The enterprise's own sources of funds: structure and use

Cash investments

Many people think that production requires the investment of very large sums of money, because this is one of the areas with a high barrier to entry. But now in the modern world there are many opportunities to attract cash flows into your own business.

Firstly, there is such a thing as a loan. It is easy to issue and obtain from banks of the Russian Federation upon provision of the required package of documents. If your production is connected with agriculture or other activities related to import substitution, then there is a chance to get a loan on very favorable terms. To submit an application, it is necessary to prepare a number of documents: a detailed business plan, a feasibility study of the project, a certificate from the tax office confirming business activity.

You also have the opportunity to attract investments from crowdfunding platforms. To do this, you will need to review your project and convince people of its worthy future. There are quite a large number of such sites on the Internet.

It is also possible to start a business with minimal production that does not require large expenses. Do you have a garage, basement or unnecessary storage? So why not start using it in such a way that this area generates some income?

One of the richest countries in terms of production is China. For some reason, all people think that all factories in this country are giants. No, most Chinese manufacturers are small enterprises that generate good income. The majority of home-produced goods from the Middle Kingdom are supplied to Europe, America and to us, to Russia.

Contract construction

If the developer is constructing by contract, the cost of the construction project is formed by the debit of account 08-3 “Construction of fixed assets” at the expense of work performed by contractors and the developer’s own costs for organizing construction.

Make the following entries in accounting:

Debit 08-3 Credit 60 – costs for the construction of the facility for work performed by contractors are written off;

Debit 19 Credit 60 – VAT claimed by contractors is taken into account;

Debit 68 subaccount “Calculations for VAT” Credit 19 – VAT submitted by contractors is accepted for deduction;

Debit 08-3 Credit 26(20) – the developer’s own costs associated with organizing the construction of the facility are written off.

If the developer engages a technical customer to partially or fully perform its functions, then its services are reflected as part of capital investments.

In accounting, reflect this with the following entries:

Debit 08-3 Credit 60 – costs for the construction of an object for the services of a technical customer are written off;

Debit 19 Credit 60 – VAT presented by the technical customer is taken into account;

Debit 68 subaccount “Calculations for VAT” Credit 19 – VAT submitted by the technical customer is accepted for deduction.

Situation: how can a developer reflect in accounting and take into account the receipt of temporary buildings and structures when calculating income tax? The developer constructs the main facility for himself using a contract method.

Include temporary title buildings and structures that meet certain criteria as part of fixed assets. Costs for objects that do not meet these requirements, as well as costs for non-title buildings, increase the initial cost of the main construction project.

To understand the nuances of accounting, it is important to understand what temporary structures are erected during construction. There are two types of such objects:

• Temporary title buildings and structures (VTZS). Such temporary buildings are used for the needs of the entire construction site. The list of auxiliary buildings is determined in advance in the title list (hence the name). Such temporary structures include electrical substations, technical warehouses, boiler rooms, access roads to the construction site (except roads), dormitories for workers, etc.

• Temporary non-title buildings and structures (TNS). These temporary buildings are used in certain construction areas. The composition of non-title structures is determined by the contractor based on emerging needs. This includes, for example, scaffolding, stepladders, electrical, water, and gas distribution.

In what order to register and take into account VTZS

As already mentioned, temporary title buildings and structures that meet certain requirements are taken into account as separate objects as part of fixed assets. When ready, such facilities must be put into operation directly during the construction process. This is done by special working commissions. In this case, an act is drawn up, for example, in the OS-1a form. This procedure follows from paragraph 1.6 of the Construction Norms and Rules SNIP 3.01.04-87, approved by Decree of the USSR State Construction Committee dated April 21, 1987 No. 84, and paragraph 3.1.8 of the Regulations approved by letter of the Ministry of Finance of Russia dated December 30, 1993 No. 160.

The specified rule on the inclusion of VTZS in the OS is valid only to the extent that does not contradict the Law of December 6, 2011 No. 402-FZ and PBU 6/01. Therefore, it is necessary to take into account the restrictions established by the latest regulatory documents. In particular, one of the main criteria will be the useful life of more than 12 months and the cost of the title structure more than 40,000 rubles. And if the working commission often sets the SPI equal to or less than the duration of construction, then with the cost it’s not so simple.

