Recommendation P-51/2014-OK Mash “Costs for major repairs of fixed assets”

How is it different from ongoing renovation work?

Reconstruction and modernization include measures that contribute to the improvement or, as an option, the targeted formation of updated technical and economic characteristics of the equipment used.
Repair work implies a set of activities that involve the replacement of certain parts, components, structures of a specific OS object, as well as actions aimed at ensuring its normal functioning.

Repair work, in turn, can be current or capital.

If we judge the purpose of the current repair, it should be noted that it is aimed at eliminating, relatively speaking, minor breakdowns, preventing possible malfunctions, and generally maintaining the current performance of the equipment used.

As for the overhaul, it is carried out to maintain the working condition of the fixed asset by restoring its technical and economic parameters to the required level.

Thus, capital repairs usually involve more serious costs than, for example, routine repairs.

Accordingly, a certain approach is required to the accounting of expenses for major repairs, provided, however, by the current norms and standards.

How is it different from upgrading the OS?

Modernization of fixed assets and repair work are associated in many ways, so accountants often make many mistakes when preparing reports on work performed.

In order to correctly fill out the statements and make the appropriate entries, you must clearly understand the definition of each concept.

Repair is comprehensive work to troubleshoot and restore the functionality of objects in order to restore operational operations.

In addition, these measures are aimed at prevention in order to replace worn parts and structures.

Important: at the same time, repair work, even when replacing old parts of fixed assets with elements of the latest developments, should not lead to changes in the technical and economic indicators of the equipment as a whole.

The use of routine repairs can be carried out several times a year in order to eliminate minor problems, replace worn parts; the operation of the OS object does not stop during this event.

In general, the entire process is aimed at extending the operational life of the fixed asset.

Overhaul of the OS is carried out once a year with a complete temporary shutdown of the equipment; it involves disassembling the facility to replace components.

Important: for an accountant there is no distinction as to what type of repair was made.

OS modernization is a series of activities aimed at replacing parts and assemblies with more advanced options in order to increase equipment performance, its technological qualities and economic characteristics.

Important: the main feature of modernization is the replacement of existing components, and not failed ones, since in this case it will be a repair.

How to account for repairs of fixed assets in accounting

Any type of repair is preceded by the formation of a repair plan for the year, based on a feasibility study of their need and calculation of the estimated estimated cost. They carry out repairs on their own (self-employed) or by concluding an agreement with a contractor - a third-party company.

Accounting for repairs of fixed assets on an economic basis involves assigning costs to production cost accounts. As a rule, enterprises that carry out OS repairs on their own have auxiliary production facilities on the basis of which repairs are carried out, therefore they collect expenses on the accounts of these production facilities, and then, as the OS object is restored, write them off to the main production account, recording the operations with postings:

In the absence of auxiliary repair shops, repair costs are collected directly in cost accounts:

D/t 20, 23, 25, 26, 29, 44 – K/t 02, 10, 60, 70, 69

Example

The company independently carried out ongoing repair work to replace worn equipment parts in the amount of 150,000 rubles, of which the purchase of materials amounted to 95,600 rubles, wages of workers 35,000 rubles, depreciation of mechanisms - 8,900 rubles. The company does not have a repair shop. The accountant records the repair work with the following records:

Operation	D/t	K/t	Sum
Written off as production costs:
Inventory	20	10	95 600
Salary of shop workers	20	70	35 000
Insurance premiums for salary have been calculated (35,000 x 30%)	20	69	10 500
Depreciation of fixed assets involved in repairs	20	02	8900

If the repair is carried out by a contractor, then the work is carried out on the basis of a concluded contract, the acceptance is formalized by the relevant act, the accountant makes the following entries:

Operation	D/t	K/t
Upon presentation of the certificate of repair work performed, costs are included in the cost price	20, 23, 25, 26, 44	60
VAT on completed work	19	60
Payment for repairs was made to the contractor	60	51
VAT is accepted for deduction	68	19

Example

A trading company entered into an agreement with a contractor for the repair of refrigeration equipment in the amount of 200,600 rubles. in view of VAT. The accountant documented the acceptance of completed work with the following entries:

Operation	D/t	K/t	Sum
The contractor presented an invoice for payment	44	60	170 000
VAT	19	60	30 600
Payment made	60	51	200 600
VAT is accepted for deduction	68	19	30 600

Major and current repairs of the OS, unlike other recovery methods

In the production activities of organizations during the operation of the operating system, wear and tear of the operated objects naturally occurs, and breakdowns occur. Their timely restoration allows you to increase their service life and avoid the cost of purchasing new equipment. Recovery is possible through modernization, reconstruction and repair. Modernization and reconstruction are recognized as work that improves or creates new technical and economic characteristics of an object. Whereas repair includes a set of measures aimed at replacing individual structures, parts, and maintaining its working condition.

