Retained earnings (uncovered loss) in the balance sheet

Definition

retained earnings

(uncovered loss) – the final financial result of the company’s activities for the reporting year, one of the components of liabilities, i.e. the company’s sources of funds, included in the “Capital and Reserves” section of the Balance Sheet.

Retained earnings represent the company's profit for the reporting year minus income tax, dividends, penalties for violation of tax laws and other expenses at the expense of profits (clause 83 of the Regulations on accounting and financial reporting in the Russian Federation, approved by Order of the Ministry of Finance of the Russian Federation dated July 29, 1998 N 34n).

An uncovered loss is a company's loss for the reporting year that is not covered by relevant sources.

Filling out the “Capital and Reserves” section in the balance sheet: what information is reflected in it?

The “Capital and Reserves” section in the balance sheet is an information block that consists of 7 lines. The accountant’s task is to reflect in them such indicators as:

• size of the company's authorized capital;
• the price of the company's own shares that were purchased from their owners;
• the size of additional, reserve capital;
• the amount of retained earnings or the amount of uncovered loss of the organization.

The size of the company's authorized capital is reflected in line 1310. Let's study the features of filling it out in more detail.

How is retained earnings (uncovered loss) formed and used?

The increase in the balance of retained earnings, reflected in the credit of account 84 “Retained earnings (uncovered loss)”, occurs due to the net profit of the reporting year, which is written off to account 84 from account 99 “Profits and losses” with the final turnover of December of the reporting year (Instructions for using the Plan accounts).

The net profit indicator increases:

– correction in the reporting period of significant errors of previous years made by companies that are not small enterprises, which led to overestimation of expenses during the period of errors (clause 1, clause 9, clause 14 of PBU 22/2010);

– write-off to account 84 of additional capital from the revaluation of non-current assets disposed of in the reporting period (clause 15 of PBU 6/01, clause 21 of PBU 14/2007);

– restoration in the composition of retained earnings of the amounts declared and unclaimed after the expiration of the dividend payment period established by the current legislation of the Russian Federation (Letter of the Ministry of Finance of the Russian Federation dated January 27, 2012 N 07-02-18/01).

The use of retained earnings for the payment of dividends (including interim ones - clauses 1 and 2 of Article 42 of the Federal Law of December 26, 1995 N 208-FZ; clause 1 of Article 28 of the Federal Law of February 8, 1998 N 14- Federal Law), is reflected by posting to the debit of account 84 in correspondence with accounts 75 “Settlements with founders”, 70 “Settlements with personnel for wages”.

Also, the net profit indicator decreases when:

– increasing the authorized capital at the expense of retained earnings;

– direction of retained earnings to the reserve fund.

The use of retained earnings for expenses, for example, as a source of capital investments, is reflected only in analytical accounting by reserving the corresponding amount in a special subaccount (subaccount) of account 84, for example:

Debit 84 “Retained earnings (uncovered loss)”

Sub-account (sub-account) “Retained earnings (uncovered loss)”

Credit 84 “Retained earnings (uncovered loss)”

Subaccount (subconto) “Use of retained earnings as a source of capital investments.”

The increase in the balance of uncovered loss, reflected in the debit of account 84, occurs due to the reflection of the loss of the reporting year, which is written off to account 84 from account 99 “Profits and losses” with the final turnover of December of the reporting year

The indicator of uncovered loss increases the correction in the reporting period of significant errors of previous years made by companies that are not small enterprises, which led to an understatement of expenses in the period of errors (clause 1, clause 9, clause 14 of PBU 22/2010).

Repayment of uncovered losses from relevant sources is reflected in the credit of account 84 “Retained earnings (uncovered loss)” in correspondence with the accounts:

– 80 “Authorized capital” - when bringing the amount of the authorized capital to the value of the organization’s net assets in connection with the repayment of a loss due to the excess of the amount of the authorized capital over the amount of the organization’s net assets;

– 82 “Reserve capital” – when funds from reserve capital are used to pay off losses;

– 75 “Settlements with founders” – when repaying losses through targeted contributions from participants (shareholders).

Uncovered loss

Losses as a result of the organization’s activities may arise in the following cases:

• the company’s costs exceed the income received both from its main activities and from operations not related to its main financial and economic activities;
• significant errors from previous reporting periods were identified;
• adjustments have been made to the company's accounting policies.

