How to write off materials purchased for current repairs in the Russian Federation

Repair of fixed assets - what is it?

Repair of fixed assets (Fixed Assets) is a process that relates to both own and leased property. It is carried out in order to support or restore the functionality of the OS. The repair procedure consists of eliminating faults that have arisen, replacing worn parts or individual components of the object. Depending on the frequency and volume of work performed, repairs can be:

• current,
• average,
• capital.

However, in no case should the repair process lead to a change in the basic technical characteristics or purpose of the object being repaired, since such a change will already be regarded as modernization (reconstruction), which must be taken into account according to completely different rules (clause 2 of Article 257 of the Tax Code of the Russian Federation).

Carrying out repairs, unlike modernization (reconstruction), does not in any way affect either the initial or residual value of the object. All repair costs, whatever their value, are taken into account during the period of its completion. However, such expenses require economic justification and documentary evidence (letters of the Ministry of Finance of the Russian Federation dated March 24, 2010 No. 03-03-06/4/29, dated February 25, 2009 No. 03-03-06/1/87).

Repairs can be carried out:

• attracted counterparty,
• on our own,
• in a mixed way.

Since 2022, to replace PBU 6/01, officials have approved 2 new FSBU 6/2020 “Fixed assets” and 26/2020 “Capital investments”. According to the new standards, OS accounting must be maintained according to new rules. You can begin to apply the standards earlier by establishing new accounting provisions in your accounting policies.

ConsultantPlus experts explained in detail how to correctly take into account the costs of major, current and unscheduled repairs of OS when applying FSB 6/2020 and FSB 26/2020. To do everything correctly, get trial access to the system and go to the Ready solution. It's free.

Documentation of repairs

Repairs are preceded by drawing up:

• a defective statement reflecting the condition of the object, which can be made in 1 copy if the repairs are carried out on their own or in a mixed way, and drawn up in 2 copies if the repairs are carried out by a third-party contractor;

Read about what form a defective statement can take in the material “Drawing up a correctly defective report - sample.”

• estimates for repair work drawn up either by a third-party contractor or by its own department carrying out repairs;
• an order from the manager to carry out repairs, which reflects the timing of the repair work, the forces carrying it out, and, if necessary, decisions to replace temporarily absent OS;
• agreement for repairs, if it will be done by a third party;
• invoice for the internal movement of fixed assets, if the object is being repaired in its own department.

Read about the rules for issuing such an invoice in the article “Unified form No. OS-2 - form and sample.”

Upon completion of the repair work, the following is drawn up:

• certificate of acceptance of the object from repair;

For information on how to fill out such an act, read the material “Unified Form No. OS-3 - Form and Sample.”

• invoice for internal movement of fixed assets, if the object was repaired in its own department;
• a record of the repair performed in the OS inventory card.

For an example of making such a record, see the sample to the article “Unified Form No. OS-6 - Form and Sample”.

Find out how to write off materials for OS repairs in ConsultantPlus. See the authoritative opinion of K+ experts in the Ready-made solution by getting free trial access.

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Reflection of repairs in accounting

Accounting for the cost of repairing fixed assets in accounting varies depending on how the repair work is carried out.

When carried out on their own (i.e., by one of the auxiliary departments), an order is opened for such work in the relevant department, for which direct costs associated with it are collected during the entire time the repair is in progress:

Dt 23 Kt 10, 69, 70.

If third-party contractors are involved for part of the work (i.e., a mixed method of repair), then account 60 will be added to the list of accounts reflected in this loan entry. In this case, a VAT entry may also arise if the services of a third-party contractor are subject to this tax:

Dt 19 Kt 60.

The overhead costs of the auxiliary department performing the repairs, distributed at the end of each month, will also be added to the total cost of the repair order:

Dt 23 Kt 25.

Upon completion of the repair, which will be recorded in the acceptance certificate of the object, the costs collected in account 23 for the corresponding order will be written off as overhead costs for the maintenance of the department in which the repaired OS is used:

Dt 25 (26, 44) Kt 23.