Repairs are divided into current and major. Current repairs are aimed at prevention, maintaining the facility in working order and eliminating minor faults. Capital - guarantees the restoration of the technical parameters of the object and its working condition.

Overhaul can be comprehensive, covering the entire facility, or selective, including the repair of individual parts of the facility.

The validity of OS repairs is established by the technical services of organizations by determining the order of scheduled preventive maintenance, while assigning the type of repair.

A feature of accounting for major repairs compared to other types of restoration is that repair costs are included in current costs, while costs for modernization and reconstruction are included in capital costs.

For key differences between repair and OS modernization for tax purposes, see ConsultantPlus. Trial access to the legal system is free.

OS overhaul in accounting - postings

Once the decision on the need for a major overhaul of fixed assets has been made, the facility can be restored by the organization itself or by using equipment and workers from a third-party company on a contract basis. If you go the route of overhaul by the organization’s services, then you need to take into account that expenses will include the cost of spare parts and materials, wages, and insurance premiums.

Accounts for carrying out major repairs in various ways will be as follows:

• if there is a structural unit (repair service):

Dt 23 Kt 10 (16, 69, 70) - repair costs collected;

Dt 20 (25, 26, 29, 44) Kt 23 - expenses are written off depending on the use of the operating system (the account on which depreciation is recorded is debited);

• if there is no repair service, account 23 is not used, and the costs are written off directly to the cost account:

Dt 20 (25, 26, 29, 44) Kt 10 (16, 69, 70);

• If the repair is carried out by a contractor, the cost entry will be:

Dt 20 (25, 26, 29, 44) Kt 60.

For long-term overhauls, it is recommended to transfer objects to a separate subaccount of account 01 “OS under repair”.

The recommendations of ConsultantPlus experts will help you write off materials for OS repairs in accounting and for income taxes. Get free trial access to the system and go to the Ready-made solution.

Corporate income tax

In general, expenses for repairs of fixed assets, including capital ones, are considered as other expenses and are taken into account for tax purposes in the reporting (tax) period in which they were made, in the amount of actual costs (clause 1 of Article 260 of the Tax Code of the Russian Federation ) .

In order to uniformly recognize repair expenses for profit tax purposes, an organization has the right to create a reserve for future expenses for repairs of OS in the manner established by Art. 324 of the Tax Code of the Russian Federation (clause 3 of Article 260 of the Tax Code of the Russian Federation).

Contributions to the reserve are calculated based on the total cost of fixed assets and the contribution standards approved by the organization independently in its accounting policy for tax purposes (paragraph 1, clause 2, article 324 of the Tax Code of the Russian Federation).

The total cost of fixed assets is determined as the sum of the initial (replacement) cost of all depreciable fixed assets put into operation as of the beginning of the tax period in which the reserve is formed (paragraph 2, clause 2, article 324 of the Tax Code of the Russian Federation).

When determining the standards for deductions, the maximum amount of deductions to the reserve for future expenses for OS repairs is determined based on the frequency of repairs of the OS object, the frequency of replacement of OS elements (in particular, assemblies, parts, structures) and the estimated cost of the specified repairs. At the same time, the maximum amount of the reserve for future repair costs cannot exceed the average amount of actual repair costs that have developed over the last three years (paragraph 3, clause 2, article 324 of the Tax Code of the Russian Federation).

Deductions to the reserve for future expenses for repairing the OS during the tax period are written off as expenses in equal shares on the last day of the corresponding reporting (tax) period (paragraph 4, clause 2, article 324 of the Tax Code of the Russian Federation).

When creating a reserve for upcoming repairs, the amount of actual costs incurred for repairs is written off from the funds of the specified reserve (paragraph 5, clause 2, article 324 of the Tax Code of the Russian Federation).

That is, until the end of the tax period (calendar year), only quarterly contributions to the reserve will be taken into account as expenses, and the amount of actual repair costs will not be taken into account in expenses.

In the situation under consideration, at the end of the tax period, the amount of actual repair costs incurred is greater than the amount of the reserve. The balance of actually incurred repair costs for tax purposes is included in other expenses as of the end of the tax period (paragraph 6, clause 2, article 324 of the Tax Code of the Russian Federation).

For more information on creating a reserve for repairs of operating systems and writing off expenses from the specified reserve, see the Practical Guide to Income Tax.