Line 1370 of the balance sheet is a reflection of losses that were not covered by possible sources of financing. Data for previous periods and the current year are summarized.

Sources of loss coverage:

• funds of the authorized capital: bringing the size of the authorized capital to the net assets of the company. The reduction of the authorized capital must be carried out within the limits established by law (the minimum threshold for public joint-stock companies is 100 thousand rubles, for non-public joint-stock companies and LLCs - 10 thousand rubles).
• funds from the company's reserve fund;
• targeted investment by the founders of the organization (contributions from the owners of the company that do not affect the distribution of shares and the amount of the authorized capital);
• retained earnings from previous years.

Accounting for dividends

Line 1370 of the balance sheet contains a breakdown. Monetary compensation paid during the period is recorded in a special column in parentheses in section Ⅲ. Field 1371 is called “including interim dividends”. They are specified in the report in the following way - retained profits or losses are recorded, and compensation is recorded in another line.

The balance sheet plan provides a separate account for profit and loss. It reflects the values ​​that have accumulated over the course of a year. If the report needs to be drawn up for an intermediate date, then the group account is entered in the line, where profits and losses are noted.

They accumulate money from ordinary operations carried out by the organization, and various amounts directly related to this group.

In some situations, a company must adjust its indicators in January:

1. 1370 includes revaluation of assets if:

• the total result of the devaluation of assets is higher than the revaluation amount included in additional capital after the revaluation that took place last year;
• accounting for previously undervalued assets;
• revaluation of intangible assets discounted in the previous period.

1. The indicator changes when the estimated value of assets changes:

• when the period of operation of intangible assets is specified;
• establishing a method for calculating depreciation.

1. Profit includes the results of revaluation of fixed assets when:

• The fixed assets were not undervalued, but before there had been a markdown, and its value was entered in line 1370 in the previous period;
• the amount of depreciation of a fixed asset is higher than its revaluation, which was included in additional capital based on the results of the revaluation carried out in the previous period;
• there is a depreciation of fixed assets that were not previously undervalued.

Additional and reserve capital in the balance sheet: line 1350

Relevant information is the most important characteristic of such a source as the balance sheet (“Capital and Reserves”). What does it include?

Regarding additional capital, it can be formed in 3 ways:

• upon the fact of additional valuation of assets classified as non-current;
• at the expense of income generated in the process of issuing securities (if, for example, the company’s shares are traded at a value exceeding par value), at the expense of the contributions of the founders - if we are talking about an LLC;
• at the expense of the restored VAT at the time of transfer of this or that property to the authorized capital.

In order to correctly reflect the figures on line 1350, it is necessary to use information within the credit balance of account 83. The reserve capital of the enterprise is also reflected in the “Capital and Reserves” section. The line code in the balance sheet intended to indicate the value of this resource is 1360.

Information about the corresponding type of capital in the financial statements is reflected by companies that have a reserve fund. In the general case, these are joint-stock companies, since, due to the requirements of Russian legislation, they are obliged to form one. The reserve fund of a joint-stock company is formed through mandatory contributions in the amount of 5% of net profit or more. As soon as it reaches the value specified in the constituent documents of the enterprise, the corresponding deductions can be stopped. In this case, the amount of the reserve fund must be 5% or more of the authorized capital of the company.

Of course, an LLC also has the right to form an appropriate fund. Its amount and the procedure for transferring capital in order to create the corresponding resource are determined in the management policy of the organization.

In order to correctly reflect the figures for reserve capital in the balance sheet, it is necessary to use information about the credit balance within account 82. The next information block of the “Capital and Reserves” section in the balance sheet is line 1370. It reflects data on the firm’s retained earnings.

How to calculate retained earnings or uncovered loss

They are calculated using the required formula. The total amount of net profit or loss for a specific time is added up. This concept refers to the amount that remains after taxes have been deducted. Calculations will help you correctly fill out line 1370 and the explanation for it.

Example in the report: as of December 31, 2016, the amount for loan 84 is 489,000 rubles. During the year, dividends amounting to 20 thousand rubles were paid. The entry will look like this: Dt 84 Kt 75 – settlements with the founders. 1370 will include 489,000, and 1371 will include 29,000, which reflects interim dividends.