When repairs are carried out only by a third-party contractor, the costs for it will appear in accounting only on the date of signing the act of acceptance of the object from repair and will immediately be charged to overhead costs for the maintenance of the department in which the OS that has been repaired is used, with the allocation of VAT indicated in the documents :

Dt 25 (26, 44) Kt 60;

Dt 19 Kt 60.

In the posting for accounting for completed repair costs for both options (in-house or third-party), the list of accounts indicated by debit may also include accounts 23 and 29, if the accounting of overhead costs for them is organized using the boiler method or in separate subaccounts of these accounts. OS repair costs cannot be included in direct costs, since the objects are not involved in production during repairs.

According to the current accounting rules, a reserve for OS repairs is not created in the accounting department. Previously, this could be done, but since 2011, this possibility has been excluded from the Guidelines for fixed assets accounting, approved by Order of the Ministry of Finance of the Russian Federation dated October 13, 2003 No. 91n (Order of the Ministry of Finance of the Russian Federation dated December 24, 2010 No. 186n).

From a letter to the editor:

“Our trading organization purchased a warehouse for storing goods, which was put into operation in November 2013. In December 2013, the organization purchased construction materials for routine repairs of the warehouse, which was carried out by an external organization (contractor) in the same month.

How to take into account purchased construction materials and work on current repairs of a warehouse performed by a contractor in accounting and tax accounting?

Sincerely, Marina Vasilievna, accountant"

Accounting for building materials for current repairs

In accounting, account 07 “Equipment for installation and building materials” (subaccount 07-3 “Building materials”) takes into account the presence and movement of materials used by the customer, developer when performing construction and other special installation work and subsequently included in the initial cost of the construction project and (or) equipment for installation.

Account 10 “Materials” is intended to summarize information about the availability and movement of materials. Subaccount 10-1 “Raw materials and supplies” takes into account the availability and movement of raw materials, basic materials (including building materials from the contractor), auxiliary materials, agricultural products prepared for processing, etc. (clauses 12, 16 of the Instructions for the application of a standard chart of accounts, approved by Resolution of the Ministry of Finance of the Republic of Belarus dated June 29, 2011 No. 50 (hereinafter referred to as Instruction No. 50)).

Accounting for fixed assets is carried out in accordance with the Instructions for Accounting for Fixed Assets, approved by Resolution of the Ministry of Finance RBOT 04/30/2012 No. 26 (hereinafter referred to as Instruction No. 26).

Instruction No. 26 contains a list of expenses that increase the cost of fixed assets. At the same time, the actual costs of the organization for carrying out all types of repairs of fixed assets are attributed to the organization’s expenses, and they do not increase the initial cost of the repaired fixed assets (clause 20 of Instruction No. 26).

For reference: the initial cost of fixed assets is not subject to change, except in the following cases:

– reconstruction (modernization, restoration) of fixed assets, carrying out other similar work;

– revaluation of fixed assets in accordance with the law;

– other cases established by law (clause 14 of Instruction No. 26).

In this case, the actual costs of maintaining fixed assets in working condition (technical inspection and maintenance, carrying out all types of repairs) are recognized as expenses in the reporting period in which they were incurred.

Thus, to reflect in the accounting records the receipt of construction materials intended for the repair of a warehouse, you should use not account 07, but account 10 (subaccount 10-1).

Transfer of materials to the contractor for repairs

Under a work contract, one party (contractor) undertakes to perform certain work on the instructions of the other party (customer) and deliver the result to the customer within a specified time period, and the customer undertakes to accept the result of the work and pay for it (pay the price of the work). The work is performed at the contractor's risk, unless otherwise provided by law or agreement of the parties (clause 1 of Article 656 of the Civil Code of the Republic of Belarus (hereinafter referred to as the Civil Code)).

Unless otherwise specified in the contract, the work is performed at the contractor’s expense - from his materials, with his forces and means (clause 1 of Article 658 of the Civil Code).

In this situation, repairs are carried out by a third-party contractor, but using materials from the customer organization.

When performing work using the customer's material, the contractor must:

– use the material provided by the customer economically and prudently;

– after completion of the work, provide the customer with a report on the consumption of material;

– return the balance or, with the consent of the customer, reduce the price (estimate) of the work taking into account the cost of the unused material remaining with the contractor (clause 1 of Article 667 of the Civil Code).