Justification and confirmation of costs for major repairs

When carrying out major repairs of fixed assets, special attention should be paid to the order of registration of the process. During inspections, tax authorities place high demands on documentary evidence of repairs that have taken place.

First of all, the need for major repairs should be justified. To do this, a report is drawn up, which records the identified defects, or a defect sheet.

You can download a ready-made sample of a defect report from ConsultantPlus, receiving free test access to the system.

The transfer of an object for repair is formalized by an invoice for internal movement - in the case of repairs carried out by its own specialized service or an acceptance certificate if the object is transferred to a contractor.

After completion of the repair work, an acceptance certificate is drawn up, by which the object is accepted back. It is signed by members of the selection committee, persons responsible for the safety and repair of the OS, representatives of the contractor and can be drawn up according to the OS-3 form or a free one.

Documents confirming the actual costs of major repairs can be: estimates and technical documentation confirming the volume of repairs and costs for them, certificates of work performed from the repair organization or internal primary records for materials used for repairs, labor, etc.

Overhaul of fixed assets in accounting for deferred expenses

Not every enterprise has the opportunity to create a reserve for repairs, but the restoration of the operating system must be carried out, while trying to be guided by the principle of uniform cost write-off. This is especially true when carrying out major repairs, since the amounts involved are quite large, and a one-time write-off can significantly damage the condition and reputation of the company. The method of writing off repair costs by distributing them as future expenses using an account will help you avoid jumps in product costs. 97. In this case, the entries for recording repair work will be as follows:

Capital costs are usually repaid in the time interval between repairs.

What is repair, types of repair

Repair is maintaining a fixed asset in good condition and preventing its failure. Repair does not change the properties of the object; it restores functionality and eliminates faults.

If there have been changes in the properties of the object that are not related to the workload and technical and economic indicators of the object (power, service life), and also the quality and range of products (works, services) have not changed, then the restoration work performed can be classified as repair.

Repair is divided into:

• current;
• capital;
• carried out in an economic way (with one’s own resources);
• performed by contract.

How to determine when repairs are ongoing and when they are major? Overhaul is the replacement of worn-out main parts, structures, and elements with more durable and economical ones that improve the operational capabilities of the objects being repaired.

Major repairs cannot include a complete change or replacement of the main structures, the service life of which in buildings and structures is the longest (for example, stone and concrete foundations of buildings and structures, all types of building walls, underground network pipes).

Routine repair is the maintenance of fixed assets to keep objects in working order; it eliminates minor damage and malfunctions. During current repairs, the operation of buildings does not stop, including heat, water and energy supplies.

Also take into account the periodicity factor; major repairs are carried out much less frequently than current ones: for example, major repairs are carried out annually, current repairs are carried out monthly.

Reflection in accounting

Repair costs are included in the cost of production, while modernization and reconstruction costs are included in the initial cost of the facility.

If you do not reasonably reflect the restoration of fixed assets as a repair, then the tax base for property tax will be underestimated (reconstruction and modernization increase the cost of fixed assets, and therefore property tax) and for income tax (costs will be written off immediately, and not through depreciation).

The organization must reflect fixed assets in accounting according to the degree of their use, located:

• in operation,
• in stock (reserve);
• under repair;
• at the stage of completion, additional equipment, reconstruction, modernization and partial liquidation;
• on conservation.

According to clause 20 of the Methodological Instructions, approved by order of the Ministry of Finance of Russia dated October 13, 2003 No. 91n.

To account for fixed assets undergoing long-term repairs, it is advisable to reflect them in a separate subaccount of account 01 “Fixed assets under repair.”

Debit 01 subaccount “Fixed assets in repair” Credit 01 subaccount “Fixed assets in operation”

– the fixed asset was transferred for repair.

Debit 01 subaccount “Fixed assets in operation” Credit 01 subaccount “Fixed assets in repair”

– fixed asset taken from repair.

If the repair is short-term, then it will be enough to rearrange the inventory cards of the fixed assets being repaired into the group “Fixed assets under repair” in the file cabinet. When an OS is received from repair, the inventory card is moved accordingly (according to clause 68 of the Methodological Instructions, approved by Order of the Ministry of Finance of Russia dated October 13, 2003 No. 91n).

Repair costs

If objects that are not yet part of the operating system are being repaired, then the costs of repairs are included in their original cost. If fixed assets are repaired, then the costs of repairs are considered current expenses.

Household repairs

If repairs are carried out by an organization with the help of a repair shop, then the costs are reflected in account 23 “Auxiliary production”.

Debit 23 Credit 10,69,70... - expenses for repairing the OS are reflected.

