What applies to financial investments?
When accounting for this category of existing assets, economic entities rely on the norms adopted by law, which are reflected in the current PBU 19/02 “Accounting for financial investments.”
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In order for an asset owned by a subject to be recognized as a financial investment, the following basic conditions must be met:
- Documentary evidence of ownership/receipt of assets.
- Organizational risks associated with assets: insolvency, liquidity, price changes.
- Availability of potential economic benefits (interest accrual, increase in initial cost).
Based on the above signs, financial The following instruments are considered investments: securities (including government securities, bonds and bills of exchange of other enterprises), contributions to the authorized capital of other entities (except for subsidiaries), loans provided to other entities, deposits with credit institutions, receivables in the form of assignment of claims. .
The following are not recognized as financial investments:
- Own shares purchased from employees, settlements using bills of exchange.
- Property used to generate income under rental agreements.
- Works of art, jewelry purchased not for resale.
- Intangible assets of entities, fixed assets and inventories (MPI).
Accounting 81 for Dummies
> accounting > Account 81 in accounting for dummies
Account 81 in accounting “Own shares repurchased from shareholders” is active and includes information about the company’s own shares subject to repurchase.
In addition, this account is also used by limited liability companies when purchasing a share from one of the participants for the purpose of resale to third parties or other participants.
In the article we will look at what this account is intended for, with which accounts it corresponds and give examples of postings.
What is 81 accounts for?
81 accounts are used to summarize information about the availability and movement of the company’s own shares. Shares are purchased from shareholders, after which further transactions are carried out with them.
Actions with shares will depend primarily on the decision of the owner, that is, the buyer. When repurchasing shares, an entry is made in the accounting debit of account 81 for the amount of money actually spent.
When canceling securities, correspondence is carried out with the authorized capital. The difference that appears from 81 accounts is allocated to 91 accounts
Important! In agricultural structures, repurchase can be carried out for the amount of actual costs, both on the debit and credit of the accounts used when accounting for money.
Reflection of the sale of shares in accounting
Share repurchase activities take place at the request of shareholders. Shares subject to redemption become the property of the organization, after which they are resold, canceled or distributed among other shareholders. The features of using account 81 include the following:
- In practice, the account can be used not only by joint-stock companies, but also by limited liability companies (when purchasing shares in the authorized capital).
- Information on this account is reflected in the liability side of the balance sheet using parentheses (section 3, line 1320).
Important! The procedure for the repurchase and further sale of shares is established by the norms of the current legislation. It is common to all participants in this process and requires compliance with certain nuances.
Which accounts does 81 accounts correspond to?
Important! When a company buys back shares owned by a shareholder from a shareholder, an entry is made in the debit of account 81 for the amount of expenses incurred.
When canceling its own shares purchased by the company, accounting is carried out in the credit of account 81 and the debit of account 80 after the company has completed all the prescribed procedures.
If there is a difference in 81 accounts between the costs incurred for the purchase of a share or share and their nominal value, it is allocated to 91 accounts.
81 accounts correspond with the following accounts:
| By debit | By loan |
| Account 50 “Cash” Account 51 “Settlement accounts” Account 52 “Currency accounts” Account 55 “Special accounts” Account 91 “Other income and expenses” | Account 73 “Settlements with personnel for other operations” Account 80 “Authorized capital” Account 91 “Other income and expenses” |
Account correspondence
In the course of a company’s activities, situations may arise in which companies buy back their own shares or shares in the authorized capital. This raises the question of how to account for the acquired part of the equity capital.
In accordance with the chart of accounts, as well as instructions for using accounts, account 81 is used . It is used to record the availability and movement of company securities purchased by the company from shareholders.
The LLC uses this account to account for the share of the participant purchased by him for the purpose of transferring to third parties. This norm is provided for by Order of the Ministry of Finance 94n.
Accordingly, in practice it is possible to carry out several business transactions and document this with the appropriate entries.
| Business transaction | D | TO |
| Share repurchase | 81 | 50 (51,52) |
| Reduction of authorized capital | 80 | 81 |
| Income received from the sale of shares purchased from a shareholder | 91 | 81 |
Answers to common questions
Question: Account 81 is active, but it is not reflected in the balance sheet asset. Why?
Answer: The asset line of the balance sheet, which may include the company’s own shares purchased from shareholders, is a financial investment. However, these shares do not qualify as financial investments. This account has a close connection with the authorized capital, which is why it is reflected in the capital section, with a minus sign and in parentheses.