Please note that when transferring materials to the contractor, the customer does not lose ownership of them. Consequently, the transfer of materials to the contractor, as well as their return by the latter, does not constitute their sale. It is advisable to reflect such a transfer in subaccounts of account 10, for example in subaccount 10-7 “Materials transferred for processing to third parties.”

The basis for writing off inventory items from the shipper and posting them to the consignee, as well as for warehouse, operational and accounting, are invoices TTN-1 and TN-2, which are used by legal entities of all forms of ownership (clause 2 of the Instructions for filling out standard forms primary accounting documents TTN-1 “Consignment note” and TN-2 “Consignment note”, approved by Resolution of the Ministry of Finance of the Republic of Belarus dated December 18, 2008 No. 192 (hereinafter referred to as Instruction No. 192)).

Consignment note TN-2 is used for the release and acceptance of goods if their movement is carried out without the participation of a car (by mail or courier).

Therefore, when transferring the customer’s materials to a contracting organization for routine repairs, it is advisable to issue a consignment note TN-2, in which it is necessary to indicate the name, quantity, price and cost of the material at which it is listed in the accounting records of the customer organization. In this case, the VAT rate and amount are not indicated, since there is no sale of materials.

For reference: materials accepted by the contractor from the customer are accounted for as the debit of account 003 “Materials accepted for processing” and in the situation under consideration are accounted for at the cost indicated in the customer’s delivery note. As they are used in the provision of services and returned to the customer, the materials accounted for in this way are written off from the credit of off-balance sheet account 003 (clause 81 of Instruction No. 50).

Repair work performed by a contractor: documentation and accounting

As is known, each business transaction is subject to registration by a primary accounting document, which is drawn up at the time of the business transaction or immediately after its completion and is intended to reflect the result of the business transaction on the accounting accounts.

For reference: such requirements are imposed by Decree of the President of the Republic of Belarus dated March 15, 2011 No. 114 “On some issues of the use of primary accounting documents” (hereinafter referred to as Decree No. 114) (subclause 1.1 clause 1).

The primary document confirming the fact that the contractor performed routine repairs in the situation under consideration is the work completion certificate, which must contain the following information:

– name of the document, date of its preparation;

– name of the organization, surname and initials of the individual entrepreneur;

– content and basis for a business transaction, its assessment in natural and (or) cost terms;

– positions of persons responsible for carrying out a business transaction and (or) the correctness of its execution, their names, initials and signatures (subclause 1.4 clause 1 of Decree No. 114).

In organizations engaged in trade and trade-production activities, costs associated with sales, incl. expenses for the maintenance of buildings and structures are taken into account in account 44 “Sales expenses”.

Expenses incurred by the organization related to the sale of products and goods are reflected in the debit of account 44 and the credit of the corresponding accounts. Amounts recorded on account 44 are written off from this account to the debit of account 90 “Income and expenses from current activities” in accordance with the law.

Analytical accounting for account 44 is carried out according to expense items and (or) in another manner established by the organization’s accounting policy (clause 35 of Instruction No. 50).

It should be noted that expenses that cannot be correlated with income of a certain reporting period are recognized in accounting as part of the expenses of the reporting period in which they were incurred (clause 32 of the Instructions for accounting of income and expenses, approved by the resolution of the Ministry of Finance of the Republic of Belarus dated September 30. 2011 No. 102).

Taking into account the above, the organization’s expenses for carrying out routine repairs of the warehouse premises are included in the distribution costs of the month in which they were incurred on the basis of a work completion certificate signed by the customer and the contractor.

In addition, based on the certificate of completion of work and the contractor’s report on the consumption of materials, the cost of consumed materials is reflected in the debit of account 44 in correspondence with the credit of account 10 (subaccount 10-7).

Tax accounting of expenses for current repairs

To attribute expenses to expenses taken into account when taxing profits, two main points should be taken into account:

– costs of production and sale of goods (work, services), property rights, taken into account for taxation, represent the valuation of goods (work, services), property rights of natural resources, raw materials, materials, fuel, energy used in the process of production and sale of goods (work, services), fixed assets, intangible assets, labor resources and other expenses for their production and sale, reflected in accounting;

– costs for the production and sale of goods (work, services) are determined on the basis of accounting documents (if necessary, by making calculated adjustments to accounting data as part of tax accounting) and are reflected in the tax period to which they relate (accrual principle) , regardless of the time (term) of payment (preliminary or subsequent) (clauses 1, 2 of Article 130 of the Tax Code of the Republic of Belarus (hereinafter referred to as the Tax Code)).