Summarizing the above, we found out that column 1370 in the balance sheet may consist of retained earnings or uncovered losses. It includes compensation, which is entered below in another line 1371. Reporting at the end of the year or at an intermediate date may vary. When a company does not have retained earnings or losses, the amount of net similar indicators is entered in the line. In this case, the line will have the same value as 2400.

Line 1370 “Retained earnings (uncovered loss)”

Line 1370 reflects the amount of retained earnings or uncovered loss of the organization:

What does line 1370 of the balance sheet consist of?

The line codes in the accounting reporting forms are given in Appendix No. 4 to Order of the Ministry of Finance dated July 2, 2010 No. 66n. Thus, line 1370 is called “Retained earnings (uncovered loss).” As the name suggests, this line reflects the amount of retained earnings or uncovered losses accumulated as of the reporting date.

In accordance with the Chart of Accounts and the Instructions for its use, account 84 “Retained earnings (uncovered loss)” is provided for accounting for retained earnings (uncovered loss).

However, this account only reflects the profit or loss accumulated at the end of the year, i.e., December 31st. If the balance is drawn up as of the interim reporting date, to fill out line 1370, the balance of not only account 84, but also account 99 “Profits and losses” is used. Let us recall that it is in account 99 that profits or losses from ordinary activities, other operations, as well as amounts directly attributed to account 99 (for example, fines for violation of tax laws) are accumulated throughout the year.

If a loss is reflected on line 1370 on the reporting date, then its amount is shown not with a minus, but in parentheses, for example: (10,000).

Please also note that interim dividends paid during the reporting year are shown in the balance sheet separately in parentheses on a separate line in Section III of the balance sheet (Letter of the Ministry of Finance dated December 19, 2006 No. 07-05-06/302). For example, on line 1371 “including interim dividends”.

Let's give an example. As of December 31, 2017, the credit balance of account 84 is 365,000 rubles. At the same time, interim dividends in the amount of 29,000 rubles were paid during the year, which corresponded to the accounting entry of the form: Debit account 84 – Credit account 75 “Settlements with founders” (Order of the Ministry of Finance dated October 31, 2000 No. 94n). Therefore, in the balance sheet at the end of 2021, profit and its use for the payment of interim dividends will be reflected as follows:

What is reflected in line 1370 of the balance sheet

2021-03-09 3.6 min 1618 Author: MMF Editorial Board

1. Purpose of the article: reflection of information about the undistributed financial result of the current year and previous years.
2. Account numbers included in the line: account balance (debit or credit).
3. Line in the balance sheet: 1370.

At the end of the year, at the general meeting of the company’s shareholders or founders of the organization, a decision is made on the distribution of the company’s net profit. The part of the financial result that was not distributed among the participants is recognized as retained earnings of the current year.

If the financial result is negative, information appears about the company's uncovered loss.

In the company's accounting, retained earnings or uncovered losses are recorded in account 84. It separately displays the undistributed financial results of the current year and previous periods for different subaccounts. Note from the author! Account 84 is active-passive, so there can be a debit balance (the amount of the outstanding loss) and a credit balance (the amount of retained earnings), depending on the company's performance.

Line 1370 of the balance sheet belongs to the section Capital and reserves of the passive part of the balance sheet: the company’s own capital in terms of retained earnings is reflected here. Information for all years is summarized and displayed in one line. This line also records information about losses of the current year and previous periods that were not covered by relevant sources of financing.

Note from the author! The amount of uncovered loss reduces section III of the company’s balance sheet, which reflects the company’s own sources of funds.

Line 1370 – part of net profit not spent on the needs of the organization. Note from the author! Net profit in accounting is understood as the final positive financial result of a company’s activities, which remains after the repayment of all obligations in terms of payment of mandatory taxes, fees, and insurance contributions to the budget. According to the accounting rules, the financial result of the enterprise is displayed in Kt99. At the end of the year, a balance sheet reformation procedure is carried out (closing all main accounting accounts).

One of the results of this procedure is the transfer of the balance from Kt99 to Dt84 in terms of undistributed income for this period.

Retained earnings can be spent on the following needs:

1. increasing the size of the company's authorized capital (after official registration of changes in the constituent documentation);
2. payment of dividends to shareholders or founders of the company;
3. creation of reserves: transfer of part of retained earnings to the company's reserve capital;
4. repayment of losses from previous years.

