Entries used in accounting for bank guarantees

How are rights and responsibilities distributed when issuing a bank guarantee?

A bank guarantee is an obligation that a bank or any other credit organization issues as insurance for the fulfillment of contractual (agreement, procurement) conditions (Article 368 of the Civil Code of the Russian Federation). It is provided in both electronic and written form. If the contractor violates a number of conditions, the bank pays the customer organization a documented amount of money.

In relations related to the provision of a guarantee, three participants are involved:

• guarantor (bank) - an entity that, for a certain fee, assumes the obligation to issue a guarantee;
• principal (executor) - a participant who initiates the issuance of a bank guarantee and is a debtor in accordance with the terms of the agreement;
• beneficiary (customer) - a person whose interests are protected by a bank guarantee.

In this case, the beneficiary and the principal are parties to the agreement, as when concluding a government contract. They act strictly in accordance with current civil legislation (Article 420 of the Civil Code of the Russian Federation). Their mutual settlements are made outside the jurisdiction of the relationship established with a third party - the bank that provided the guarantee.

The parties interact taking into account the current bank guarantee agreement - a document defining the legal relationship of all three parties: the guarantor, the beneficiary and the principal. The agreement on the provision of a bank guarantee must indicate that the guarantor bank will pay the guarantee only if the supplier-principal cannot fulfill the obligations established by the government contract to the beneficiary customer. The bank guarantee agreement necessarily stipulates the circumstances due to which situations of payment of bank collateral occur.

General information

You may be interested in:Addresses of Moscow Industrial Bank branches in Lipetsk

A bank guarantee agreement can be concluded by an insurance (credit) organization for any required amount and for almost any period not only with a legal entity, but also with an individual entrepreneur. As established in paragraph 1 of Art. 369 of the Tax Code, it ensures the fulfillment by the principal of the obligation to the beneficiary. Simply put, a bank guarantee is a guarantee to a lender. The bank guarantees that the company applying for the guarantee will fulfill its obligation.

Financial organization, in accordance with the provisions of Art. 368 of the Tax Code, acting as a guarantor, issues, at the request of the principal (client), a written obligation to pay the beneficiary (creditor) the amount of money specified in the contract if the latter submits a corresponding written request.

You may be interested in: How to restore KBM after replacing rights: procedure

As established in paragraph 2 of Art. 369 of the Tax Code, the principal undertakes to pay remuneration to the guarantor.

In some cases, a guarantee from a financial organization is mandatory:

• for concluding government contracts;
• when executing government orders;
• to participate in auctions, competitions, tenders, etc.

the issuance of guarantees is included in banking operations on the basis of clause 8, part 1, art. 5 Federal Law No. 395-1.

Documents and grounds for accounting of bank guarantees

Bank guarantee transactions are regulated by civil and banking legislation. In the same regulatory legal acts one can find the answer to the question of whether a bank guarantee is registered.

In the Civil Code, the provisions regulating such a financial obligation are spelled out in Chapter 23 (paragraph 6, Articles 168, 169, 374 - 379, Article 429 of the Civil Code of the Russian Federation). The issuance of a bank guarantee by credit institutions relates to bank operations (clause 8, part 1, article 5 of the Federal Law of December 2, 1990 No. 395-1).

When concluding a supply agreement, it is not allowed to indicate a condition on a bank guarantee if there is no reason to assume that the guarantee obligations will be received from the guarantor under certain conditions (Determination of the RF Armed Forces in case No. 305-ES16-14210 of January 30, 2017). But when it comes to public procurement in accordance with the regulations of the Federal Contract System Law, the provision of a guarantee issued as security for the performance of the contract is mandatory. This is stated in Art. 96 44-FZ. The customer is obliged to include in the procurement documentation, notice of order, invitation to participate in the selection of a supplier in a closed way a requirement to ensure the execution of the contract (Part 1 of Article 96 44-FZ). The exception is the situations defined in Part 2 of Art. 96 44-FZ.

In Part 3 of Art. 96 states that such contract performance security is provided in the form of a bank guarantee. It must meet the requirements established in Art. 45 44-FZ. The supplier has the opportunity to provide a bank guarantee as security for the execution of a government contract and in the form of funds by transferring the required amount to the settlement (personal) account specified by the customer organization. The method of guaranteeing its obligations is determined by the procurement participant himself.

IMPORTANT!

From July 1, 2019, procurement participants will be able to provide a bank guarantee as security for the application.