To determine the cost of a temporary title building, actual expenses for it are collected separately from other construction expenses on account 08 “Investments in non-current assets.” To do this, you can open a special sub-account, for example, “Construction of VTZS”.

To determine the estimated cost of VTZS, use one of the following methods:

• make calculations based on the construction organization project based on the title list;

• set aside a percentage of the estimated cost of all construction, repair, and installation work based on established standards.

This is established by paragraph 4.84 of the Methodology, approved by Decree of the State Construction Committee of Russia dated March 5, 2004 No. 15/1.

The chosen method for calculating the estimated cost of VTZS does not affect the procedure for determining the initial cost of temporary construction. To do this, you need documents confirming the actual costs of constructing the VTZS. Such a document will be an act of acceptance of work performed (for example, in the KS-2 form). In it, the contractor must indicate the cost of work performed and costs of materials. It is compiled on the basis of a log of work performed (form KS-6a). Use these documents when determining the initial cost of the VTZS.

When the VTZS object is ready and meets the established criteria, include it in fixed assets. Remember, if you have documents confirming the actual costs of the developer for the construction of the VTZ, it is not accepted into accounting as part of fixed assets, disputes with tax inspectors cannot be avoided. And the courts support the demands of tax inspectors (see, for example, the decision of the Thirteenth Arbitration Court of Appeal dated March 28, 2011 No. A56-49550/2010).

Starting next month, start depreciating such an object.

Here's what wiring you'll need to do. When forming the initial cost of the VTZS, reflect the actual costs of its construction as follows:

Debit 08 subaccount “Construction of VTZS” Credit 60 (76) – reflects the cost of contract work on the construction of VTZS.

When commissioning an object that meets the criteria of a fixed asset:

Debit 01 Credit 08 subaccount “Construction of VTZS” - reflects the initial cost of VTZS included in the OS.

When calculating depreciation:

Debit 08 subaccount “Construction of the main construction project” (91-2) Credit 02 – depreciation of the VTZS involved in construction has been accrued.

What to do if the VTZS does not meet the OS criteria? Include the costs of constructing such an object directly into the initial cost of the object being built:

Debit 08 subaccount “Construction of the main construction project” Credit 08 subaccount “Construction of the VTZS” - reflects the initial cost of the VTZS included in the OS.

All this follows from the Instructions for the chart of accounts (accounts 01, 02, 08, 60, 76, 91), paragraphs 4 and 17 of PBU 6/01.

If it is impossible to determine the actual cost of VTZS from documents from the contractor

In this case, a possible solution would be to set the initial cost based on what was planned in the design and estimate documentation. This document is an integral part of the contract; any changes in the cost of construction are agreed upon and endorsed by the parties either by changes in the estimate or by additional agreements (Articles 743 and 744 of the Civil Code of the Russian Federation). Therefore, design and estimate documentation can be used as a sufficient basis for determining the initial cost.

What if, after accounting for VTZS as part of fixed assets, the estimated cost has changed? In this case, assign the amount of the increase to the cost of the main construction project. After all, firstly, such an increase will no longer be associated with the VTZS put into operation. And secondly, there is no reason to overestimate VTZS - fixed assets, both in accounting and tax accounting. This follows from paragraph 14 of PBU 6/01 and paragraph 2 of Article 257 of the Tax Code of the Russian Federation.

Advice: to avoid uncertainty with the initial cost of VTZS, correctly formulate the contractor’s obligations in the contract.

The fact is that the developer does not have the right to simply request additional documents from the contractor confirming the actual costs of constructing the VTZS. After all, they are calculated based on established standards from the remaining construction work actually completed. This is confirmed by the letter of the Ministry of Regional Development of Russia dated October 20, 2009 No. 34541-IP/08. However, despite the chosen calculation method, it is still necessary to receive VTZS. This is done in the manner established in the contract. Which the department also points out.

Therefore, write down the contractor’s obligation to submit the necessary documents on the actual costs of constructing the VTZS. For example, the following phrase can be added to the contract: “...For completed construction of temporary title buildings and structures, the contractor is obliged to submit a separate act in the KS-2 form and documents confirming the actual cost of materials and work performed...”.