In the situation under consideration, the organization’s expenses for routine repairs of a warehouse intended for storing goods purchased for sale are the costs of a trading organization associated with its current activities.

Consequently, for the purposes of calculating income tax, the cost of current repairs and materials used during its implementation are taken into account as part of the costs of production and sale of goods (work, services), property rights taken into account for taxation.

The VAT amounts presented by the contractor are recognized by the customer as tax deductions, which are subject to deduction regardless of the date of payment for the purchased maintenance work after the VAT amounts are reflected in the accounting records (part one, clause 6, article 107 of the Tax Code).

Accounting for repairs in tax accounting

In NU, accounting for the costs of repairing fixed assets is possible in 2 ways (Article 260 of the Tax Code of the Russian Federation):

• The same as in accounting, i.e. by including costs in expenses during the period of completion of repairs (clause 1).
• Through the creation of a reserve (clause 3). The amount of contributions to it is determined in a special manner established by clause 2 of Art. 324 Tax Code of the Russian Federation. The total amount of the reserve is subject to limits, but can accumulate over several tax periods. If a reserve is created, then all repair costs are taken into account and attributed to the reduction of this reserve. And only if its amount is exceeded, repair costs can be taken into account directly in the costs.

For more information on creating and using a reserve for repairs of operating systems at NU, read the material “Creating a reserve for repairs of fixed assets (nuances).”

The decision to create or not create a reserve in NU must be fixed in the accounting policy. If you decide to create it, the algorithm for calculating the amount of the reserve and the period for which it is formed are also written down.

Since the current accounting rules do not provide for the possibility of creating a reserve for repairs of fixed assets, differences will arise between the accounting and accounting data in terms of the reserve formed for the purposes of the accounting system.

We confirm expenses for equipment repairs

You can repair a broken down car, excavator, grader, etc. by contacting a specialized company, or by using the construction organization’s own resources.

What documents are needed to justify the costs incurred in each of these options? What complaints do tax inspectors most often make?

The answers to these questions are in this article. The repairs are carried out by a third-party company. The legislation does not define the list of documents that need to be drawn up in this case, so there are some differences in the composition of the documents used by companies performing repair and maintenance work on cars and special equipment.

As a rule, the parties enter into an agreement, for example for a year, and send the equipment for repair as necessary. The preliminary cost of repair work and the necessary spare parts is recorded in the repair request. The fact of handing over the car for repair is confirmed by the acceptance certificate of the vehicle to the contractor (it indicates the completeness of the vehicle, visible external damage and defects, etc.).

d.). The final cost of the work actually performed and the spare parts and materials used is indicated in the work order, on the basis of which a transfer and acceptance certificate for the work performed and an invoice are drawn up.

The return of the vehicle to the construction company is certified by an act of acceptance and delivery of the vehicle to the customer. For clarity, let's present the above in the form of a block diagram. However, this is not the only possible way to formalize a relationship with a specialized company.

Sometimes the parties do not enter into an agreement. It happens that a work order is at the same time an act of acceptance and transfer of completed work. It happens that the purchase of spare parts and the work order for repair work are issued separately.

We recommend reading: How can you check whether a person has been deprived of a driver’s license?

In short, the options are acceptable, which should not negatively affect the ability to recognize expenses for repairs and maintenance of cars and special equipment for the purposes of both accounting and tax accounting.

Results

OS repair consists of implementing measures aimed at maintaining the operability of fixed assets, but it should not lead to a change in the technical characteristics or purpose of the OS.
Repair costs are taken into account in expenses in the amount of actual amounts upon completion of repair work, regardless of whose forces the repair is carried out: in-house or outsourced. Documented justification for the need for repairs is required. In the NU it is permissible to create a reserve for repairs, but this leads to differences between the BU and the NU. You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.