After signing the act of acceptance and delivery of repaired fixed assets (according to OS-3 form), all expenses accumulated in account 23 are written off to cost accounting accounts:

Debit 20 (25, 26, 29, 44...) Credit 23 - the costs of repairing the OS are written off.

If there is no repair shop in the organization, repair costs are immediately written off to expense accounts as they arise, without the participation of 23 accounts.

Contract repair

When repairs are carried out with the participation of a contractor, expenses are written off as follows:

Debit 20 (25,26,29,44...) Credit 60 - the costs of repairs performed by the contractor are written off.

Does the cost of the OS increase?

The question is often asked whether financing the costs of major repairs leads to an adequate increase in the book value (estimated) value of the corresponding fixed asset.

The answer to this is contained in the standard regulating the accounting procedure for fixed assets.

In addition, some clarifications on this issue are provided by the provisions.

Thus, the initial (primary) cost of fixed assets is subject to a legal increase only if the quality characteristics of the corresponding fixed asset item have actually improved as a result of its modernization and (or) reconstruction.

As for repair costs, including the costs of major repairs, they are not included in the price of the fixed asset and, accordingly, do not increase the value of this asset.

Change in the initial cost of the OS

An organization, having owned fixed assets, will sooner or later face the need for their repair or reconstruction. Where such costs should be allocated has been a concern for many years now. Let's try to figure it out.

Paragraph 2 of Article 257 of the Tax Code determines that the initial cost of fixed assets can be changed only in cases strictly defined by the specified norm. Namely in cases:

• completions;
• retrofitting;
• reconstruction;
• modernization;
• technical re-equipment;
• partial liquidation;
• and for other reasons.

Let us define what each of the definitions used means. Paragraph 2 of Article 257 of the Tax Code notes that work on completion, additional equipment, and modernization includes work caused by changes in technological or service equipment, a building, structure or other object of depreciable fixed assets, increased loads or other new qualities.

For the purposes of Chapter 25 of the Tax Code, the reconstruction of fixed assets means the reconstruction of existing fixed assets associated with improving production and increasing its technical and economic indicators. At the same time, the reconstruction of fixed assets should be carried out according to the project and in order to increase production capacity, improve quality and change the product range.

Technical re-equipment includes a set of measures to improve the technical and economic indicators of fixed assets or their individual parts based on the introduction of advanced equipment and technology, mechanization and automation of production, modernization and replacement of obsolete and physically worn-out equipment with new, more productive ones.

From the definitions we conclude that the main purpose of carrying out this work (modernization or reconstruction) is to improve or increase the initially adopted standard indicators of the functioning of fixed assets or to change the purpose of use of the object.

However, in practice there are often situations when, for example, reconstruction seems quite difficult to distinguish from major repairs. What should an accountant do in such a situation? And what documents need to be used to determine that reconstruction or repair has been carried out. Let's look at this in more detail.

Important point

The initial cost of fixed assets changes in cases of completion, additional equipment, reconstruction, modernization, technical re-equipment, partial liquidation of relevant facilities and on other similar grounds

What's all the fuss about?

It would seem, why such a distinction? And what difference does it make whether reconstruction or major repairs are carried out? The answer is simple, like everything ingenious - in accounting. In tax accounting, repair costs are taken into account as a lump sum in the amount of actual costs. Provided that the organization does not have a reserve for the repair of fixed assets (clause 2, clause 1, article 253 of the Tax Code of the Russian Federation, clause 1, article 260 of the Tax Code of the Russian Federation, clause 5, article 272 of the Tax Code of the Russian Federation).

As for reconstruction, the accounting is somewhat different. Such expenses increase the initial cost of fixed assets, which in the future can only be written off through depreciation charges (Articles 256-259 of the Tax Code of the Russian Federation). Naturally, such a write-off is extremely unprofitable for business entities, since accounting for costs in income tax expenses extends over many years.

It is also necessary to remember that the calculation of depreciation of fixed assets after reconstruction in accounting and tax accounting differs and the application of PBU 18/02 “Accounting for income tax expenses” (approved by Order of the Ministry of Finance of the Russian Federation of November 19, 2002 No. 114n) is inevitable.

From the above, it is clear that the accountant needs to clearly distinguish between when repairs were carried out and when reconstruction was carried out. Note that in the first case, only the shortcomings and errors formed during the work are eliminated in the object, and during reconstruction the properties of the object are improved. Of course, it is beneficial for the company to write off costs at a time and treat them as repairs. However, it is absolutely certain that the tax authorities will not agree with this. And in every convenient case they will assume that reconstruction was carried out and charge income tax with all the ensuing consequences.

