How are the terms of an agency agreement and accounting entries related?
The relationship between the parties under an agency agreement is not limited to the direct purchase or sale of goods (work, services). Effective interaction in a principal-agent pair is impossible:
- without competent organization of document flow (including ensuring its completeness and timeliness);
- correct use of accounting accounts when reflecting transactions under an agency agreement (for the formation and presentation of reliable reports to interested users, as well as for the error-free execution of tax obligations).
Features of accounting procedures of the parties to an agency agreement directly depend on its terms. It is from the contract that the accounting staff of the agent and the principal need to learn such important accounting nuances as:
- whether the agent acts on his own behalf or on behalf of the principal;
- whether he participates in the calculations;
- whether goods pass through its warehouses;
- what terms and form of reporting by the agent to the principal are established and within what time frame the report is approved by the principal (or refusal to accept it);
- algorithm for calculating agency remuneration (in percentage, in a fixed amount, etc.);
- nuances of receiving remuneration (through deduction from amounts received from the counterparty or a separate transfer from the principal);
- frequency of agent reporting (as the contract is executed or after its completion);
- other important features that may affect the specifics of accounting and reporting under the agency agreement.
The materials in this section of our website will help you cope with the difficulties of drawing up various business agreements.
Before signing an agency agreement, be sure to check the terms for tax risks. ConsultantPlus experts explained how to do this correctly. If you do not have access to the K+ system, get a trial online access for free.
Participation of an intermediary in settlements
Depending on the terms of the intermediary agreement related to the sale of goods (works, services):
- the intermediary may or may not participate in settlements with buyers of goods (works, services) of the customer. In the first case, funds from buyers go to the intermediary, in the second - directly to the customer;
- the intermediary can act on his own behalf (for example, under a commission agreement) or on behalf of the customer (for example, under an agency agreement). In the first case, when selling goods (work, services) to the buyer, documents are drawn up on behalf of the intermediary. In the second case - on behalf of the customer, even if they are executed by an intermediary. The right of the intermediary to sign documents must be certified by a power of attorney issued by the customer (clause 1 of Article 975 of the Civil Code of the Russian Federation);
- material assets can be shipped to customers either from the customer’s warehouse or from the intermediary’s warehouse.
How to establish document flow between the agent and the principal?
The importance of organizing competent document flow cannot be underestimated, since timely received and correctly compiled documents will allow:
- confirm expenses and legality of VAT deductions;
Find out how to issue invoices when selling goods through an intermediary here. See also our article on re-invoicing under an agency agreement.
- prove the case in court when disputes arise between the agent and counterparties.
In addition to the agency agreement, the set of documents includes:
- originals of the counterparty's documents - contracts, invoices, invoices, acts, etc. (if the agent acts on behalf of the principal);
- copies of the above documents (if the agent acts on his own behalf);
- the agent’s report along with documentary copies confirming his expenses;
- invoices for agency fees;
- other documents (confirming payment of remuneration, other expenses of the agent, etc.).
The types of documents used are agreed upon by the parties to the agency agreement. Including the agent’s report form as a separate appendix to the contract - this document is given the status of a primary document confirming the principal’s expenses in the form of:
- agency fees;
- expenses reimbursed to the agent.
Ready-made solutions from ConsultantPlus will help you check the agency agreement for risks. Get free access and go to the Ready-made solution for the principal. And this link will take you to the Ready Solution for the Agent. If you do not have access to the legal reference system, trial access is available for free.
Accounting for agent and principal
To reflect transactions under an agency agreement in accounting, various accounting schemes are used to record the relationship between the parties to an agency agreement in the following situation:
- sales of products (goods, works, services) by an agent;
- purchasing intermediary operations.
Accounting for an agent under an agency agreement and accounting for agency agreements for a principal are presented in the figures:
Agency for sale
Agency for purchase
You can also read about the features of an agency agreement in accounting here.