Only such measures will make it possible to form the initial cost of VTZ without problems. Other decisions to determine the initial cost may cause a dispute with property tax and income tax inspectors. And you will have to defend your position in court.

In what order to take into account VNSS

The costs of temporary non-title buildings and structures are taken into account by the contractor. For the developer-customer, it is only important to include the actual costs indicated in the acceptance certificate for the work performed in the initial cost of the main construction project.

When receiving the act, make the following entry:

Debit 08 subaccount “Construction of the main construction project” Credit 60 (76) – the cost of the construction project is reflected as part of investments in the main construction project.

All this follows from the Instructions for the chart of accounts (accounts 08, 60, 76).

What will you have to face?

It must be said that production is a type of business activity in which frequent inspections, high taxes and pressure from the authorities cannot be avoided. It is worth noting that your production must be kept clean and tidy, because no one has canceled sanitary standards. A novice businessman should pay attention to the geolocation of the future enterprise. After all, in megacities it is very difficult to find a free niche and quickly start making high profits. In this regard, small towns have much better chances.

But on the other hand, there are a huge number of consumers in megacities, which plays into the hands of the manufacturer. You also need to understand that at first your production may bring in tiny money, and sometimes not pay off at all. The entrepreneur’s endurance and his ability to complete the job are very important here.

Extra capital

Additional capital refers to the funds that appear after the additional valuation of assets not intended for working capital. Additional capital also includes gratuitous additions to the fixed assets of an enterprise. Additional capital also appears in the following cases:

Extra capital

• Receipt of share premium - the amount received from the difference in the rate at which the shares of the enterprise were sold and the par value of the shares at issue
• The difference from exchange rates is the difference expressed in monetary terms if individual shares of the authorized capital of the company's funds are paid in foreign currency. The difference received after conversion replenishes the additional capital fund and the company’s own funds
• The difference in the revaluation of assets - an increase in the value of the company’s assets belonging to different categories of the enterprise’s own funds leads to the release of money that replenishes additional capital

Choosing a Niche

What to produce? To answer this question, you need to understand in what area you would like to create your own production. It's the 21st century - a time of high technology. You always have access to the World Wide Web at your fingertips, where you can find many original ideas. You just need to strain a little and understand what products are not produced in the Russian Federation and why.

Even if the product you are interested in is still produced in Russia, you should not bypass it. After all, it often happens that the main components are produced abroad. And this is a reason to organize the production of these particular parts. The main thing is to approach this issue correctly and study it thoroughly. After all, to create your own production in our country there are all the necessary components: a developed domestic and foreign market, cheap labor. Only Chinese manufacturers have to spend a lot of money on logistics. So why does it work for them, but we shouldn’t?

Other reserves of the enterprise

In addition to those listed above, there may be other reserves of the enterprise that are fully owned by it. The main criteria relating assets to the enterprise’s own funds are:

• Assets acquired with own funds from the authorized capital, reserve fund or company profits
• Assets not purchased with funds from targeted loans received from investors and necessary for further depreciation during project implementation
• Assets that are not leased property of other organizations (real estate, special equipment, vehicle fleet, equipment)

In other words, if the funds of third parties were used to obtain any asset or the assets were received for temporary use, the equivalent of their financial value does not apply to the enterprise’s own funds.

Own funds are mentioned in the reporting as a separate column and refer to passive assets, the distribution of which is made within the interests of the company.

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Decor

Once you have decided what you will produce, you need to register the enterprise. Organizing your own production is possible within the framework of a legal entity, or a person can register as an “individual entrepreneur.” The second option is perfect for small production, while the first is relevant for medium and large enterprises. The difference between an individual entrepreneur and a legal entity is primarily determined by taxation and the cost of opening.

In order to explore which of these options is right for you, you need to make calculations that are based on several important factors:

• registration of a company;
• buying or renting a place;
• purchase or rental of tools;
• recruiting workers and paying wages at the first stage, when there is no constant revenue;
• advertising.

This way you can calculate all the expense items of your enterprise. Also, when registering, you will need to register a bank account through which transactions will take place.