Note! During the year, there can be no movement on Dt84 without the decision of the company’s founders. Losses as a result of the organization’s activities may arise in the following cases:

1. the firm's costs exceed its revenues

What is contained in column 1370

The codes are indicated in the supplement to the orders regulating the preparation and entry of information into the reporting documentation. Retained earnings in the balance sheet are line 1370. The column also contains the amount of uncovered loss that has accumulated over a certain period of time at the time the balance sheet was written.

According to the Chart of Accounts, account 84 is intended for recording retained profits and losses. Profits and losses received as of December 31 are recorded in it. In column 1370 enter the amounts for the reporting years - both the current and the previous one. The loan balance is shown here. If the organization has suffered a loss, the account balance is entered in the line by debit.

When a document is written for the reporting period, the remainder of 84 and 99 “Profit and Loss” is entered into 1370. It is the latter that displays the result of accumulated profits or losses from usual activities, other operations, and the money that is directly related to this account. These are penalties for violation of the Tax Code of the Russian Federation.

If, as of the date of writing the report, losses were recorded at the enterprise, their amount is written without the minus sign, and in brackets: (2000).

How to decrypt balance line 1370

Line codes commonly used in accounting are specified in Appendix No. 4 of Order No. 66n of the Ministry of Finance. Otherwise, this line is referred to as “Uncovered loss” (NU) or “Retained earnings” (NP). In fact, it indicates how many NU or IR fell on the date that turned out to be the reporting date.

To take into account this line, account 84 NU is used, which is prescribed in the Chart of Accounts.

It is important to take into account here that only the positive or negative balance that has accumulated here until the end of the year is recorded on this account. But if the report is not prepared for this date, then not only this account is filled out, but also 99, which is directly related to the “Profit and Loss” section. By the way, it is on it that positive and negative amounts related to account 99 accumulate throughout the year (for example, this includes fines that are imposed for incorrect accounting).

If a loss is reflected on the line as of the reporting date, it is marked not with a minus sign, but with parentheses - for example (9,000).

By the way, interim dividends not paid for the entire year are indicated in parentheses () on a separate line in the third balance sheet section. If this is line 1371, then dividends are taken into account in the line “including interim dividends”. Only then will the report be executed correctly and show up-to-date data.

Accounting for dividends

Line 1370 of the balance sheet contains a breakdown. Monetary compensation paid during the period is recorded in a special column in parentheses in section Ⅲ. Field 1371 is called “including interim dividends”. They are specified in the report in the following way - retained profits or losses are recorded, and compensation is recorded in another line.

The balance sheet plan provides a separate account for profit and loss. It reflects the values ​​that have accumulated over the course of a year. If the report needs to be drawn up for an intermediate date, then the group account is entered in the line, where profits and losses are noted.

They accumulate money from ordinary operations carried out by the organization, and various amounts directly related to this group.

In some situations, a company must adjust its indicators in January:

1. 1370 includes revaluation of assets if:

• the total result of the devaluation of assets is higher than the revaluation amount included in additional capital after the revaluation that took place last year;
• accounting for previously undervalued assets;
• revaluation of intangible assets discounted in the previous period.

1. The indicator changes when the estimated value of assets changes:

• when the period of operation of intangible assets is specified;
• establishing a method for calculating depreciation.

1. Profit includes the results of revaluation of fixed assets when:

• The fixed assets were not undervalued, but before there had been a markdown, and its value was entered in line 1370 in the previous period;
• the amount of depreciation of a fixed asset is higher than its revaluation, which was included in additional capital based on the results of the revaluation carried out in the previous period;
• there is a depreciation of fixed assets that were not previously undervalued.

Reflection of retained earnings (uncovered loss) in the financial statements

Retained earnings (uncovered loss) for the reporting year are reflected in line 2400 “Net profit (loss)” of the Statement of Financial Results.

The balance of retained earnings (uncovered loss) is accounted for in line 1370 “Retained earnings (uncovered loss)” of the Balance Sheet (Appendix No. 1 to Order of the Ministry of Finance of Russia dated July 2, 2010 N 66n).

Interim dividends paid during the year for which financial statements are prepared are reflected separately (i.e. on a separate line) in the annual balance sheet in the section “Capital and reserves” (in parentheses) (Letter of the Ministry of Finance of Russia dated December 19, 2006 N 07-05-06/302).