Bank guarantee - tax purposes

When accounting for taxes within the framework of legal relations related to the use of bank guarantees, you need to keep in mind that:

1. VAT is not charged for transactions related to the use of bank guarantees (subclause 3, clause 3, article 149 of the Tax Code of the Russian Federation).

Of course, this rule does not apply to the accrual of VAT on goods supplied by the beneficiary if this is assumed by law (when working under the OSN) or by agreement of the parties.

1. When the beneficiary receives payment from the bank to fulfill the principal's obligations, he includes it in income in the same way as if the goods were paid for by the principal without the use of a bank guarantee (that is, as revenue from the sale of his own products or services).
2. The principal assigns expenses arising during interaction with the guarantor bank (in the form of a commission, for example), to his choice (but taking into account the characteristics of the guaranteed asset and the content of the legal relationship with the beneficiary on the merits):

• to other expenses;
• to non-operating expenses.

Regardless of the chosen option, expenses should be recognized evenly over the period of validity of the independent guarantee (letter of the Ministry of Finance of Russia dated January 11, 2011 No. 03-03-06/1/4).

The way in which the principal, subject to this requirement, reflects the costs of the bank guarantee in the accounting records is nuanced. Let's look at them.

How to reflect receipt and issue from the principal and beneficiary

The reflection of a bank guarantee in accounting is directly dependent on the type of financial obligation for which it was issued. There are a number of situations for which a guarantee is required:

1. To ensure compliance with the terms of payment for acquired assets and property (MPS and fixed assets).
2. To insure the fulfillment of loans, borrowings and other debt obligations.
3. For guaranteeing the return of the advance payment, since many performers stipulate that an advance payment must be provided.
4. To ensure the fulfillment of other responsibilities.

Postings for a bank guarantee in accounting are formed based on a complex system of legal relationships between the principal and the beneficiary. Postings are prepared for legal relations:

• issuance and use of a guarantee;
• entering into an agreement that is not legally binding but is secured by a guarantee.

Accounting for the guarantee by the beneficiary

When the beneficiary has received a bank guarantee, he himself decides how to use it. The customer's choice whether to apply or write off bank collateral depends on whether the supplier principal has fulfilled its obligations.

Settlements between the customer and the supplier are regulated by the contract. The beneficiary receives a separate benefit when providing a bank guarantee, since the guarantor determines its payment obligations to the organization until mutual settlements are fully completed (clause 1 of Article 378 of the Civil Code of the Russian Federation). That is why for accounting purposes they use off-balance sheet account 008 “Securities for obligations and payments received.” The collateral is written off from the balance sheet if the parties fulfill their obligations. Analytics is carried out for each received collateral.

Example of transactions with a beneficiary: receipt and write-off of a guarantee

For commercial and non-profit organizations, it is necessary to use corresponding postings. Let’s imagine that LLC “Ideal Customer” purchased products from LLC “Ideal Supplier” in the amount of 500,000.00 rubles. The table shows how to reflect the collateral provided by the bank in the beneficiary's accounting records.

Let's say the buyer is late in payment, and the supplier contacts the bank with a demand to pay the principal's debt in the amount specified in the guarantee. The accounting entries will be as follows:

If payment is made on time, the beneficiary does not need to contact the guarantor for debt reimbursement. Accounting records will be generated for the receipt and subsequent write-off of collateral on the 008 off-balance sheet account.

Accounting for the principal

Accounting for guarantees in the principal’s accounting department is based on two positions:

1. The bank guarantee should not be taken into account by the principal. The logic is this: the guarantee is intended not for the principal, but for the beneficiary, and is issued by a third party - the bank. That is, the guarantee obligations are obtained for the lender and issued by the lending institution, and not by the principal himself. Therefore, it makes no sense for the principal organization to reflect these obligations on off-balance sheet accounts 008 and 009.
2. Warranty obligations must be recorded in accounting.

This is necessary in order to reflect a change in the creditor organization in the event of transfer of obligations to pay the debt to the guarantor. Reflection of collateral in accounting allows for further operations to apply penalties to the debtor.

From an analytical point of view, reflecting the guarantee collateral is necessary, as this makes financial and accounting reporting more transparent and allows you to view the resulting accounts payable of the principal in the context of analytical accounting.