We purchase equipment for production and office

The purchase of equipment, software, tools and consumables is carried out only after the premises are brought into compliance with the requirements of the machine manufacturer to ensure the technological process. If we are talking about high-precision units, it is advisable to indicate in the supply contract a clause on commissioning by specialists. If all requirements for equipment of the premises are met, the manufacturer bears financial responsibility for errors during installation.

In the Russian Federation, technical devices used at a hazardous production facility (machines, technological equipment, systems of machines and/or equipment, units, equipment, mechanisms used in the operation of a hazardous production facility) require a permit from Rostechnadzor.

Equipment used in the food industry must have the appropriate certificates.

Sales of products

Selling products of one's own production is one of the final stages that brings an entrepreneur closer to making a profit. It is important to be able to correctly compose the selling price of a unit of goods, including direct manufacturing costs, overhead costs and a commodity margin, which includes a certain percentage of net profit.

To sell products of your own production, you need to open your own stores, or sell these goods through large retail outlets. Of course, the first option will bring you much more revenue, but in order to open your own stores, you will need to study this issue well and invest a large amount of money. At first, it is better to consider the second option, because you cannot yet assume whether your products will be sold at all. In this option, your main clients will be large wholesalers. This means that you will mainly sell only in large quantities, but it all depends on the area you choose and your desires. Over time, if you realize that things are going uphill, then, of course, you can think about opening your own points.

The final products of your own factory must have the necessary certificates; the products must comply with current GOSTs. It is also worth taking care of the timely registration of a license to sell goods.

We receive certificates for products

There is a list of goods subject to mandatory certification. However, even if your product is not on this list, it is advisable to obtain a certificate. On the one hand, this gives you confidence in the quality of the goods, on the other hand, it increases customer loyalty to the manufacturer, which has a positive effect on business profitability.

For example, in most countries of the former USSR, products are standardized through GOSTs (“State Standard”), TU (“General Technical Conditions”) and TR (“Technical Regulations”). The document “General Technical Conditions” (“Technical Conditions for Products”) is used in two situations: when GOSTs and Technical Regulations do not contain requirements for manufactured products, and also if the manufacturing company is forced to supplement the prescribed standards with its own developments.

To obtain certificates, you must contact an independent certification center. If you are just starting out and do not have production capacity, you can produce a trial batch of goods on the manufacturer’s equipment and use it to go through established procedures.

Financial subtleties

In the process of organizing your own production, you need to be familiar with concepts such as “finished products” and “semi-finished products”.

The end product of the manufacturing process is called finished goods. It must meet several conditions:

• be fully equipped and ready for sale;
• comply with state standards;
• have a document that certifies its quality.

Finished products from production must be delivered to the warehouse and reported to the MOL (materially responsible person).

Semi-finished products of our own production are those products that have already passed the stages of manipulation, but are subject to additional processing. In accounting, semi-finished products are classified as inventories.

When choosing a production activity, you need to pay attention to the price factor: the product of your own production that you are going to sell should not be expensive, because it will be difficult to buy from you, and its cost should be minimal. Only under such conditions can you really count on good income.

Advantages of internal sources

Using only your own sources of funds in the process of activity certainly has a positive effect on the operation of the enterprise. The advantages of self-financing include:

• no need to attract borrowed capital and unnecessary expenses associated with it;
• high financial stability and competitiveness;
• the ability of the founders to control the processes of the enterprise;
• a more favorable environment for raising debt capital if necessary.

Accounting for own production

Finished products can be valued in several cost forms:

• production cost. Includes all production costs to produce the final product.
• full cost. Consists of production costs and expenses for logistics, advertising, etc.
• retail (or negotiated) price.

In accounting, production is reflected in several accounts that collect information about costs associated directly with the process itself, auxiliary costs, indirect costs related to management and service activities, and losses from defects.

Participation of working capital in the financial activities of the company

The structure of working capital represents mobile assets that are completely consumed and go through several stages:

1. Monetary – the enterprise purchases materials needed for the production of products.
2. Production - acquired inventories are transferred to unfinished items of labor or finished products.
3. Commodity – the enterprise carries out the sales process. Profits are received for goods sold.

The pooling of funds in circulation occurs due to the presence of a continuous advance cost at all stages of the circulation. The structure of working capital is the result of the ratio of individual categories of funds, expressed as a percentage of the total. The ratio of the amounts of money invested in each of the working capital funds is an important indicator of the effectiveness of their use.