Other definitions of reconstruction

Not only does it seem quite difficult to distinguish between the types of construction and installation work being carried out, it is also necessary to use legislation that has been in force since the times of the Soviet Union and branches of law other than tax law.

Let us note that the Tax Code provides too general a definition and in practice it seems quite difficult to classify exactly what types of construction and installation work were performed.

Typically, accountants use Appendix 1 to Departmental Construction Standards VSN 58-88 (r) “Regulations on the organization and conduct of reconstruction, repair and maintenance of buildings, public utility and social-cultural facilities” (approved by the Order of the State Committee for Architecture of the Russian Federation under the USSR State Construction Committee dated November 23 1988, hereinafter referred to as Appendix 1 to the BSN).

Appendix 1 to the BSN notes that the reconstruction of a building is a complex of construction work and organizational and technical measures associated with changes in the main technical and economic indicators. For example, the number and area of ​​apartments, construction volume and total area of ​​the building, capacity and throughput or its purpose in order to improve living conditions, quality of service, increase the volume of services.

Definitions of reconstruction can also be found in letter of the USSR Ministry of Finance dated May 29, 1984 No. 80, Methodology for determining the cost of construction products on the territory of the Russian Federation MDS 81-35.2004 (approved by Resolution of the State Committee for Construction of Russia dated March 5, 2004 15/1), letter of the State Planning Committee USSR No. NB-36-D, letter of the USSR State Construction Committee No. 23-D, USSR Stroybank No. 144, USSR Central Administration No. 6-14 dated May 8, 1984 “On the definition of the concepts of new construction, expansion, reconstruction and technical re-equipment of operations

The Law of July 18, 2011 No. 215-FZ “On Amendments to the Town Planning Code and Certain Legislative Acts of the Russian Federation” (with the exception of certain provisions) (hereinafter referred to as Law No. 215-FZ) brought a lot of clarity. These amendments introduced and supplemented the legislative acts of the Russian Federation. First of all, the innovations affected the Town Planning Code. The legislator has significantly supplemented the existing definition of reconstruction.

Thus, from July 22, 2011, you can use a new, more expanded interpretation of the definition of “reconstruction”, as well as the types of work that can be classified as it. The “new” edition contains definitions of reconstruction for capital construction projects, linear objects (communication or power lines, pipelines, roads, etc.).

In addition to changing the parameters of an object, such as height, number of storeys, volume area, reconstruction also includes such types of work as: superstructure, reconstruction or expansion of an object, replacement or restoration of its load-bearing building structures, with the exception of individual elements of these structures with similar ones or other improving indicators.

There is no definition of “repair” in either tax or accounting legislation. Therefore, let us turn again to construction regulations. In the letter of the State Statistics Committee of Russia dated April 9, 2001 No. MS-1-23/1480 there is the following definition: the cost of repairs (current, medium and capital) means the cost of work to maintain fixed assets (their individual parts and structures) in working condition during their useful life, which does not lead to an improvement in the initial standard performance indicators.

In paragraph 3.1 of the Regulations on carrying out planned preventative repairs of industrial buildings and structures MDS 13-14.2000 (approved by the resolution of the USSR State Construction Committee dated December 29, 1973 No. 279) there is another definition of “repair”, defining it as a set of technical measures aimed at maintaining or restoration of the original operational qualities of both the building or structure as a whole and their individual structures. Repairs are usually divided into current and major. Law No. 215 - Federal Law made its “mite” in the definition of “repair”. So a major overhaul is the replacement or restoration of:

• building structures of capital construction projects or replacement of their elements (except load-bearing ones);
• engineering support systems and their networks;
• individual elements of load-bearing building structures for similar or other improving indicators.

Cost accounting

Important! When the management of an organization makes an informed decision about the need to perform a major overhaul of the operating system, it is necessary to choose the appropriate method for carrying it out.

Typically, this activity can be carried out according to one of the following two approaches:

• restoration of a technical object using our own resources, that is, the internal resources of the enterprise itself;
• attracting resources from external (third-party) organizations through the conclusion of contract agreements.

Correct registration of all processes and procedures associated with the overhaul of fixed assets at an enterprise is of great importance for the correct accounting of relevant costs.

You should be aware that documentary evidence of the repairs carried out often becomes the object of close attention from tax officials.