Accounting for bank guarantees for public sector employees

Accounting for bank guarantees in a budgetary institution has its own peculiarities. When conducting competitive and auction procedures for the supply of goods, works or services, the customer organization establishes a mandatory requirement for securing applications. It can be transferred by the procurement participant either by depositing funds into the customer’s current (personal) account or by providing a bank guarantee. Based on clause 351 of Instruction No. 157n, accounting for a bank guarantee received as security for an application is carried out in off-balance sheet account 10 “Security for the fulfillment of an obligation.” The Letter of the Ministry of Finance dated July 27, 2014 No. 02-07-07/31342 states that funds received as security for participation in a competition or closed auction, as well as as security for the execution of a contract, do not need to be taken into account in off-balance sheet account 10.

In a budgetary institution, a bank guarantee is recorded in the accounting department strictly on the day the guarantee liability occurs. The amount must match the value of those obligations whose performance is guaranteed. On the day of termination of the guarantee and financial conditions, the established amount is reduced on account 10 of the off-balance sheet.

Registering a bank guarantee in budget accounting

Accounting procedures for public sector employees differ from commercial transactions. Firstly, the accounting of bank guarantees in the accounting of a budgetary institution depends on the form of provision:

• in the form of funds to a current account - we use account 304 01 under KFO 3, since these are funds at temporary disposal;
• in the form of a document from the guarantor bank - we use off-balance sheet account 10 “Securing the fulfillment of obligations.”

Budget customers are required to submit requirements for securing applications and contracts when conducting electronic competitions and auctions. The executor sends security in the form of funds for temporary disposal or in the form of documentary evidence from the guarantor bank. Accounting for warranty obligations in the budget is carried out in accordance with instruction 157n dated December 1, 2010 (clause 351 of the instructions). To record cash guarantee funds, off-balance sheet accounts are not used (letter of the Ministry of Finance No. 02-07-07/31342 dated July 27, 2014).

Accounting records are generated on the day the guarantee is provided. The amount is always equal to the obligations insured by the guarantor bank. As soon as the insurance expires, the accountant writes off the security from the 10th off-balance sheet account. Here are the main entries for accounting for a bank guarantee in a budget institution:

Postings for budgetary institutions

Funds received from a credit institution (bank) allocated for execution must be reflected in the accounting of a budgetary institution with the following entries:

Accounting for transactions related to the provision and support of bank guarantees

One of the reasons is the high reliability of bank guarantees; moreover, this type of activity generates income for banks in the form of commissions and does not require immediate withdrawal of funds from circulation. (A fragment of the article is provided. Read the full version in the magazine)

Terminology of the question

According to the provisions of the Civil Code of the Russian Federation, a bank guarantee is one of the ways to ensure the fulfillment of obligations, but at the same time it is independent in nature and does not depend on the main obligation to secure the fulfillment of which it was issued, even if the guarantee contains a reference to this obligation.

Let us define ourselves in terms used in this article.

A bank guarantee is a written obligation of the guarantor bank providing for payment to be made in favor of the beneficiary upon receipt from the latter of a claim made in accordance with the terms of the guarantee.

Beneficiary is a legal entity or individual in whose favor a bank guarantee is issued.

Bank-guarantor, guarantor - a credit organization that issues a bank guarantee.

Agreement is an agreement on the provision of a bank guarantee concluded by the bank with the principal.

Coverage is funds provided by the principal as collateral in accordance with the bank guarantee agreement concluded by the bank.

Principal is a legal or natural person, to secure whose obligations the guarantor bank issues a bank guarantee.

Accounts for recording transactions with bank guarantees

Accounting for transactions for the provision of bank guarantees is carried out in accordance with the Regulation of the Bank of Russia dated March 26, 2007 No. 302-P “On the rules of accounting in credit institutions located on the territory of the Russian Federation.”

In the Chart of Accounts for Accounting in Credit Institutions, the following accounts are highlighted to reflect transactions on the provision of bank guarantees:

315хх, 316хх “Other raised funds of credit institutions”, “Other raised funds of non-resident banks” (passive accounts) - are used to account for the coverage transferred by the principal bank to the bank. Accounts are opened in the currency of the listed coverage and for each contract.

324хх “Overdue debt on provided interbank loans, deposits and other placed funds” (active account) - is used to account for overdue debt on provided interbank loans, deposits and other placed funds with the allocation of second-order accounts for borrowers - credit institutions and non-resident banks. Analytical accounting is carried out in the context of borrowers and contracts.

32403 “Reserves for possible losses” (passive account) - used to account for reserves for possible losses on overdue loans, deposits and other placed funds. Analytical accounting is carried out in the context of borrowers and contracts.

42309–42315, 42609–42615 “Other raised funds of individuals”, “Other raised funds of non-resident individuals” (passive accounts) - are used to account for the coverage accepted from the principal - an individual under guarantees issued by the guarantor bank. Accounts are opened in the currency of the coverage received and for each contract.