Authorized capital of the organization, sources of formation

When founded, the company does not have the funds necessary to start operations. The authorized capital is the start-up fund formed when opening an enterprise. Sources of formation depend on the organizational form of the company. The size of the charter capital is agreed upon by the founders with a recording of the accepted value in the minutes of the general meeting, the decision of the sole participant, and the constituent agreement.

The size of the minimum capital depends on the specifics of the organization’s activities. Contributions to the management company are allowed in various forms:

1. Cash. The investment is made through an account opened with a bank. Deposits are provided in Russian rubles and foreign currencies, which are assessed at the conversion rate.
2. Personal property. The decision to contribute property as a contribution is made by the founders at the general meeting. The value of the property is determined by market valuation. The amount is accepted in the amount determined by an independent appraiser.
3. Securities owned by the founders.
4. Non-monetary intangible assets owned by an individual. The value of an intangible asset accepted as a contribution is determined by the general meeting of founders. If the owner of the organization is one individual, the participant alone makes decisions on the asset.

The amount of the capital is actually funds received from the founders during the activity of the enterprise, returned after its liquidation.

An example of contributing part of a share with property. The founders, consisting of 2 individuals, decided to create a company with a capital of 10,000 rubles. Founder 1 contributed a sum of money in the amount of 5,000 rubles. The general meeting decided that founder 2 contributes 10% of the cost in cash, 90% in property (office equipment). The assessment showed the cost of the operating system in the amount of 12,000 rubles. The founder contributed 500 rubles in cash, and a contribution of property was made in the amount of 4,500 rubles.

Important! After the founder’s share is contributed in kind, the property becomes the property of the organization, unless otherwise specified in the agreement.

, the MACRO TV YouTube channel hosted the first broadcast of the project “BUILDING. THE MAIN", where real estate market experts in a blitz format gave a forecast for 2021 on the prices of new buildings, the volume of commissioning, the fate of mortgages and low-margin projects. The organizers of the event are MACRO and the portal ERZ.RF.

Consultants and developers took part in the discussion, including top managers of YugStroyImperial (6th place in the TOP developers of the Russian Federation) and Unity Group of Companies (1st place in housing commissioning in 2021 in the Ryazan region). Representatives of the project organizers also took part in the broadcast.

The speakers were:

•

Kirill Kholopik
, head of the portal ERZ.RF;
•

Anton Vorobyov
, General Director of Unity Group;
•

Andrey Bachurin
, deputy commercial director of SK YugStroyImperial;
•

Sergey Razuvaev
, director of the consulting agency GMK.
The broadcast, like all MACRO events, was conducted by Svetlana Opryshko (pictured), deputy director of the company for marketing and sales.

The broadcast began with a question about projected real estate prices in 2021. Kirill Kholopik (pictured below) was the first to answer:

“In my opinion, price increases will definitely continue in 2021,” the expert said, explaining: “This is due to a shortage of supply, since at the moment sales are significantly ahead of the launch of new projects. According to my forecast, the growth will be 10-15%,” said the head of ERZ.RF.

Photo: RBC Real Estate

Anton Vorobyov (pictured below) agreed with the speaker’s statement. He said that Unity Group noted a 20% increase in prices last year, and the beginning of 2021 confirms this trend.

“I predict a price increase of 15-20%,” said the Ryazan developer. “With such figures, the level of marginality of our projects will correspond to the interest of banks,” Vorobiev explained.

At the same time, both experts agreed that preferential mortgages will not have a significant impact on price changes.

Kirill Kholopik also spoke about a possible reduction in the volume of apartment buildings commissioned. “They will remain the same or decrease by a maximum of 10%,” he believes. “A drop is expected in 2022-2023, and then, in 2024-2025, on the contrary, there should be a higher level of input,” the analyst suggested.

Photo: www.rzn.info

“We have postponed a number of projects from last year to 2021, thanks to which the volume of commissioning in our company this year will be equal to the level of 2020,” Anton Vorobiev said about the situation at Unity Group. “But failure is expected in 2022, because during the reform period many developers did not start new projects,” the developer recalled.