The movement of retained earnings (uncovered loss) during the reporting period is reflected in the Statement of Changes in Capital (Appendix No. 2 to Order of the Ministry of Finance of Russia dated July 2, 2010 N 66n).

Line 1370 of the balance sheet: explanation

First, a little theory about accounting. Facts about it will be useful for us from the point of view of understanding the tasks facing the financial services of any commercial company.

We noted above that financial statements should be prepared by enterprises with the status of legal entities. This is an important nuance, since individual entrepreneurs, who, from the point of view of the legislation of the Russian Federation, are individuals, should not keep accounting records, nor should they fill out reports based on the corresponding registers. The obligations of the individual entrepreneur in terms of financial accounting are limited to maintaining the Book of Income and Expenses.

The financial statements of a legal entity are usually understood as a set of information that reflects the results of the enterprise’s economic activities within the reporting period. This information is formed primarily through indicators recorded in accounting registers.

This line of the balance sheet (“Capital and reserves”) involves reflecting the amount of the authorized capital corresponding to that defined in the constituent documents of the enterprise. It does not matter whether any of the founders of the company partially paid their share. Even if any of the investors, in principle, did not contribute the required amount to the authorized capital, the corresponding indicator is recorded in the “Capital and Reserves” section of the balance sheet.

To correctly fill out the line in question, you should use the credit balance of account 80, used in the accounting registers. Next, the accountant needs to reflect the correct information on the company’s own shares.

Relevant information is the most important characteristic of such a source as the balance sheet (“Capital and Reserves”). What does it include?

Regarding additional capital, it can be formed in 3 ways:

• upon the fact of additional valuation of assets classified as non-current;
• at the expense of income generated in the process of issuing securities (if, for example, the company’s shares are traded at a value exceeding par value), at the expense of the contributions of the founders - if we are talking about an LLC;
• at the expense of the restored VAT at the time of transfer of this or that property to the authorized capital.

In order to correctly reflect the figures on line 1350, it is necessary to use information within the credit balance of account 83. The reserve capital of the enterprise is also reflected in the “Capital and Reserves” section. The line code in the balance sheet intended to indicate the value of this resource is 1360.

Is it true that retained earnings are net profits?

Retained earnings are truly net profits that (as the name suggests) were not distributed (divided) among the participants/shareholders of the company. Net profit is considered to be that part of income from sales and non-sales operations that remains after paying taxes.

The decision on how to distribute this income rests solely with the owners. Traditionally, the issue of retained earnings is put on the agenda of the annual meeting of the company's owners. The adopted decision is documented in minutes, which are drawn up following the results of the general meeting of participants/shareholders.

The main ways of spending retained earnings are considered to be in the following directions:

• to pay dividends to participants/shareholders;
• repayment of past losses;
• replenishment (creation) of reserve capital;
• other goals formulated by the owners.

Is retained earnings an asset or a liability?

Retained earnings on the balance sheet are, of course, a liability. The value of this indicator indicates the company’s actual debt to its owners, since ideally this profit should be distributed among the participants and invested in the further development of the business.

In fact, the company cannot dispose of retained earnings without the owners making a decision. The loss reflected in line 1370 is also on the passive side of the balance sheet, only this is a negative value, so the number is placed in parentheses.

Retained earnings and uncovered losses - what are they?

As mentioned above, retained earnings are the final income received by the company from its business activities, remaining after the transfer of income taxes and not yet divided (not directed to other purposes) by its owners.

Example 1

Voskhod LLC in 2021 received a profit of 800,000 rubles and paid income tax in the amount of 160,000 rubles. In line 1370 in the balance sheet liability at the end of 2021, Voskhod LLC should reflect 640,000 rubles. This is retained earnings.

The value in line 1370 of the balance sheet may be equal to that indicated in line 2400 of the financial results report if the company had no profits not distributed by the owners at the beginning of the year and no interim dividends were paid during the year.

As for the uncovered loss, this is the excess of the company's expenses over income at the end of the year.

Example 2

In 2021, Parus-Trade LLC received revenue from the provision of services and other non-operating income. Their total amount was 400,000 rubles.

The costs associated with conducting the main activity (transportation) are equal to 380,000 rubles. Other company expenses (not taken into account for tax purposes) amounted to another 58,000 rubles. Profit tax was assessed in the amount of RUB 4,000. Parus-Trade LLC has no reserve capital.