428хх–440хх “Other raised funds” (passive accounts) - are used to account for the coverage received from the principal, who is not a credit institution, under guarantees issued by the guarantor bank. Accounts are opened in the currency of the coverage received and for each contract.

458xx “Overdue on loans provided and other placed funds” (active account) - used to account for overdue debt on loans provided to customers and other placed funds. For second-order accounts, overdue debt is accounted for by groups of borrowers. Analytical accounting is carried out in the context of borrowers and contracts.

45818 “Reserves for possible losses” (passive account) - used to record reserves for possible losses on overdue loans and other placed funds. Analytical accounting is carried out in the context of borrowers and contracts.

47411 “Obligations to pay interest” (passive account) - used to account for interest accrued on accounts of coverage received. Accounts are opened in the currency of the coverage account and in the context of each agreement.

47423 “Claims for other operations” (active account) - used to record calculations of accrued commissions for issuing bank guarantees. Analytical accounting is carried out in the context of contracts.

47425 “Reserves for possible losses” (passive account) - used to account for reserves created in accordance with regulations of the Bank of Russia for possible losses under contingent credit obligations. Analytical accounting is carried out in the context of borrowers and contracts.

47426 “Bank's obligations to pay interest” (passive account) - used to account for interest accrued on the accounts of the coverage received. Accounts are opened in the currency of the coverage account and in the context of each agreement.

60315 “Amounts paid under provided guarantees and sureties” (active account) - used to record amounts paid by the guarantor bank to the beneficiary under the issued guarantee. Accounts are opened in the currency of payment under the guarantee and in the context of each issued guarantee.

60324 “Provisions for possible losses” - is used to account for reserves for possible losses for amounts paid to the beneficiary under issued guarantees. Accounts are opened in the context of guarantees for which guaranteed payments have been made.

70601 “Income” (passive account), on which personal accounts are opened:

70601 (12301) “Commission received for issuing a guarantee” to account for the commission received from the principal for issuing a guarantee;

70601 (16305) “Income from the restoration of reserves for possible losses”;

70601 (17202) “Income of previous years, identified in the reporting year, from other banking operations and transactions.”

70606 “Expenses” (active account), on which personal accounts are opened:

70606 (214хх) “Interest paid on other borrowed funds”;

70606 (217хх) “Interest paid on other raised funds of individual clients”, which reflects interest paid on accounts of other raised funds, which takes into account the coverage of guarantees issued by the bank;

70606 (25302) “Other operating expenses for contributions to reserves for possible losses.”

91315 “Issued guarantees and sureties” (passive account) - used to record the obligations of a credit institution under issued guarantees. Analytical accounting is carried out in the context of issued guarantees.

91311 “Securities accepted as collateral for placed funds” (passive account) - used to account for securities accepted as collateral under an issued guarantee. Analytical accounting is carried out in the context of each pledge agreement.

91312 “Property accepted as collateral for placed funds” (passive account) - used to account for property (except for securities) accepted as collateral under an issued guarantee. Analytical accounting is carried out in the context of each pledge agreement.

91414 “Received guarantees and guarantees” (active account) - used to account for received guarantees or guarantees for issued guarantees. Analytical accounting is carried out in the context of each guarantee/surety agreement.

91801 “Debt on interbank loans, deposits and other placed funds, written off from reserves for possible losses.”

91802 “Debt on loans and other placed funds provided to clients (except interbank), written off from reserves for possible losses” (active accounts) - used to account for the principal’s debt written off from the reserve for guaranteed payments made by the guarantor bank. Analytical accounting is carried out for each contract.

Accounting for transactions with bank guarantees

Let's consider typical transactions of a bank conducting operations to provide bank guarantees.

Issuing a guarantee

The credit institution's obligations under the issued bank guarantee are reflected in the accounting records as follows:

Dt 99998 “Account for correspondence with passive accounts with double entry”

Kt 91315 “Issued guarantees and sureties.”

In accounting, a guarantee is reflected on the day the guarantee comes into force specified in the guarantee, or when the condition for the guarantee to come into force specified in the guarantee occurs.

If the terms of the guarantee provide that it comes into force from the date of issue, then the guarantee is reflected in accounting on the day the guarantee is transferred to the principal.

Payment by the principal of the commission for issuing a guarantee is made in accordance with the bank’s tariffs using the following transactions.