Andrey Bachurin (pictured below) spoke about the main trends of next year. A representative of the largest Krasnodar developer identified two types of clients inherent in this southern region: those who move to the region for permanent residence, and those who buy property for a seasonal holiday.

“I will note the return of investors to the real estate market in order to preserve funds,” Bachurin informed, adding: “There are changes in the client’s portrait. The so-called generation is entering the market. millennials, so we change the marketing strategy to suit their needs and demands.”

In addition, a representative of SK YugStroyImperial shared his experience of introducing a remote transactions service: according to him, during the pandemic, the company focused on this, which allowed it to remain in a stable condition.

Sergei Razuvaev (pictured below) spoke quite radically about supporting low-margin developers. “Such thoughts are futile,” he said harshly, continuing: “If someone doesn’t like to build in a low-margin region, then let such a developer solve his commercial problems in another area.”

“This, of course, does not concern the topic of social housing,” Razuvaev said. “Otherwise, such reasoning is anti-market and anti-competitive,” he concluded.

The live broadcast was concluded by Kirill Kholopik, who voiced his forecast for 2021 as a whole. He suggested that the year would pass without shocks, since, in his opinion, developers had already coped with the transition to project financing and responded to the challenges of the pandemic.

“There are great hopes that the market will begin to see an increase in the launch of new projects,” emphasized the head of ERZ.RF. “In my opinion, this is the main task for the next year - to stimulate developers so that they increase this figure by one and a half times,” he concluded.

You can watch the full version of the broadcast by following the link. The next issue based on the results of February will be held on March 4. In order not to miss other events from MACRO and ERZ.RF and to receive announcements of all events with top speakers in the construction industry, register at the link macroconf.ru/erzrf.

Other publications on the topic:

"CONSTRUCTION. MAIN": developers will answer questions from ERZ.RF readers in a new fast video format

The largest developers in Russia will discuss the finishing of apartments live

Real estate market experts will discuss supply issues

Experts discussed the effectiveness of online sales tools for the construction business

Construction market experts will share tools for online real estate sales

Experts: the share of finished apartments in the capital’s new mass-segment buildings exceeded 70%

Professionals discussed the problems of project financing for developers

How can construction companies save money on the purchase of goods and services during a crisis?

Sources of formation of own funds

Own funds are represented by a limited list of items. Each of the constituent elements has a separate source of formation. When reflecting data in the balance sheet as of the reporting date, the cost component is taken into account.

Expenditure of own funds is carried out strictly for specific needs. The list is approved by the founders and enshrined in the company’s statutory documents. Equity capital is used to pay shareholders, dividends to founders, and cover expenses or losses according to the approved purpose.

Own funds are reflected in Form 1 of the balance sheet on line 1300. The amount of own funds on the balance sheet is determined by summing up the constituent elements. When calculating, use the formula:

Formulas and tables

Tax deduction for construction and installation work for yourself

A special feature of such an object of taxation as carrying out construction and installation works for one’s own consumption, among other things, is that in this case the taxpayer has the right not only to deduct tax amounts calculated by him independently from the volumes of construction and installation work, but also from the amounts of “input” tax :

Moreover, these two types of deductions are applied by taxpayers in the general manner, as indicated in paragraph 1 of paragraph 5 of Article 172 of the Tax Code of the Russian Federation, that is, after registration of goods (work, services) and in the presence of the corresponding primary documents. A similar point of view regarding the application of deductions for the amount of tax presented to the VAT taxpayer for payment by contractors is contained in the letter of the Ministry of Finance dated September 21, 2007 No. 03-07-10/20.

Source

How to pay VAT on construction and installation works for yourself

Note that the construction of “our” facilities is often carried out by the contractor, but from the customer’s materials. If a contractor using the customer’s materials is engaged in the construction of “his” facility, then the cost of customer-provided materials purchased by the customer for construction in his own interests is not included in the taxpayer’s tax base for construction and installation work. In addition, the “owner” of the construction project does not have an object of taxation when transferring customer-supplied materials. Similar explanations on this matter are given in the letter of the Ministry of Finance dated March 17, 2011 No. 03-07-10/05. The arbitrators also agree with this approach, as indicated by the resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated September 2, 2008 No. 4445/08 in case No. A67-6103/06, the resolution of the Federal Antimonopoly Service of the Moscow District dated December 13, 2010 No. KA-A40/14232-10-2 on case No. A40-138021/09-13-1067 and others.