This means that at the end of 2021, after the balance sheet reformation, an entry of 42,000 rubles will appear in line 1370 in parentheses. (400,000 – 380,000 – 4,000 – 58,000).

An uncovered loss occurs when the company receives an actual loss and there are no financing reserves. The value entered in the liability side of the balance sheet in parentheses will reduce the total for section 3 of the balance sheet.

Among the main reasons for receiving an uncovered loss are:

• obtaining an actual negative financial result from the company’s activities due to the excess of costs over income;
• changes in accounting policies that had an impact on the financial condition of the company (this is directly stated in paragraph 16 of PBU 1/2008, approved by order of the Ministry of Finance of Russia dated October 6, 2008 No. 106n);
• errors found in the current year, made in previous years, which affected the financial result (subclause 1, clause 9 of PBU 22/2010, approved by order of the Ministry of Finance of Russia dated June 28, 2010 No. 63n).

Balance sheet line 1370 capital and reserves in a simplified balance sheet

How to fill out line 1370 of the balance? The line codes in the accounting reporting forms are given in Appendix No. 4 to Order of the Ministry of Finance dated July 2, 2010 No. 66n. Thus, line 1370 is called “Retained earnings (uncovered loss).” As the name suggests, this line reflects the amount of retained earnings or uncovered losses accumulated as of the reporting date.

In accordance with the Chart of Accounts and the Instructions for its use, account 84 “Retained earnings (uncovered loss)” is provided for accounting for retained earnings (uncovered loss). However, this account only reflects the profit or loss accumulated at the end of the year, i.e., December 31st. If the balance is drawn up as of the interim reporting date, to fill out line 1370, the balance of not only account 84, but also account 99 “Profits and losses” is used.

The company may also have additional retained earnings when correcting significant errors in previous reporting years that were identified after the approval of the financial statements for these periods. For example, if in past periods certain company expenses were overestimated or any income was not taken into account. Distribution of profits The amount of retained earnings received both in previous reporting periods and in the current year can be used: to pay dividends to the owners of the company; for the formation and replenishment of reserve capital (for JSC - mandatory, for LLC - if this is provided for in the company’s charter); to increase the authorized capital of the company; for any other purposes determined by the owners of the company (for example, creating special-purpose funds, providing charitable assistance, financing capital investments, etc.).

It is impossible to give a resigning employee a copy of SZV-M. According to the law on personal accounting, when dismissing an employee, the employer is obliged to give him copies of personalized reports (in particular, SZV-M and SZV-STAZH). However, these reporting forms are list-based, i.e. contain information about all employees. This means transferring a copy of such a report to one employee means disclosing the personal data of other employees.

The Pension Fund has finally put an end to the debate about the need to submit the SZV-M form in relation to the manager who is the sole founder.

We formulate the organization’s mandatory reporting correctly: read the article for possible reasons for discrepancies in the preparation of annual reporting.

Question:

When preparing annual reports, a discrepancy was identified on line 2400 net profit, which should be equal to the turnover on the loan account 84.01 (in the balance sheet line 1370 = balance on the loan account 84). Due to what indicators a discrepancy is possible, where to look for an error

Answer:

indicators on lines 1370 of the Balance Sheet and 2400 of the Income Statement are interrelated if there were no turnovers in account 84 during the reporting period (with the exception of balance sheet reformation). For example, no dividends were accrued and no contributions were made to reserve capital.

The rationale for this position is given below in the materials of the Glavbukh System, commercial version.

Relationship between financial statements indicators

Reporting forms, the relationship of indicators of which are given in the tables, were approved by order of the Ministry of Finance of Russia dated July 2, 2010 No. 66n. For more information about when these forms need to be used, see What documents need to be submitted as part of the financial statements.

Relationship between indicators

Balance Sheet
and
Income Statement

An example of how income tax calculations are reflected in the Statement of Financial Results. The organization applies PBU 18/02

CJSC Alfa applies a general taxation system. For 2013, the organization received a balance sheet profit in the amount of RUB 2,559,000. This indicator is reflected in line 2300 “Profit (loss) before tax” of the Statement of Financial Results.

The organization applies PBU 18/02. Information on deferred tax liabilities (assets), permanent tax liabilities (assets) and conditional income tax expense (income) for 2013 is given in the table (RUB).