On the day the guarantee comes into force or on the last calendar day of the month or in accordance with the terms of the agreement concluded with the principal, an entry is made to accrue a commission to the bank for issuing the guarantee:

Dt 47423 “Calculations for accrued commissions for issuing bank guarantees”

Kt 70601 (12301) “Commission received for issuing a guarantee.”

Payment of the bank's commission for issuing a guarantee can be made on the day the funds are received in the bank's correspondent account or on the day the coverage amount is written off from the principal's account. This operation is formalized by the following posting:

Dt correspondent account, current account, current account

Kt 47423 “Calculations for accrued commissions for issuing bank guarantees.”

Creation of a reserve for possible losses under issued guarantees

The bank's obligations under issued bank guarantees reflected in off-balance sheet accounts are subject to reservation based on a professional judgment on the quality category in the manner prescribed by Bank of Russia Regulation No. 283-P dated March 20, 2006.

Accounting for the formation of a reserve for possible losses is carried out as follows:

Dt 70606 (25302) “Other operating expenses for contributions to reserves for possible losses”

Kt 47425 “Provisions for possible losses under issued guarantees.”

The posting is generated on the day the issued guarantee is placed on off-balance sheet accounting/on the date of reclassification of an element of the reserve calculation base to a higher quality category.

Restoration (reduction) of the reserve for possible losses is carried out by the following entry, which is generated on the day of write-off (partial write-off in the case of payment) of the guarantee from off-balance sheet accounting/on the day of reclassification of an element of the reserve calculation base to a lower quality category:

Dt 47425 “Provisions for possible losses under issued guarantees”

Kt 70601 (16305) “Income from the restoration of reserves for possible losses.”

Changing the Limit of Liability

If the agreement on the provision of a bank guarantee (hereinafter referred to as the agreement) provides for a reduction in the limit of liability under the guarantee, then if the limit of liability of the bank under the issued guarantee changes on the date of reduction of the amount of the issued guarantee, an entry is made to reduce the amount of the guarantee:

Dt 91315 “Issued guarantees and sureties”

Kt 99998 “Account for correspondence with passive accounts with double entry.”

Accounting for collateral and coverage

When issuing a guarantee in accordance with the terms of the agreement concluded with the principal, the bank may accept coverage in the form of cash or security in the form of a pledge of securities, property, precious metals and other property.

If the agreement provides for the principal to transfer to the bank the coverage under the guarantee issued by the bank, then the accounting of the received funds is carried out in the accounts for accounting for other raised funds in Chapter A of the Chart of Accounts for Accounting in Credit Institutions as follows:

Dt correspondent account, current account, current account

Kt 428хх–440хх “Other raised funds”

Kt 42309–42315 “Other raised funds of individuals”, 42609–42615 “Other raised funds of non-resident individuals”

Kt 315хх “Other funds raised from credit institutions”, 316хх “Other funds raised from non-resident banks”.

The posting is generated on the day the funds are received in the bank's correspondent account or on the day the coverage amount is written off from the principal's account.

Collateral in the form of a pledge of bills, securities and other types of collateral is reflected in the corresponding off-balance sheet accounts of Chapter B of the Chart of Accounts in credit institutions in accordance with the requirements of the Bank of Russia.

Security presented in the form of a pledge of property in the amount of the estimated value of the pledged item specified in the pledge agreement is reflected in off-balance sheet accounts with the following entry:

Dt 99998 “Accounts for correspondence with passive accounts with double entry”

Kt 91312 “Property accepted as security for placed funds.”

Collateral in the form of a pledge of securities in the amount of the estimated value of the securities specified in the pledge agreement is reflected by the posting:

Dt 99998 “Accounts for correspondence with passive accounts with double entry”

Kt 91311 “Securities accepted as collateral for placed funds.”

Reflection in accounting of the amount of security provided in the form of a guarantee or surety in accordance with the guarantee or surety agreement is documented by posting:

Dt 91414 “Guarantees and sureties received”

Kt 99999 “Account for correspondence with active accounts with double entry.”

The return of part of the coverage in the event of a reduction in the limit of liability under the guarantee is carried out by the following transactions on the date of reduction in the amount of the issued guarantee:

Dt 315хх “Other funds raised from credit institutions”, 316хх “Other funds raised from non-resident banks”

Dt 42309–42315 “Other raised funds of individuals”, 42609–42615 “Other raised funds of non-resident individuals”

Dt 428хх–440хх “Other raised funds”

CT correspondent account, current account, current account.