Summary by principal
The agent's report and the documents attached to it are no less important for the principal, since on their basis not only the income, but also the expense component of accounting and tax accounting, as well as VAT, which is deductible, is formed. Regardless of the type of agency agreement, accounting for the main transaction and agency remuneration must be organized separately by the principal.
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In order not to make mistakes with transactions under an agency agreement, it is necessary to study its terms - on the basis of which documents to reflect transactions in accounting, what algorithms are used to calculate agency fees, etc.
The main account for recording transactions is 76 “Settlements with various debtors and creditors” in correspondence with accounts 51 (for payments), 68/2 (for VAT accounting), 44 (for registering purchased goods), etc. More
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Accounting for agency agreement
Agent Accounting
Accounting for an agency agreement , as a rule, is kept on account 76 “Settlements with various debtors and creditors”, to which various sub-accounts can be allocated. Since the goods purchased by the agent on behalf of the principal do not belong to him, they are reflected on the balance sheet in account 002 “Inventory assets accepted for safekeeping.” In addition, if the principal transfers goods to the agent for subsequent sale, then they are recorded in off-balance sheet account 004 “Goods accepted on commission.”
accounting for an agency agreement, agency fees are reflected in account 62 “Settlements with buyers and customers.” It is the basis for calculating VAT for the agent, as well as the income that is taken into account when calculating income tax.
All intermediaries pay VAT under the agency agreement , based on the amount of their remuneration. Exceptions to this rule are the sale of the following types of goods (work, services) exempt from taxation (clause 2 of Article 156 of the Tax Code of the Russian Federation):
- for leasing premises to foreign citizens and organizations accredited in the Russian Federation;
- for the sale of medical goods according to the list approved by the government (clause 1, clause 2, article 149 of the Tax Code of the Russian Federation);
- for the sale of funeral supplies (according to the list approved by the government) and related services (clause 8, clause 2, article 149 of the Tax Code of the Russian Federation);
- for the sale of folk arts and crafts products (with the exception of excisable goods), samples of which are registered in the manner established by the government (clause 6, clause 3, article 149 of the Tax Code of the Russian Federation).
When calculating income tax, the company's expenses are subtracted from the agent's income (excluding VAT). The agent has no right to include the amounts reimbursed by the principal either in income or expenses (clause 9, clause 1, article 251, clause 9, article 270 of the Tax Code of the Russian Federation). Also, VAT is not charged on amounts received from the principal as payment for goods (works, services) purchased by the agent; tax on the cost of products purchased for the principal is not deductible.
Accounting for an agent without participation in settlements: postings of an agency agreement
Debit 76 Credit 51 – Paid expenses incurred by the agent at the expense of the principal;
Debit 76 of the account “Settlements with the principal” Credit 76 – Reflects the principal’s debt for expenses;
Debit 76 s/ac “Settlements with the principal” Credit 90 – Agency fee accrued;
Debit 90 Credit 68 – VAT charged on agency fees;
Debit 51 Credit 76 account “Settlements with the principal” – Received compensation for expenses and agency fees to the current account.