Conclusion
Thus, 81 accounts in accounting are used to summarize information about the presence and movement of the organization’s own shares, which were purchased from shareholders for the purpose of their subsequent sale or for the purpose of cancellation. Other companies have the right to use this account to account for the participant’s share, also acquired by the company for transfer to third parties or distribution between participants.
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postings, Account 81 in accounting
Source: https://buhland.ru/schet-81-v-buxgalterskom-uchete/
Financial investments in accounting policies
The list of assets that can be recognized as financial investments is not limited by law. Each organization independently decides on the possible composition of assets of this type. All information must be reflected in the accounting policies.
Formation of financial assets of the organization
| Asset criteria | Possible | Units |
| By time of use | Short term and long term | Short-term - repayment period less than 12 months; if the circulation period is longer, the assets are classified as long-term |
| Unit of account | Series, batch | The organization independently determines the unit of measurement. But at the same time, the principles of transparency in accounting and control over the movement of assets must be observed. |
| Acceptance for registration | Initial cost | Acquisition costs include the volume of actual costs, including purchase, delivery and others, excluding refundable taxes. |
| Determination of current market value | Assets with determinable and indeterminable market values | For assets with a certain market value, periodic adjustments to the existing price are required. If the current market value cannot be determined, the original cost is taken into account. |
All methods for determining financial investments should be reflected in the accounting policies. This applies to periods of use, units of measurement and other conditions.
To evaluate assets accounted for as financial investments, the actual costs of their acquisition are taken. Costs may involve more than just payments to suppliers. At the same time, the provisions of PBU 19/02 exclude general business expenses from costs to determine the initial cost, if these expenses were not directly related to the acquisition.
Valuation of securities
When purchasing securities, there are the following types of expenses: payment of the contract price to the seller and other expenses. If other expenses when purchasing securities are considered insignificant compared to the contractual value, their amount can be taken into account as part of the entity’s other expenses in the reporting period of acquisition. Institutions can determine the level of materiality independently by prescribing accepted criteria in their accounting policies.
For securities related to trading on the market, it is possible to determine the current value. It is calculated based on market trading data. In the financial statements, the timing of revaluation is determined independently. This could be a month, a quarter, etc.
If the revaluation of securities can significantly distort data on the financial condition of the enterprise, entities have the right not to adjust the value of assets. These actions must be reflected in the notes to the financial statements.
If it is not possible to determine the current market value of securities, the reporting shall indicate the initial cost of the financial investment.
Account 59 in accounting “Creation of reserves for the depreciation of investments in securities.” Postings
To record changes in the value of securities in organizations, account 59 is used. It is intended to summarize information about impairment for each asset position.
Impairment of securities is recognized as a sustainable decrease in their original value, which does not allow obtaining further economic benefits. Account 59 reflects the difference between the accounting and initial prices for available financial investments.
The formation of the reserve occurs after analyzing the financial condition of the securities. It is preferable to create in cases where there is a steady decrease in value, at the reporting date the price is significantly lower than the original one, or there is information about an inevitable decrease in the value of the asset in question in the future.
The creation of reserves, as well as an increase in the value of financial assets, is accompanied by the posting:
Debit 91 - Credit 59.
The basis for reducing the volume of newly accepted reserves is considered to be an increase in the value of these assets, as well as their disposal partially or entirely as a result of sale.
If the amount of the previously established reserve decreases or a disposal of financial investments occurs, the posting takes the following form:
Debit 59 - Credit 91.
About account 91, read the article: “Accounting for other income and expenses (account 91). Postings.”
Creation of a reserve for depreciation of financial investments
Financial investments for which the current market value cannot be determined must be tested for impairment. If the impairment test confirms a permanent significant decrease in the value of financial investments, then the enterprise must create a reserve for them.
Typically, current market value cannot be determined:
- For shares not traded on the organized securities market;
- For contributions to the authorized capital of LLC.
The amount of the reserve is formed from the difference between the initial and estimated cost of financial investments. The procedure for creating a reserve must be specified in detail in the accounting policy.
It should be noted that not all investments created reserves are accounted for in account 59. For example, for loans provided by an enterprise, a reserve is created in account 63.
It is important to know that financial investments are tested for impairment at least once a year, and, as a rule, as of December 31.