The debit turnover on account 68 subaccount “Calculations for current income tax” is equal to 160,000 rubles. (45,000 rub. + 115,000 rub.). Credit turnover—RUB 605,800. (RUB 55,000 + RUB 19,000 + RUB 20,000 + RUB 511,800). The amount of current income tax for 2013 is RUB 445,800. (RUB 160,000 - RUB 605,800).

The Alpha accountant compiled the report regarding the preparation of calculations for income tax and net profit (loss) as follows (thousand rubles).

An example of reflecting net profit (loss) of the reporting period in the Financial Results Report. The organization pays UTII

LLC "Torgovaya" is engaged in retail trade. Retail trade has been transferred to UTII. For 2013, the organization received a balance sheet profit in the amount of RUB 859,000. This indicator is reflected in line 2300 “Profit (loss) before tax” of the Report. The organization does not apply PBU 18/02. Therefore, when filling out lines 2410-2450 of the Report, the Hermes accountant added dashes. The credit turnover on account 68 sub-account “Settlements on UTII” of the organization for the reporting period is 64,160 rubles. The accountant showed this amount on line 2460 “Other”.

The Hermes accountant compiled the report regarding the formation of net profit (loss) as follows (thousand rubles).

Procedure for filling out the Financial Results Report

Alexander Sorokin answers,

Deputy Head of the Operational Control Department of the Federal Tax Service of Russia

“Cash payment systems should be used only in cases where the seller provides the buyer, including its employees, with a deferment or installment plan for payment for its goods, work, and services. It is these cases, according to the Federal Tax Service, that relate to the provision and repayment of a loan to pay for goods, work, and services. If an organization issues a cash loan, receives a repayment of such a loan, or itself receives and repays a loan, do not use the cash register. When exactly you need to punch a check, look at

Drawing up mandatory financial statements for sending to the tax authorities requires filling out an officially established form containing columns with various names. It is also necessary to indicate not only the name, but also the code of the column. In accordance with this, the question arises about deciphering line 1370 of the balance sheet. To figure this out, you need to know what information this line should contain. This will allow you to correctly draw up a report and submit it without violations to the relevant authorities to verify the information and activities of the organization.

Retained earnings of the reporting year

The credit balance at the end of the year according to accounting account 99 is net profit. When reforming the balance sheet, it is written off to accounting account 84 (Dt 99 Kt 84) and constitutes retained earnings at the end of the reporting year.

In order to separate the indicators of retained earnings of the current (reporting) year from last year’s, some accountants allocate separate lines 1372 and 1372 in the balance sheet, which respectively reflect the retained earnings of the reporting period and previous years.

The use of retained earnings is the prerogative of the company's owners. And highlighting this financial indicator for different years in the balance sheet is primarily convenient for them. But it is worth keeping in mind that the retained earnings of the past year cannot be fully distributed without taking into account the company’s previous operating results.

IMPORTANT! It must not be allowed that the value of the company’s net assets, after transferring retained earnings of the reporting year for the payment of dividends, becomes less than the size of the company’s authorized capital even if there is a reserve fund. The caution applies to cases where uncovered losses were recorded in previous years. The decision to cover last year's losses from retained earnings of the reporting year is made exclusively by the owners of the company.

But retained earnings for previous years can be distributed by the participants/shareholders of the company not only at the end of the year, but at any time. The main thing is to hold a thematic meeting of all company owners and approve the appropriate decision.

Example 1

In 2021, revenue from the sale of goods of Solnyshko LLC amounted to 2 million rubles (excluding VAT). The cost of goods that were sold amounted to 1 million rubles (purchase from suppliers, transportation, etc.). Other costs of the company - 70 thousand rubles.

Business transactions

Dt90.9 Kt99

930 thousand rubles – net profit of the LLC.

From the final financial result of the company, income tax was paid to the budget.

Dt99 Kt68

186 thousand rubles – settlements with the Federal Tax Service of Russia.

After carrying out the balance sheet reformation procedure, the following posting was made

Dt99 Kt84

744 thousand rubles - the retained profit of the company is displayed.

In the balance sheet of Solnyshko LLC at the end of 2021, line 1370 will contain the amount of 744 thousand rubles.

Example 2

As a result of the analysis of financial and economic activities, a loss was identified based on the results of activities in 2021. The loss as of January 1, 2018 amounted to 40 thousand rubles. The founders of the company decided to cover the loss through their own targeted financing.