At different stages of OS overhaul, the following documents must be drawn up:

• Justification of the need for this repair. For an OS object, an act of recording identified faults or, as an option, a defective statement is drawn up.
• If an object is transferred to the enterprise’s own division for repairs, an invoice is issued certifying the fact of internal movement.
• If the repair of a fixed asset is entrusted to an external organization, a corresponding contract and a certifying acceptance certificate are drawn up.
• The fact of completion of major repairs and return of the object to its intended place is also documented in the acceptance certificate.
• All paid expenses and incurred expenses must be confirmed by payment documents, estimate and technical documentation.

Overhaul in accounting

Accounting for RR OS is carried out in accordance with clause 67 of the Methodological Recommendations for Accounting for OS, approved by Order of the Ministry of Finance of the Russian Federation dated October 13, 2003 No. 91n, that is, repairs are production costs or sales expenses. Below we present the registration of transactions in accounting.

If you have access to ConsultantPlus, check whether you have correctly reflected the costs of major repairs in your accounting. If you don't have access, get a free trial of online legal access.

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;
• 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.

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

• certificate of acceptance of the object from repair;

• 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.

Accounting for the reserve for repairs of fixed assets

The rules for creating a reserve for OS repairs are described in Art. 324 Tax Code of the Russian Federation. To calculate the reserve you will need:

• the total cost of fixed assets (the initial cost of all fixed assets that are in use at the beginning of the tax period for the formation of the reserve);
• standard of deductions (indicated in the accounting policy based on an individual decision).

To calculate the standard of deductions, the maximum amount of the reserve is determined. It will be the smallest of the amounts:

• estimated (estimated) cost of upcoming repairs, which includes the cost of materials, workers’ salaries, expenses for services of other organizations, etc. (Clause 1 of Article 324 of the Tax Code of the Russian Federation);
• average value of real RR for the last three years.

The maximum amount of the reserve can be increased if complex and costly overhauls are planned, by the amount of this repair related to a specific tax period. In this case, the following conditions must be met:

• accumulation of funds for such major repairs is carried out more than one tax period;
• no similar repairs were carried out during the previous three tax periods;
• Availability of a schedule for such major repairs and estimates for it.

The standard for contributions to the reserve can be found using the formula:

N = R / OS,

Where:

N is the annual standard for contributions to the reserve for OS repairs;

P is the maximum amount of contributions to the reserve for OS repairs;

OS - the total cost of the OS.

Contributions to the reserve are made every reporting period for income tax, so the annual amount of the reserve must be divided in proportion to the number of reporting periods (4 quarters or 12 months).

Repair of fixed assets: what is it?

Definitions of repair as a way to maintain and improve the efficiency of fixed material assets are not provided in modern regulations. The Regulation on carrying out planned preventive repairs of industrial buildings and structures MDS 13-14.2000, approved by Decree of the USSR State Construction Committee dated December 29, 1973 No. 279, has not been cancelled, and therefore is considered relevant: it defines the repair of this particular type of fixed assets. This is considered a combination of technical measures related to improving or maintaining at the same level the operational characteristics of buildings, structures and their structures.

Characteristics of repair of fixed assets

Repair, as a way to maintain the OS in an effective condition, is characterized by the following factors:

• the functions of the fixed asset being repaired remain unchanged;
• the technical capabilities of the asset are not expanded;
• the characteristics of the object are as close as possible to the original ones;
• the initial cost of the asset reflected on the balance sheet increases as a result of repairs.

Repair of fixed assets is carried out in different ways:

• repairing damage;
• repair;
• replacement of individual elements, structures and assemblies;
• maintenance (maintenance, lubrication, checking, cleaning, setting, adjustment, etc.).

Classification of repairs of fixed assets

Depending on what is taken as the basis for dividing into groups (scope of work, their cost, duration, degree of interference in the functioning of the fixed asset and the order of organization), repairs can be divided into several categories.

1. If planning is possible:

• scheduled preventive maintenance – carried out regularly, without waiting for problems in the functioning of the fixed asset, in order to prevent a decrease in efficiency;
• emergency repair - emergency elimination of problems or disruptions in the operation of an object to restore its functionality;
• restorative repair is a type of emergency repair, when work is forced to be carried out after the impact on fixed assets of any emergency situations beyond human control, for example, natural disasters.

• According to the volume and characteristics of the work performed:
• current repair – the smallest in scale and cost of repair actions performed, designed to ensure effective operation until the next repair, without affecting the main functional characteristics of the facility (can be carried out several times during the year);
• medium repair is a more labor-intensive process, involving large costs, requiring partial intervention in the operation of the fixed asset being repaired; most often associated with the replacement of parts and important components (not performed more than once a year);
• major repairs are the most expensive and time-consuming of all types of restoration repair work; they completely cover the facility, providing for high-level interventions, as a result of which it falls out of service during the repair (carried out occasionally).

