered the use of the object for its intended purpose are eliminated.
The traditional division into current, average and major repairs is not a mandatory norm and is not taken into account in accounting work. Even if, after the repair, the technical characteristics of the object have changed in the direction of improvement, the costs of repairs do not affect the book value of the repaired property, plant and equipment. Accounting entries for the accounting and write-off of these costs do not affect the synthetic accounts in which fixed assets are recorded.
When carrying out repairs of any complexity in 2014, as before, the following accounting entries are drawn up:
- With a one-time write-off of costs in the absence of pre-created repair funds:
Dt 20,25,26,44 - Kt 10,70,69,60 - write-off of expenses for repairs to cost items.
- If the organization has established a repair fund:
Dt 20,25,26,44 - 96 - monthly formation of the repair fund;
Дт 96 - Кт 10,70,69,60 - write-off of expenses at the expense of the repair fund;
Дт 97 - Кт 10,70,69,60 - the amount of the excess of the amount of the reserve.
If, at the end of the reporting period, an excess of the repair fund reserve is identified, the unused amount is reversed. It is worth noting that in 2014 organizations that switched to accounting in accordance with IFRS 16, the cost of part of the repairs classified by this standard as capitalized, will be able to include in the cost of fixed assets. However, the introduction of IFRS is a topic for a separate and long discussion.
Reconstruction of fixed assets
Unlike renovation, there is a definition of renovation in tax and accounting regulations. However, the available formulations do not sufficiently concretize the economic essence of the reconstruction of fixed assets, as a result of which situations may arise when the results of particularly complex repairs, or those that have led to a significant improvement in the properties of the object, may be mistakenly accepted.
To avoid such discrepancies in practice, you must first of all adhere to the following rule:
Reconstruction of an object of fixed assets can only be considered a set of such measures that are carried out in relation to a properly functioning object in order to qualitatively change its technical indicators.
Thus, the possibility of attributing to the cost of the object of fixed assets the cost of replacing structural faults is excluded, which led to a significant improvement of the object due to the installation (installation) of more modern elements.
It should be noted here that, according to the established practice, the term "reconstruction" is used mainly in relation to capital construction projects. An indirect confirmation of the validity of this practice is found in paragraph 14 of Art. 1 of the Urban Planning Code of the Russian Federation and the system materials of the Ministry of Finance for budgetary organizations (letter of the Ministry of Finance of Russia dated 05.02.2010 No. 02-05-10 / 383).
Thus, reconstruction can be understood as a change in number of storeys, heights, areas and the connection of previously absent engineering and technical systems.
Modernization of fixed assets
In terms of its technical and economic essence, the modernization of fixed assets is identical to the reconstruction, but it is carried out in relation to the movable property of the organization: machine tool park, transport, mechanisms and other objects that do not belong to the category of capital construction.
Modernization is a set of measures aimed at improving a fixed asset, which lead to a qualitative improvement in the technical and economic properties of an object and are associated with the replacement of its structurally significant elements with more modern and efficient ones.
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Immediately it must be said that an indirect sign of the belonging of the measures taken to the category of "modernization" is the possibility of further use of the elements withdrawn to be replaced by more effective ones. Replaced items are sent to the warehouse and become an accounting object as low value.
The absence of the possibility of identifying useful in the future or identifying them as faulty means that all or (part of) the measures should be excluded from the modernization category and recorded as repairs.
Dismantling of fixed assets
Excluding markdowns, among the grounds on which the cost of a fixed asset can be reduced, the Tax Code provides only for dismantling, or, as it is indicated in the code, partial liquidation of the object. The rest of the possibilities are defined by the vague wording "for other reasons."
It seems that this was done in order to reserve a “place in the law” for possible grounds that may arise in the future, since no changes are foreseen in the corresponding article of the Tax Code in 2014.
What is the dismantling of fixed assets? Let's imagine that some fixed asset, for example, a production line, which is a single accounting object and consists of modules, has undergone partial disassembly. Some of its constituent modules, whose functions are no longer involved in the production cycle, were withdrawn.
In certain cases, this leads to the fact that the object loses its functionality and must be written off, that is, excluded from the composition of fixed assets. Instead of a fixed asset accounting object, several new accounting objects will appear. These will be either fixed assets or low value or materials. But not always a partial disassembly of a property object leads to such a result.
The fixed asset may not be written off, but remain in the accounting with a changed, reduced value. This happens if:
- The object has not lost its functionality, remained a single isolated complex;
- Removal of part of the components (constituent parts) allows further use of the object for its intended purpose;
- Removal of component parts does not cause significant damage to the object.