Business transactions

Dt50 Kt75

15 thousand rubles – cash contribution by the founders.

Dt51 Kt75

25 thousand rubles – transfer of funds by the founders to the company’s current account.

Dt75 Kt84

40 thousand rubles - the loss is covered by targeted contributions from the founders.

Own shares in the balance sheet: line 1320

Filling out the corresponding line in the “Capital and Reserves” section in the balance sheet is a procedure that may have some specific features for companies with the status of JSC and LLC.

Thus, joint stock companies, when preparing reports and reflecting data on them in line 1320, indicate information on their own shares, which were purchased directly from their holders. LLCs record information on the value of shares within the authorized capital, which, in turn, were purchased from the founders of the enterprise.

To fill out the line in question in the “Capital and Reserves” section, you must use data on the debit balance within account 81. Next, you need to reflect in the reporting information on additional and reserve capital. Let's study the nuances of this procedure in more detail.

Retained earnings: calculation formula

According to general accounting data, retained earnings are a company's net profit after taxes that can be distributed to the company's owners.

Based on global financial practice, retained earnings (hereinafter referred to as RR) are calculated using the following formula:

NPk = NPn + PE – Div,

Where:

NPk - NP at the end of the reporting year;

NPn - NP at the beginning of the reporting period;

PE - net profit remaining after accrual of income tax;

Div - dividends paid in the reporting year based on the NP of previous years.

If you do not have the NP value, then to calculate the NP you can use the following scheme:

• first calculate profit before tax (to determine it, calculate operating profit, which is defined as the difference between operating income and operating expenses);
• then subtract depreciation and interest costs from operating profit;
• Subtract tax from the resulting profit value.

Indicators for investors

When analyzing the financial condition of a company, investors pay attention to the use of retained earnings. If NP accumulates and is not put into circulation, this state of affairs should seem to suit investors, since they can count on significant dividends.

However, without investment in its activities, the company stops growing, and its income not only does not increase, but may also decrease (due to a drop in competitiveness, high wear and tear of equipment, and for other reasons related to the lack of investment). So a company that accumulates profits but does not invest in its activities cannot be attractive.

At the same time, a company that does not make a profit and does not pay dividends cannot interest investors at all.

The ideal option for investors is a company that invests the funds remaining after paying dividends in its development. Although the owners may decide not to pay dividends and direct the entire volume of NP into circulation.

How to calculate retained earnings or uncovered loss

They are calculated using the required formula. The total amount of net profit or loss for a specific time is added up. This concept refers to the amount that remains after taxes have been deducted. Calculations will help you correctly fill out line 1370 and the explanation for it.

Example in the report: as of December 31, 2016, the amount for loan 84 is 489,000 rubles. During the year, dividends amounting to 20 thousand rubles were paid. The entry will look like this: Dt 84 Kt 75 – settlements with the founders. 1370 will include 489,000, and 1371 will include 29,000, which reflects interim dividends.

Summarizing the above, we found out that column 1370 in the balance sheet may consist of retained earnings or uncovered losses. It includes compensation, which is entered below in another line 1371. Reporting at the end of the year or at an intermediate date may vary. When a company does not have retained earnings or losses, the amount of net similar indicators is entered in the line. In this case, the line will have the same value as 2400.

Results

There is a separate line in the balance sheet to reflect retained earnings (profit remaining after the amount of income tax or net profit has been withdrawn from it). The figure entered into it corresponds to the amount of the entire net profit accumulated over the years of the company’s activity. During the reporting year, the value of retained earnings in accounting relating to this year can be seen in a separate accounting account. Dividends are paid out of net profit.

Sources

• https://www.audit-it.ru/terms/accounting/neraspredelennaya_pribyl_nepokrytyy_ubytok.html
• https://zagranic.ru/2020/09/10/stroka-1370-buhgalterskogo-balansa-rasshifrovka/
• https://nalog-nalog.ru/buhgalterskij_uchet/vedenie_buhgalterskogo_ucheta/neraspredelennaya_pribyl_v_balanse_nyuansy/
• https://warmedia.ru/1370-%D1%81%D1%82%D1%80%D0%BE%D0%BA%D0%B0-%D0%B1%D0%B0%D0%BB%D0% B0%D0%BD%D1%81%D0%B0/

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