• economic method of repair - maintenance and/or restoration of an object is carried out by attracting internal resources of the organization itself;
• contract repair method - hiring external contractors to carry out the work.

Current and major repairs: how to distinguish

The division of repairs into current and capital is important, since these types of work are reflected differently in the enterprise’s accounting and other reporting. Meanwhile, the regulations of tax and accounting legislation do not provide a clear distinction and definition of these types of repair work.

The letter of the Ministry of Finance of the Russian Federation dated January 14, 2004 No. 16-00-14/10 “On the grounds for determining types of repairs” explains that the organization itself must develop provisions on the basis of which repair work will be classified as current or capital. In this case, it is permissible to use the provisions of documentation that has remained relevant since the times of the USSR, such as the cited Resolution of the State Construction Committee No. 279.

Let's consider the main differences between current and major repairs, which are accepted in business practice.

Nuances of accounting for OS repairs

The specifics of accounting for the costs of repairing fixed assets must be reflected in the accounting policies of a particular enterprise and are formalized by an appropriate order. As a rule, these funds are included in the costs of production or circulation, for which one of the ways is chosen.

1. Actual expenses are included in distribution costs. This method is used mainly for current repairs: expenses are written off in the same period in which they were incurred.
2. A special repair financial reserve is created. The organization chooses the procedure for accruing reserve funds in relation to the special limits established in internal regulations for such deductions, the size of which depends on the group of fixed assets.
3. Attributing repair costs to deferred expenses so that they can be written off evenly later. This method is more convenient if large-scale repair work is to be carried out, and a fund or reserve for this has not been created. If you write off a large amount for these expenses at once, the reflection of the cost of work will be disrupted.

Accounting entries

OS repair costs are taken into account as part of production costs or, alternatively, sales costs.

This position is reflected in the methodological recommendations regulating the accounting of fixed assets and approved by the administrative act of the Ministry of Finance of the Russian Federation. The tables below highlight typical transactions.

The first situation is that the enterprise has its own division authorized to carry out repair work. In this case, it is appropriate to use account 23:

The second situation is when the organization independently repairs fixed assets, but does not have its own repair unit:

The third situation is when repair work is carried out entirely by a third-party contractor:

Creating a reserve

Tax accounting regulations require the inclusion of repair costs as part of other costs.

Such expenses are recognized precisely in the reporting period in which they were actually incurred.

In addition, the legislation allows the formation of target reserves intended to finance future repairs.

If such a reserve is nevertheless created by the enterprise, this makes it possible to evenly distribute (show) repair costs in the tax accounting system over a number of reporting periods.

The method of reflecting (fixing) repair costs is fixed in the accounting policy of the organization.

It should be clarified that such reservation and distribution of repair costs is allowed exclusively for tax accounting. This practice is not provided for in accounting.

Accounting for repair operations of OS objects - Audit-it.ru

Silvestrova T. , expert of the information and reference system "Ayudar Info"

The activities of any institution are impossible without the use of property. Objects of material assets that meet the criteria established by clause 7 of the FSBU “Fixed Assets” are classified as fixed assets. During operation, objects break down and require repairs. How are repair operations for fixed assets reflected in accounting?

Repair is a set of technological operations and organizational actions to restore the performance, serviceability and service life of an object and (or) its components (GOST 18322-2016 “Interstate standard. System of technical maintenance and repair of equipment. Terms and definitions”).

Repair includes operations of localization, diagnostics, troubleshooting and monitoring of operation.

Troubleshooting and restoration of the primary characteristics of the object are carried out:

• by the employees of the institution;
• through the involvement of a third party organization (individual).

The main questions that arise for an institution when recording operations for the repair of fixed assets are as follows:

• whether the work is a major or current repair;
• will the book value of the object change after the work performed;
• How to reflect these transactions in the accounting accounts?

We will present the answers to these questions below.

Classification of repair work

The following classification of repair work is used (we will display it in the form of a diagram).

A brief description of repairs (current and capital) in relation to fixed assets is given in Instructions No. 65n.

From the provisions of this document it follows that repair work (current and major repairs) falls under subarticle 225 “Works, services for property maintenance” of KOSGU and includes:

• troubleshooting (restoring operability) of individual objects of non-financial assets, as well as objects and systems (security, fire alarms, ventilation systems, etc.) that are part of individual objects of non-financial assets;
• maintaining technical, economic and operational indicators of non-financial asset objects (useful life, capacity, quality of application, quantity and area of ​​objects, throughput, etc.) at the initially envisaged level;
• carrying out minor redevelopment of premises;
• restoration of museum objects and museum collections included in museum funds;
• carrying out work on the restoration of non-financial assets, with the exception of work that is in the nature of reconstruction, modernization, and additional equipment;
• restoration of the efficiency of functioning of objects and systems, hydrodynamic, hydrochemical cleaning, carried out in addition to technological needs (the list of works performed by the utility service provider, based on the terms of the contract for the supply of utility services), the cost of payment of which is reflected in subarticle 223 “Utilities” of KOSGU.