If the terms of the signed agreement with the principal or other agreements aimed at minimizing the bank’s risks under the issued guarantee provide for the accrual of interest on the amount of the placed coverage, then the following transactions are made:

Dt 70606 (214хх) “Interest paid on other borrowed funds”

Kt 47426 “Bank’s obligations to pay interest on the coverage account”

or

Dt 70606 (217хх) “Interest paid on other attracted funds from individual clients”

Kt 47411 “Obligations to pay interest.”

These postings are made on the last working day of the month (unless another frequency for calculating interest income is established by the accounting policy of the credit institution).

Interest on the amount of the placed coverage is accrued from the day following the day the corresponding amount of coverage is deposited into the coverage accounting account, up to and including the day specified in the agreement with the principal. When calculating the amount of interest due, the number of days in a year is taken to be 365 (366) under agreements concluded with principals in accordance with the legislation of the Russian Federation. Agreements concluded with principals who are non-residents of the Russian Federation in accordance with the legislation of the country of their residence may indicate any interest accrual base agreed upon by the parties (360, 365 or 366 days).

Payment to the principal of interest accrued on the amount of coverage is carried out as follows. On the payment date determined by the relevant agreement, it is necessary to accrue additional interest on the coverage account in accordance with the previous posting. The following accounting entries are made:

Dt 47426 “Bank’s obligations to pay interest on the coverage account” or

Dt 47411 “Obligations to pay interest”

CT correspondent account, current account, current account.

Payment under guarantee

If the bank makes payments of funds in favor of the beneficiary under the issued guarantee, then these amounts are accounted for as follows:

Dt 60315 “Amounts paid by the bank under the guarantees provided”

CT correspondent account, current account, current account.

Simultaneously with the previous posting or on the date of removal of the guarantee from off-balance sheet accounting, the guarantee liability is written off:

Dt 91315 “Issued guarantees and sureties”

Kt 99998 “Accounts for correspondence with passive accounts with double entry.”

The guarantee liability is written off for the amount of the guarantee or in part of the payment made.

According to Art. 378 of the Civil Code of the Russian Federation, the guarantor’s obligation to the beneficiary under the guarantee terminates:

1) payment to the beneficiary of the amount for which the guarantee was issued;

2) the end of the period specified in the guarantee for which it was issued;

3) due to the beneficiary’s waiver of his rights under the guarantee and its return to the guarantor;

4) due to the beneficiary’s waiver of his rights under the guarantee by means of a written statement releasing the guarantor from his obligations.

In this case, termination of the guarantor’s obligation on the grounds specified in subparagraph. 1, 2 and 4, regardless of whether the guarantee is returned to him.

Thus, the obligation for the provided guarantee is written off off-balance sheet in the following cases, depending on which of the circumstances occurs earlier:

— at the end of the business day specified in the guarantee as the expiration date of the guarantee;

- on the day the original guarantee is returned to the guarantor’s disposal;

- on the day of receipt of a copy of the guarantee with a note from the beneficiary regarding the termination of obligations under the guarantee;

- on the day of receipt of written notification from the beneficiary about the termination of the guarantor’s obligations under the guarantee;

- on the day the guarantor fully fulfills his obligations under the guarantee;

- on the day of receipt of documents, the presentation of which satisfies the conditions for termination of obligations under the guarantee.

Write-off of collateral

On the day the guarantee is deregistered, the security under the guarantee is deregistered, provided that there are no unfulfilled obligations of the principal under the contract.

Write-off of collateral in the form of property in the amount of the balance of account 91312:

Dt 91312 “Property accepted as security for placed funds”

Kt 99998 “Account for correspondence with passive accounts with double entry.”

Write-off of collateral in the form of a pledge of securities in the amount of the balance on account 91311:

Dt 91311 “Securities accepted as collateral for placed funds”

Kt 99998 “Account for correspondence with passive accounts with double entry.”

Write-off of provided guarantees or sureties in the amount of the balance on account 91414:

Dt 99999 “Account for correspondence with active accounts with double entry.”

Kt 91414 “Guarantees and guarantees received.”

If the bank exercises its rights under the pledge/guarantee/surety agreement, the collateral under the issued guarantee is written off on the date of receipt of execution under the pledge/guarantee/surety agreement, respectively.

Creating a reserve for possible losses on warranty transactions

Amounts paid by a credit institution to a beneficiary under bank guarantees are recognized as loans for the purposes of Bank of Russia Regulation No. 254-P dated March 26, 2004 “On the procedure for credit institutions to form reserves for possible losses on loans, on loan and similar debt” (hereinafter referred to as the Regulation No. 254-P). Therefore, a reserve for possible losses should be created for them based on a professional judgment about the quality category in the manner prescribed by the specified Regulations:

Dt 70606 (25302) “Other operating expenses for contributions to reserves for possible losses”

Kt 60324 “Reserves for possible losses on guarantee operations.”