To correctly determine the tax base, a taxpayer-organization should correctly keep accounting records of the costs of building a facility. Documents in the field of accounting regulation include federal and industry standards, regulations of the Bank of Russia provided for in paragraph 6 of Article 21 of Law No. 402-FZ, recommendations in the field of accounting, as well as standards of an economic entity.

The program for the development of federal accounting standards for 2018–2020 was approved by Order of the Ministry of Finance dated April 18, 2018 No. 83n “On approval of the program for the development of federal accounting standards for 2018–2020 and on the recognition of the Ministry of Finance Order No. 85n “On” dated June 7, 2021 as no longer in force approval of the program for the development of federal accounting standards for 2017–2019” and the recognition of the Ministry of Finance’s order No. 70n dated May 23, 2016 “On approval of the program for the development of federal accounting standards for 2016–2018” as invalid.”

In the absence of federal standards, on the basis of paragraph 1 of Article 30 of Law No. 402-FZ, organizations use the rules of accounting and preparation of accounting (financial) statements approved by the Ministry of Finance and the Bank of Russia before the entry into force of Law No. 402-FZ, that is, before 01.01. 2013.

Moreover, from July 19, 2017, the current Accounting Regulations (PBU), approved by the Ministry of Finance in the period from October 1, 1998 to January 1, 2013, are recognized for the purposes of Law No. 402-FZ as Federal Accounting Standards (hereinafter referred to as the FSBU). This is indicated in paragraph 1.1. Article 30 of Law No. 402-FZ. Thus, for now, instead of the Federal Accounting Standards, commercial organizations are using existing PBUs.

To facilitate calculations for determining the tax base for construction and installation work, the company should organize the maintenance of second-order subaccounts, for example 08-3-1 “Costs on construction and installation work for own consumption, taken into account when determining the tax base” and 08-3-2 “Costs on construction and installation work for own consumption not included in the tax base.”

Construction and installation works for own consumption: a guide to VAT

Today, many companies build real estate for their own consumption. This is understandable, since business development sooner or later requires company owners to reconstruct or modernize old production facilities or build new ones.

Russian business entities, for the most part, are VAT taxpayers, and construction and installation work for their own consumption, as is known, is subject to taxation under this tax.

Article 146 of the Tax Code of the Russian Federation (hereinafter referred to as the Tax Code of the Russian Federation) is devoted to objects of VAT taxation, subparagraph 3 of paragraph 1 of which determines that the object of taxation for value added tax is construction and installation work for one’s own consumption. The difficulty in determining this object of taxation for the taxpayer is that tax law does not disclose what is meant by construction and installation work for one’s own consumption. In cases where the Tax Code of the Russian Federation does not contain an independent definition, the taxpayer has the right to turn to other branches of legislation that disclose such concepts, which allows for paragraph 1 of Article 11 of the Tax Code of the Russian Federation.

In particular, paragraph 19 of the Instructions for filling out federal statistical observation forms No. P-1 “Information on the production and shipment of goods and , No. P-3 “Information on the financial condition of the organization” is devoted to construction and installation work for one’s own consumption, that is, carried out in an economic way. ”, No. P-4 “Information on the number and wages of employees”, No. P-5(m) “Basic information on the activities of the organization, approved by Rosstat order No. 772 dated November 22, 2017.

According to this standard, construction and installation work (hereinafter referred to as construction and installation work) (including installation and adjustment of equipment necessary for the operation of buildings, for example installation and installation of equipment for heating, ventilation, elevators, electrical, gas and water supply systems, etc.) , performed in an economic way, includes work carried out for its own needs by the organization’s own resources. Including work for which the organization allocates workers for the construction of the main activity and pays them wages according to construction orders. As well as work performed by construction organizations on their own construction (not under contract agreements, but, for example, during the reconstruction of their own administrative building, construction of their own production base, etc.). A similar definition is contained in paragraph 18 of the Instructions for filling out the federal statistical observation form No. 1-enterprise “Basic information about the activities of the organization,” approved by Rosstat order No. 39 dated January 30, 2018.