The importance of classifying repair work as work of a capital or routine nature is dictated by the peculiarities of reflecting these expenses in accounting accounts. FSBU “Fixed Assets” has identified cases of changes in the value of fixed assets following the results of a major overhaul of an object. Expenses for performing work on current repairs of fixed assets are not taken into account in the cost of such objects.

Including the cost of repair work in the cost of the operating system

After an asset is recognized in accounting as an item of fixed assets, it is accounted for at its book value. The carrying amount is the original cost of the asset, taking into account its changes. From January 1, 2021, government institutions in their work are guided by the provisions of the Federal Budgetary Accounting Standards “Fixed Assets”. As a general rule, expenses for repairs of fixed assets are included in the expenses of the institution. However, the provisions of this standard establish certain cases of changes in the book value of an object during major repairs.

Thus, the FSBU “Fixed Assets” has determined that a change in the book value of an item of fixed assets is possible if it is provided for by this standard and other regulations within the framework of the legislation of the Russian Federation in the case of:

• completions;
• retrofitting;
• reconstruction (including elements of restoration, technical re-equipment, modernization, partial liquidation (dismantling));
• replacement (partial replacement as part of a major overhaul for the purpose of reconstruction, technical re-equipment, modernization) of an object or its component;
• revaluation of fixed assets.

Thus, if a major overhaul is carried out for the purpose of modernization, reconstruction, technical re-equipment and during it the object or its component is replaced, these expenses are included in the cost of the fixed asset.

Further, when deciding on the inclusion of repair costs in the cost of a fixed asset, clause 27 of the Federal Budgetary Accounting Standards “Fixed Assets” is of interest, which establishes that if the procedure for operating a fixed asset item (its components) requires the replacement of its individual components, provided that such components parts in accordance with the recognition criteria for fixed assets, which are provided for in paragraph.

8 FSBU “Fixed Assets” are recognized as an asset; the costs of such replacement, including during major repairs, are included in the cost of the fixed asset item at the time of their occurrence.

At the same time, the cost of the fixed asset item, in respect of which restoration (major repair) work was carried out, is reduced by the cost of the replaced (retired) parts in accordance with the provisions of the FBU “Fixed Assets” on the derecognition (disposal from accounting) of fixed asset items (if subject to documentary confirmation of cost estimates for the disposed object).

The accounting entity enshrines in its accounting policies the application in accounting of the provisions of clause 27 of the Federal Accounting Standards “Fixed Assets” in relation to groups of fixed assets.

So, in order to apply clause 27 of the FSBU “Fixed Assets” and change the value of an object as a result of work on its overhaul, the following conditions must be met:

1) the object includes several components, each of which is recognized as an asset (fixed asset) by virtue of clause 8 of the Federal Budgetary Accounting Standards “Fixed Assets”;

2) the procedure for operating a fixed asset object (its components) requires the replacement of individual such components (components) of the object.

When carrying out work to replace a separate component of an object, the accountant does:

• an operation to dismantle an object, reflecting the disposal of the part being replaced (when the operation is completed, the value of the object decreases);
• an operation to include a new part installed during a major overhaul into the cost of an object (when the operation is completed, the value of the object decreases).

Source: https://www.audit-it.ru/articles/account/assets/a8/944293.html

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.

Sources

• https://praktibuh.ru/buhuchet/vneoborotnye/os/prochee/kapitalnyj-remont-osnovnyh-sredstv.html
• https://praktibuh.ru/buhuchet/vneoborotnye/os/prochee/uchet-remonta-osnovnyh-sredstv.html
• https://nalog-nalog.ru/buhgalterskij_uchet/vedenie_buhgalterskogo_ucheta/kapitalnyj_remont_osnovnyh_sredstv_v_buhgalterskom_uchete/
• https://superbu.ru/remont-osnovnyih-sredstv-kak-otrazit-v-buhgalterskom-uchete/
• https://nalog-nalog.ru/buhgalterskij_uchet/vedenie_buhgalterskogo_ucheta/osobennosti_ucheta_zatrat_na_remont_osnovnyh_sredstv/
• https://assistentus.ru/osnovnye-sredstva/remont-i-uchet/