The posting is made on the date of payment to the beneficiary under the bank guarantee.

Tax accounting

The guarantee from the bank must be reflected in both the accounting and tax records of the organization. Tax accounting of bank guarantees is carried out in accordance with the norms of the Tax Code of the Russian Federation. The remuneration is taken into account as part of other costs associated with the production and sale of various products, and as other expenses.

The Tax Code of the Russian Federation requires the submission of reports to the Federal Tax Service, including the costs of a bank guarantee during the period of its actual provision, and not according to the timing of payment of monetary amounts under it. In tax accounting, the date of receipt of a bank guarantee is considered the day of signing the agreement (main agreement) on the issuance of guarantee obligations to the client.

Tax accounting of bank guarantees has a number of nuances. The purchase of goods, works and services under a contract is subject to VAT, with the exception of products not subject to value added tax. Operations involving the use of bank guarantees are not subject to VAT (subclause 3, clause 3, article 149 of the Tax Code of the Russian Federation).

After receiving payment of the guarantee for the obligations not fulfilled by the supplier from the guarantor bank, the beneficiary-customer includes it in income in the same way as the payment of the principal would be taken into account without the use of a bank guarantee.

The principal has the right to take into account expenses under the guarantee (commission to the guarantor) for tax accounting purposes either as other expenses or as non-operating expenses. In any of these cases, costs are recognized throughout the entire validity period of the bank guarantee in equal parts (Letter of the Ministry of Finance of the Russian Federation No. 03-03-06/1/4 dated 01/11/2011).

Accounting for the costs of obtaining a bank guarantee

The costs of remuneration to the guarantor for providing a bank guarantee are reflected in the Transaction document. Manually entered transaction type Transaction in the Transactions - Accounting - Manually entered transactions section.

In our example, costs are associated with remuneration under a bank guarantee to ensure payment of rent for 6 months, so account 97.21 is used.

Postings in the accounting of the principal in case of failure to fulfill an obligation

Situations often arise when the principal did not manage to fulfill his obligations under the contract, after which the beneficiary turns to the bank to receive the funds due to him under the contract from the guarantor. The guarantor notifies the principal about this and informs about the termination of the warranty obligations. The principal is obliged to reimburse the bank for the amount that it transferred to the beneficiary.

If the principal needs to recognize the bank’s regressive claim in accounting, then transactions in the event of failure to fulfill obligations are reflected in accounting entries:

Accounting for unfulfilled obligations of the principal

After payment of the bank guarantee, the credit institution submits claims to the principal. A claim is sent to the debtor demanding compensation for the cost of the guarantee obligations transferred to the creditor.

The recourse banking claim is reflected in the principal’s accounting records with the following entries:

Accounting for payment of commission for issuing a guarantee

For the guarantor, the issuance of security under the contract is a source of income, therefore, the principal will have to pay a certain commission for the bank to issue the guarantee. Such a commission can be fixed, or calculated as a percentage of the contract amount or by other methods.

In the bank guarantee agreement, the bank has the right to stipulate various conditions for the payment of obligations. For example, an obligation may be established for the principal to make a one-time or evenly distributed payment over the entire period of validity of the guarantee.

Bank guarantee (BG): concept

This term denotes a guarantee of third parties, in the situation under consideration - namely the bank, which, as a guarantor, undertakes to transfer the required amount to the creditor in the event that there is a violation by the contractor of the contractual terms (Article 368 of the Civil Code of the Russian Federation). The main violation, as a rule, is considered to be untimely payment of the debt incurred. All aspects of the guarantee payment are recorded in the agreement on the issuance of the BG, drawn up on a special form. It is drawn up between the borrower-executor (principal) and the bank (guarantor) in favor of the lender-supplier (beneficiary).

When registering a BG, each party pursues its own benefit:

• the beneficiary is guaranteed to receive the specified amount even if the terms of the transaction are not met;
• the guarantor receives a commission for providing the guarantee;
• the principal begins work or acquires an asset.

The principal pays a commission for issuing the BG. And although these can be significant costs, in some cases the issuance of a guarantee becomes a mandatory condition and the only opportunity to obtain a contract.

Postings to reflect the commission on a bank guarantee

The procedure for reflecting the commission depends on the moment of acquisition and registration of the acquired property.