After the dismantling of fixed assets is made, the accounting department should not only reduce the cost of the fixed asset proportionately, but also recalculate the amount of its depreciation. This is due to the fact that the previously accrued depreciation was calculated based on the fact that the cost of the object naturally takes into account the cost of its component, which was removed as a result of partial liquidation.
The procedure for recalculating depreciation deductions must be fixed in the accounting policy of the organization. If the useful life of the item does not change, such a recalculation can be made in proportion to the cost or percentage of the withdrawn part in the book value of the item.
The situation is more complicated with determining the specific amount by which the fixed asset should be discounted. Regulatory legal acts do not establish the procedure for determining these amounts. Thus, this question is left to the discretion of the organization. Which should independently work out and fix the markdown procedure for dismantling by internal regulations.
The following methods seem to be the most reasonable:
- Commission determination of the percentage of the excluded part in the total composition of the fixed asset;
- Actual estimate based on the available documented data on the cost of the excluded part;
- Conclusion of an independent appraiser.
When determining the cost of the excluded part, the percentage of its depreciation should be taken into account as part of an item of fixed assets. The book value of the fixed asset is reduced by the residual value of the excluded part.
Expenses directly related to the partial liquidation of a fixed asset can be accounted for in two ways:
- If the withdrawn part can be used in the future, the costs of its withdrawal are included in the cost at which it is received at the warehouse;
- If the withdrawn part is of no value and is subject to liquidation, the costs of its withdrawal are included in other non-operating expenses of the organization.
Additional equipment of fixed assets
Retrofitting a fixed asset is easiest to imagine as the reverse procedure of dismantling. Imagine that in the case of the same production line, in order to meet the changed production needs, a new module is included in the object, which qualitatively changes the functionality of the line as an object of fixed assets. This will be the case for retrofitting.
The cost of an item of fixed assets increases in the case of additional equipment by the cost of the part introduced into its composition and the amount of costs directly related to the additional equipment. Note that in relation to capital construction objects, instead of the term “additional equipment”, the term “completion” can be used, which more accurately reflects the nature of the changes introduced.
Postings on reflection of additional equipment, modernization and reconstruction of fixed assets in accounting are made uniformly.
All costs are accumulated on the asset investment accounting account:
Dt 08 - Kt 07, 10, 69, 70, 60 - the actual costs of the work performed
Upon completion of the activities carried out, the costs are written off with their inclusion in the cost of the fixed asset:
Dt 01 - Kt 08 - change in the value of an item of fixed assets.
The accrual of depreciation for such facilities starts from the month following the month of the end of all reconstruction activities (completion, etc.)
When carrying out measures that change the value of an item of fixed assets, the methodological basis is for the most part the Tax Code. This contributes to the fact that differences between accounting and tax accounting data occur much less frequently than in other cases. To exclude the occurrence of such differences, it is enough to take into account the requirements of the Tax Code in the accounting policy of the institution.
Difficulties arise most often of a rather subjective nature, due to differences in the assessment of economic situations by the taxpayer and the fiscal authorities. A striking example of this is all the same repair and reconstruction.
From the taxpayer's point of view, reconstruction is a very disadvantageous mechanism for him. Indeed, costs incurred here and now, if included in the cost of property, plant and equipment, will be offset by depreciation over a significant future period. That is why very often the documentation preceding and accompanying these events is drawn up in such a way that they can be classified as repairs.
In turn, the fiscal authorities are not interested in understating the size of the base for calculating income tax, which is why they seek to remove the measures carried out by the taxpayer from the category of repairs to the category of reconstruction (modernization). In this case, the taxpayer must have undoubted documentary evidence of the nature of the work. Most often, in such cases, the involvement of independent experts helps to assess the nature of the existing shortcomings and the belonging of events to one category or another.
Fixed assets conservation
Preservation of fixed assets is, mainly, a way to preserve property that is not used for objective reasons in the current production process. In accounting, the transfer of an object to conservation is made out in the simplest way. Based on the order of the head, the following wiring is drawn up:
Dt 01 subaccount "Fixed asset for conservation" - CT 01 subaccount "Fixed asset in operation"
The withdrawal of a fixed asset from conservation is made out by reverse posting. From the month following when the object was mothballed, depreciation ceases to be charged on it. Depreciation is renewed at the beginning of the month following that. when the object was returned from conservation. In this case, the useful life is increased by the period during which the object was mothballed.
All of the above is true only if the conservation period exceeds three calendar months. Otherwise, when the object is withdrawn from conservation, additional depreciation should be charged for the entire period of inactivity of the object. Once again, we draw your attention to the fact that the conservation of a fixed asset is not a basis for changing its value.