Accounting for an agent with participation in settlements: postings of an agency agreement
a) the agent sells the principal's property
Debit 004 – Property received from the principal is reflected off the balance sheet;
Debit 51 (50) Credit 62 – Money received from the sale of goods;
Debit 62 Credit 76 account “Settlements with the principal” – Reflects the sale of goods by the agent;
When selling property, its value must be written off from the off-balance sheet account:
Loan 004 – Property transferred to buyer;
Debit 76 Credit 51 – Paid the agent’s expenses related to the sale, which are reimbursed by the principal;
Debit 76 of the account “Settlements with the principal” Credit 76 – Reflects the principal’s debt for expenses;
Debit 76 account “Settlements with the principal” Credit 90 – Agency fees accrued;
Debit 90 Credit 68 – VAT charged on agency fees;
Debit 76 ac/account “Settlements with the principal” Credit 51 – Proceeds from the sale minus agency fees and compensation of expenses were transferred to the principal
b) the agent acquires property for the principal
Debit 51 Credit 76 s/ac “Settlements with the principal” – Money was received to the current account for the purchase of goods;
Debit 76 ac/account “Settlements with the principal” Credit 62 ac/account advances on remuneration – Advance received under an agency agreement;
Debit 76 Credit 68 – VAT accrued on the advance payment of agency fees (on the advance amount);
Debit 60 Credit 51 – Paid for goods to supplier;
Debit 002 – Goods purchased for the principal were capitalized;
Debit 76 “Settlements with the principal” Credit 60 – Reflects the debt for purchased goods;
Credit 002 – Purchased goods were transferred to the principal;
Debit 62 Credit 90 – Agency fees accrued;
Debit 90 Credit 68 – VAT charged on agency fees;
Debit 62с/сч advance on remuneration Credit 62 – Advance on agency remuneration credited;
Debit 68 Credit 76 – Accepted for deduction of VAT accrued on the advance payment of agency fees;
Debit 76 “Settlements with the principal” Credit 51 – Unspent funds were returned to the principal;
Debit 51 Credit 76 “Settlements with the principal” – Received compensation for expenses to the current account.
In this case, the agent issues an invoice in two copies, indicating in it all the data from the invoice received from the seller. Such a document must be registered in the journal of issued invoices with the agent, and one copy must be given to the principal.
Accounting for an agency agreement with the principal
Goods transferred to the agent for sale are accounted for by the principal in account 45 “Goods shipped”. Revenue is reflected in account 90 “Sales” at the moment of transfer of ownership, which the agent must indicate in his report.
After selling the goods, the principal issues an invoice in duplicate in the name of the agent, where he indicates the same data as in the document that the intermediary issued to the buyer.
In the case where goods are purchased by an agent on his own behalf, the basis for deducting VAT will be the invoice issued by the intermediary. The principal must register such a document in the Purchase Book and the journal of received invoices.
a) the principal sells goods through an agent
Debit 45 Credit 41 – Goods transferred to agent for sale;
Debit 62 Credit 90 – Revenue from the sale of goods is reflected;
Debit 90 Credit 68 – VAT accrued on sales;
Debit 90 Credit 45 – Cost of goods sold is written off;
Debit 44 Credit 76 s/ac “Settlements with the agent” – Agency fees have been accrued;
Debit 19 Credit 76 account “Settlements with the agent” – Accepted for deduction of VAT on remuneration;
Debit 76 of the account “Settlements with the agent” Credit 62 – The debt of buyers is offset;
Debit 68 Credit 19 – VAT accepted for deduction on agency fees;
Debit 51 Credit 76 s/ac “Settlements with agent” – Money from the sale of goods was received into the current account.
b) the principal purchases goods through an agent
Debit 76 of the account “Settlements with the agent” Credit 51 – Funds were transferred to the agent for the purchase of goods;
Debit 10 Credit 60 – Goods received from supplier;
Debit 19 Credit 60 – VAT accrued on purchased goods;
Debit 10 Credit 60 – Agency fee included in the cost of goods;
Debit 19 Credit 60 – VAT accrued on remuneration;
Debit 60 Credit 76 ac/account “Settlements with agent” – The debt to the supplier has been offset;
Debit 60 Credit 76 account “Settlements with the agent” – The debt to the agent is offset;
Debit 68 Credit 19 – Accepted for VAT deduction;
Debit 51 Credit 76 account “Settlements with the agent” – Received the balance of funds.
Download agency agreements in the FreshDoc application:
- Agency contract
- Agency agreement for the purchase of real estate
- Agency agreement for the purchase of goods
- Agency agreement for the purchase of services
- Agency agreement for finding clients
- Subagency agreement
- Agency agreement for the sale of services
- Agency agreement for the sale of real estate
- Agency agreement for the sale of goods