If the commission is transferred to the bank before the purchased assets are registered and before the funds are transferred by the principal, then the credit institution’s remuneration is included in the expenses for the acquisition of property - in its cost (clause 6 of PBU 5/01, clause 8 of PBU 6/01 ).

Let's show it with an example. Zarya LLC acquires the building from Aktiv LLC. The cost of the property is 1,500,000.00 rubles. Zarya LLC provides the seller with a guarantee from the bank. The guarantor's commission is 3% of the value of the property - 45,000.00 rubles. The fee must be paid in one lump sum. The commitment is issued for a period of one month. The transaction was completed, all mutual settlements were made on time, no warranty obligations were applied.

If the guarantee obligations were provided after the value of the property asset was formed, then it is no longer possible to change the amount of the recorded asset by including the amount of remuneration to the guarantor in the initial cost of the property.

If the bank commission, which was paid before the initial cost of the asset was formed, is included in other expenses, this may affect the calculated property tax. In 2020, property tax is calculated according to new rules. All movable property is excluded from the base. This means that when purchasing a property, writing off bank fees for other expenses may lead to a distortion of the tax base.

The accounting entries will be as follows: Dt 91.2 Kt 76 - accounting for the commission to the bank, the amount of which is not included in the initial cost of the purchased object.

Tax Code of the Russian Federation: accounting and features of accounting for a bank guarantee

It is worth initially noting that the guarantor bank does not charge VAT when providing guarantees. The Tax Code of the Russian Federation in paragraph 1 of clause 1 of Article 146 provides for a provision according to which the object of VAT is the sale of services produced in the territory of the Russian Federation. But at the same time, a bank guarantee issued by a guarantor bank is not subject to VAT, which is prescribed by the Tax Code in paragraph 3 of paragraph 3 of Article 149. Consequently, the accounting for a guarantee depends on the purposes for which it was raised. In addition, whether a bank or insurance company acts as a guarantor also matters.

Tax accounting may provide for the provision of a guarantee by the guarantor bank as expenses associated with payment for bank services, which are included in other expenses associated with production and/or sales, as specified in paragraph 25 of paragraph 1. Article 264 (Tax Code of the Russian Federation).

The provisions of Article 318-320 of the Tax Code of the Russian Federation determine that the method of accrual of expenses must take into account them in the reporting period to which these expenses relate, regardless of the period in which the actual payment of funds and/or other form of payment was made. At the same time, expenses under the cash method are taken into account after the actual payment has been made, which is confirmed by the Tax Code of the Russian Federation in paragraph 3 of Article 273.

Below is a thematic video that will help you understand the issue:

A bank guarantee can be issued for the purchase of Material and Production Raw Materials (MPR). For example, materials, raw materials, goods for production, etc. From an accounting point of view, such products should be accepted according to the actual cost, which is equal to the amount of costs regarding the purchase of products excluding VAT, actually incurred. In this case, the remuneration to the guarantor bank should be included in the actual cost of inventories purchased by the organization.

It is not uncommon for cases when the obligations under the contract were fulfilled by the supplier, while the buyer is unable to pay for the purchased goods due to insufficient funds. In such situations, a bank guarantee provided to the counterparty allows for a deferred payment without interrupting the business process.

According to the Ministry of Finance, the Tax Code in its provisions does not provide for the fulfillment of the condition regarding the submission to the Tax Service of a guarantee of a bank that is territorially registered in the same place as the taxpayer. In such cases, the amount of remuneration intended for the guarantor should be included in the group of other expenses. Tax accounting should take into account the same amount as non-operating expenses, as indicated by the Tax Code of the Russian Federation in clause 15, clause 1, article 265.

Rate this article: ( 1 ratings, average: 5.00 out of 5)

Save the link so as not to lose it, you will need it:

Features of accounting policies

The remuneration to the guarantor under the loan agreement must be reflected in the accounting policies of the organization. When concluding a loan agreement, one of the conditions of the agreement may be the mandatory execution of guarantee obligations. In such cases, the costs are borne by the borrower himself. The procedure is specified in PBU 15/2008 “Accounting for expenses and borrowings on loans.” The borrower is obliged to consolidate the chosen method in the accounting policy. Remuneration costs can be classified as other expenses (clause 7 of PBU 15/2008) or additional borrowing costs can be recognized evenly as part of other expenses (clause 8). This can only be done during the validity of the loan agreement itself. The correspondence of the accounting accounts will not change depending on the choice of cost distribution method and will be as follows:

The write-off methodology can be presented schematically: