What does the balance on the debit of account 58 reflect. Accounting for financial investments
Account 58 in the financial statements is designated by the balance line “Financial investments” and shows the conduct of operations with the movement of investments (investments) of a controlled enterprise in securities (hereinafter referred to as securities), shares and bonds of other organizations, fixed capital of enterprises, and especially the cost of loans that were provided other companies.
- Transactions completed in accordance with all requirements with documents that can confirm the right to the opportunity to invest assets, as well as receive income from them in the form of cash.
- The ability of the organization to assume a certain group of risks;
- The ability of an enterprise to obtain economic benefit (i.e., the amount of interest, dividends, increase in value).
Accordingly, in simple words it can be explained that the financial investment section shows the participation of a certain enterprise in the financial transactions of another business entity.
Legislative framework
The legality of all financial transactions carried out by a business entity is regulated by government regulations, orders, recommendations and guidelines on accounting. The balance sheet line “Financial investments” is legally provided for:
For accurate and legal financial investment, the organization must must take into account all necessary standards provided for in the bills. Regulatory regulation in this system consists of several levels.
The highest is the Decree of the President of the Russian Federation, and the lowest are the instructions and regulations of the enterprise itself in accordance with the industry focus and the amount of profit received.
Typical correspondence for debit and credit
Based on the standard plan of the organization, analytical analysis. To provide a complete picture of the financial position of the enterprise, the analysis reflects short-term and long-term cash deposits. Financial investments correspond with the following accounts of the enterprise's balance sheet.
In relation to debit:
- 50 – Treasury;
- 51 – Nominal accounts;
- 52 – Monetary account standards;
- 75 – Settlement with the founders of the enterprise;
- 76 – Payments to debtors and creditors;
- 80
- 91 – Other income and expenses;
- 98 – Future income.
In relation to the loan:
- 51 – Current accounts;
- 52 – Monetary account standards;
- 76 – Payments to debtors and creditors;
- 80 – Property fund of the enterprise;
- 90 – Profit from sales;
- 91 – Other income and expenses;
- 99 – Profit and loss.
For the company to operate effectively, it is necessary to combine all corresponding accounts efficiently and correctly. This will help control and analyze the receipt of profit or loss from financial investments, and, accordingly, will show the feasibility and return on investment of such investments.
A typical opening of sub-accounts for account 58 is:
- 58-1 : Units and shares;
- 58-2 : Debt Central Banks;
- 58-3 : Loans granted;
- 58-4 : Deposits under a simple partnership agreement.
If the price of securities upon their acquisition compensates for the nominal value, then financial entries are made specific entry. The debit reflects the total income from investments in the Central Bank, and the credit reflects the difference in amounts between settlements with debtors and creditors and investments.
Loans are reflected in the collateral of bills of exchange, so this stage of postings goes through apart. Funds that are transferred for use to third parties are reflected in debit, and when these funds are returned, an entry is made in the reverse order.
The operation of issuing a deposit to an individual or legal entity is carried out on a debit basis; accordingly, when it is reimbursed under the agreement back, a reverse entry is made in the balance sheet. Directly depending on what operation is carried out, score 58 is reflected either as active or passive.
Maintaining records that provide complete visibility of short-term and long-term assets is called analytics. The excess of the exchange rate over the face value is agio, decrease – dizagio. The excess is not recorded in the balance sheet, and the decrease is reflected in account 59, which shows the Central Bank's depreciation reserves.
The company's participation in other companies is reflected in the balance sheet as values for investment and transfer. Often such activity is expressed by purchasing shares of other companies. Such investments are reflected in the balance sheet “Financial investments within the purchase price”.
The concept of the current rate in asset items reflects the price at which shares and bonds can be fixed at the moment. The exchange rate often fluctuates, so it is carried out numerous revaluations. Here you should take into account the shares at their actual price, but if the current exchange rate decreases, the amount of the difference should be written off as a loss.
The amount of the actual cost of the securities is shown in subaccount 58-1 and is calculated by the amount of funds invested in shares and bonds. Correspondence between capital and the Central Bank absent, so taking inventory becomes more difficult.
The face value price is included in the asset according to these indicators. It is much more convenient to carry out an inventory, since the amount and the balance of the nominal are equal. The only drawback to this operation is discrepancy between actual and nominal prices.
Subaccount 58-1 displays shares and shares, essentially indicating the ability of the head of an enterprise under his control to invest in the authorized capital of a commercial company, i.e. buy their shares. At the legislative level, such a procedure can be carried out if:
- Transfer of funds to purchase securities of a given company.
- Transfer of tangible and intangible assets.
- Contribution of monetary value to the capital of a third-party organization.
When conducting such operations on the company's balance sheet, the subaccount undergoes a reformation of its characteristics. These procedures may be called:
- Material accounts that are transferred to another company.
- Accounts for recording cash investments are determined by the Chart of Accounts and the ability of the responsible persons to liquidate the securities.
- A current account involves the transfer and receipt of capital from one enterprise to another.
Based on PBU 19/02, financial investments in the balance sheet are reflected in long-term and short-term storage. Information about storing loans is located in section 5.
The report fully reflects the movement of the cash fund to receive interest and dividends from the investment procedure, as well as the allocation of cash to pay interest on purchased securities. Detailed information on the accrual of dividends and interest appear on the income statement.
Methods for reflecting investments in accounting are determined by the assessment and analysis of cash investments upon disposal according to the types and methods of analysis of economic activity.
Posting examples
To accurately make financial entries, you should take into account all factors of production and industry of the enterprise, as well as the actual and nominal value of the securities.
To carry out the transaction of purchasing shares, you must make postings:
- Dt 58-1 Kt 76(Acquisition of Central Bank);
- Dt 91-2 Kt 76(Accounting for the commission amount in other expenses);
- Dt 76 Kt 51(Calculation of the value of shares taking into account the intermediary commission).
To carry out a securities revaluation operation: Dt 51-1 Kt 91-1(Additional valuation of shares according to market value).
To conduct a sale of securities:
- Dt 58-1 Kt 76(Value expression of the share under the contract);
- Dt 76 Kt 51(Accrual of share value);
- Dt 91 Kt 59(Definition of reserve);
- Dt 91 Kt 58-1(Book value of the Central Bank);
- Dt 62 Kt 91(Cost of shares in the agreement);
- Dt 59 Kt 91(Increase in share price due to reserve);
- Dt 51 Kt 62(Credits of funds for sold shares);
- Dt 91 Kt 99(Profit from sales).
Thus, it can be determined that a business entity is investing in other third-party companies for the purpose of making a profit. Accounting for all parameters is carried out on the basis of PBU 19/02.
When assessed, investments are registered according to initial cost. This cost depends on the order of acquisition of investments and receipts. The initial value of securities may change during the process of their revaluation and may differ from the amount of the initial deposit.
Fulfilling the requirements of the regulatory framework, the assessment of financial investments can be made upon their disposal. Adhering to the procedure for conducting an accounting audit, there is several ways to reflect financial contributions by type, such as deposits in shares and bonds, investments in the authorized capital of a third-party organization, investments under a partnership agreement, loans and advances provided to other companies.
By order of the head of the enterprise, within the time period established by him, it is necessary to carry out inventory account 58(Financial investments). The result of the inventory is reflected in writing in financial accounting and accounting audit.
Financial investments on the balance sheet areassets that have certain characteristics clearly defined by current legislation. An accountant must distinguish financial investments from other assets.
Financial investments in the balance sheet structure
In the structure of the balance sheet, financial investments are assets recorded in lines 1170 and 1240. Line 1170 is located in the first section of the balance sheet “Non-current assets”, and line 1240 is in the second section (“Current assets”). Line 1170 records the amounts of long-term financial investments (for a period of more than a year), and line 1240 records the amounts of short-term investments (for a period not exceeding a year).
In accounting, a breakdown of financial investments by the period for which they are formed must be carried out, as this is provided for by the instructions for using the chart of accounts (Order of the Ministry of Finance dated October 31, 2000 No. 94n, hereinafter referred to as Order 94n) and PBU 19/02.
The main part of the financial investments reflected in lines 1170 and 1240 of the balance sheet is recorded in accounting in the form of a debit balance of the account. 58, on which financial investments are recorded. To it is added the debit balance of financial investments in accounts 55 and 73 (in terms of deposits and loans to employees of the enterprise, respectively). In addition, the amount of debit balances of accounts 58, 55, 73 must be reduced by the credit balance accounts 59 (formation of reserves for financial investments).
IMPORTANT! It is advisable to account for assets reflected in accounts 55 and 73, classified as financial investments, in separate sub-accounts depending on the investment period. Then, when creating a balance, there will be no problems filling out lines 1170 and 1240.
Let's take a closer look at what assets are reflected in account 58.
Account 58 “Financial investments”
Order 94n established the following list of subaccounts of account 58:
- 58.1 - shares and shares;
- 58.2 - debt securities;
- 58.3 - loans provided;
- 58.4 - contributions under a simple partnership agreement.
However, the law does not prohibit enterprises from independently establishing a list of subaccounts in accordance with the goals of their accounting policies. At the same time, Order 94n clearly states that the enterprise is obliged to ensure a breakdown of financial investments into long-term and short-term.
Therefore, if the enterprise has financial investments with a period of up to 12 months or more than 12 months, it is necessary to organize their separate accounting, which allows separating the amounts of long-term financial investments from short-term ones.
Postings for transactions with financial investments in account 58 may look like this:
Accounting for financial investments in accounts 55.3 and 73.1, standard transactions
Account 55.3 reflects the enterprise's deposits - funds provided to financial institutions for the purpose of receiving interest income. They can also be short term or long term. Account 73.1 reflects loans provided by the enterprise to its employees.
Here are some typical entries when accounting for financial investments in accounts 55.3 and 73.1.
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Description of operation |
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Account 55.3 “Deposit accounts” |
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Funds were transferred to the deposit account |
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Interest accrual on deposit |
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Interest is transferred to a deposit account (if the company does not withdraw it) |
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Interest transferred to the company's current account |
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Closing the deposit |
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Account 73.1 “Settlements with personnel for loans provided” |
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A loan was issued from the company's cash desk to an employee |
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The loan is transferred to the employee’s card |
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The company has accrued interest on the loan issued to the employee (if the loan agreement provides for this) |
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Withholding interest or loan amount from the employee's salary |
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Repayment of a loan by an employee to the company's cash desk |
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The company has written off the employee’s loan debt (if such a decision has been made) |
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Accounting for interest on financial investments
Operations for the provision of loans are reflected using subaccount 58.3 “Loans provided”. Such financial investments must be formalized by loan agreements. Essential information in the agreement is the amount and term of the loan, as well as the amount of interest accrued on such obligations.
Typical wiring may look like this:
Results
Financial investments in the balance sheet are reflected on lines 1170 and 1240. Moreover, in accordance with the current accounting legislation, it is necessary to organize separate accounting of short-term and long-term financial investments.
These are financial investments, which include, in particular, state and municipal securities, securities of other organizations (including bonds, bills), contributions to the authorized capital of other organizations, interest-bearing loans provided to other organizations, deposits, accounts receivable debt acquired on the basis of assignment of the right of claim (clause 3 of PBU 19/02).
Account 58 “Financial investments” () is intended as the chart of accounts and instructions for its use to summarize information on the availability and movement of an organization’s financial investments. 58 accounting account is an active synthetic account, the debit of which reflects the receipt (increase in value) of financial investments, and the credit reflects their disposal (decrease in value). Analytical accounting on account 58 is carried out by type of financial investments and objects in which these investments were made (for example, by borrowing organizations).
In addition, in analytical accounting, financial investments should be divided into short-term and long-term.
Also, financial investments within the group of interrelated organizations for which consolidated financial statements are prepared should be taken into account separately on account 58 (Order of the Ministry of Finance dated October 31, 2000 No. 94n).
Subaccounts to account 58
An organization can open, in particular, the following sub-accounts to account 58:
Typical transactions for account 58
Let us present in the table some typical accounting entries for account 58 (Order of the Ministry of Finance dated October 31, 2000 No. 94n):
| Operation | Account debit | Account credit |
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| Shares were purchased by transfer from a foreign currency account | 58-1 | 52 “Currency accounts” |
| Ruble bonds purchased | 58-2 | 51 “Current accounts” |
| Loan of materials provided | 58-3 | 10 "Materials" |
| An object of fixed assets was transferred as a contribution under a simple partnership agreement | 58-4 | 01 "Fixed assets" |
| The difference between the original and par value of the bond, for which the current market value is not determined, is included in financial results | 58-2 | 91 “Other income and expenses” |
| The revaluation of shares for which the current market value is determined is reflected as of the reporting date | 91 | 58-1 |
| Repayment of the bill is reflected | 51 | 58-2 |
| The loan issued in non-cash form was returned | 51 | 58-3 |
| An object of intangible assets, previously transferred as a contribution under a simple partnership agreement, was returned | 04 "Intangible assets" | 58-4 |
This material, which continues the series of publications devoted to the new chart of accounts, analyzes account 58 “Financial investments” of the new chart of accounts. This commentary was prepared by Y.V. Sokolov, Doctor of Economics, Deputy. Chairman of the Interdepartmental Commission on Reforming Accounting and Reporting, member of the Methodological Council on Accounting under the Ministry of Finance of Russia, first President of the Institute of Professional Accountants of Russia, V.V. Patrov, professor of St. Petersburg State University and N.N. Karzaeva, Ph.D., deputy. Director of the audit service of Balt-Audit-Expert LLC.
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*Note: Unfortunately, here (in the explanations to account 58 “Financial Investments”) a mistake was made: when additionally accruing the amount of excess of the par value of purchased securities over their purchase value, this account should not be credited, but debited.
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In general, we can say that account 58 “Financial investments” reflects various types of participation of one company in the affairs of another, while it is emphasized that this account takes into account values not only transferred on account of these investments, but also subject to transfer (meaning securities, the ownership of which has already passed to the buyer).
Most often, this participation is expressed in the acquisition of securities. However, their exchange price fluctuates all the time, and valuation problems become decisive in this area of accounting. The old instructions noted that securities (shares, bonds, etc.) are recorded in accounts for accounting for financial investments at their purchase price. The new instructions do not say anything about this, since the procedure for assessing assets is determined by other regulatory documents, in particular, the Regulations on Accounting and Financial Reporting, paragraph 44 of which states: “Financial investments are taken into account in the amount of actual costs for the investor.” , and these costs in some cases exceed the purchase price by the amount of some expenses (fees for information and consulting services related to the acquisition of securities; remuneration to the intermediary with whose participation the securities were purchased, etc.).
According to classical terminology, the excess of the exchange price over the nominal value is called agio, and a decrease in disagio. There has been much debate in the literature about whether these processes change the value of a firm's capital.
The answer “yes” is realistic, since in this case the value of both securities and, more importantly, the total value of assets is more accurately shown.
The answer “no” is no less realistic, since in this case the amounts that were actually invested in these securities and, accordingly, in the assets of the company remain in the books.
Practice, based on the requirement of prudence, has developed a compromise solution: excess is not reflected in accounting, but disaggio is reflected using account 59 “Reserves for the impairment of investments in securities.”
In general, account 58 “Financial investments” includes, in essence, a complex of independent accounts, which are called sub-accounts.
Let's look at each of them.
58.1 "Units and shares"
The administration of an enterprise can make contributions to the authorized capital of commercial organizations, buy their shares, i.e. make investments in other organizations.
A share is an issue-grade security that secures the rights of its owner (shareholder) to receive part of the profit of the joint-stock company in the form of dividends, to participate in the management of the joint-stock company and to part of the property remaining after its liquidation.
Investments in equity securities can be made:
- in the form of cash deposits through the purchase of shares;
- in the form of direct investments in the authorized capital of funds;
- through the transfer of various tangible and intangible assets.
All of the above greatly complicates the description of subaccount 58.1 “Units and shares”. It can be called:
- a material account, if we take into account the material assets contributed to the authorized capital of a third-party enterprise;
- an account for accounting for funds, based on the place in which the compilers of the chart of accounts placed it, and on the possibility of relatively quick liquidity of securities;
- account of settlements, because in all cases we are talking about the relationship between the persons who gave capital and the persons who received it.
The above interpretations of subaccount 58.1 “Units and shares” lead to three versions of securities accounting:
1. They can be fixed at face value.
Advantages. Ease of accounting and inventory of securities. The balance of the subaccount turns out to be equal to the amount of nominal values. The amount of financial investments taken into account turns out to be equal to the share that corresponds to the value of the authorized capital of the enterprise to which these shares belong.
Flaws. The real value of shares almost never corresponds to their par value and, therefore, the balance of subaccount 58.1 “Shares and shares” will not be real.
2. They can be fixed at the actual purchase price.
Advantages. The balance of account 58.1 “Units and shares” reflects the funds actually invested in them.
Flaws. The balance of account 58.1 "Units and shares" rarely corresponds to the amount of capital owned by the buyer in the company that issued the shares. This circumstance, in particular, makes their inventory somewhat difficult.
3. They can be fixed at the current rate.
Advantages. The balance of account 58.1 “Shares and shares” shows the liquidation value of the shares, i.e. the price at which the shares can currently be sold.
Flaws. The stock price changes all the time, which forces the accountant to constantly resort to revaluation. Their inventory becomes dramatically more complicated. The value of actually invested capital essentially disappears, and the amount of nominal capital is quite difficult to calculate.
From the point of view of the principle of prudence, the second and third concepts should be accepted. Shares should be accounted for at the actual purchase price (second option), but if their current rate falls below the purchase price, then the difference should be written off as a loss.
All investments are shown in the debit of account 58 "Financial investments" subaccount "Units and shares" in the full amount (at actual cost). In this case, the par value of the security is not important. It is charged at actual cost. Likewise, the size of the purchased share in the authorized capital of the enterprise is not important. He must be capitalized by the buyer for the amount actually received.
For example, if the nominal value of a share is 50,000 rubles, and 200,000 rubles were paid for it, then the buyer debits account 58 “Financial investments” subaccount “Units and shares” for 200,000 rubles.
In this case, the amount of the authorized capital will not coincide with the amount of deposits listed with the owners in account 58 “Financial investments”, but the share in the capital remains unchanged. Unless otherwise provided in the agreement approved by all founders. Those. in our case, the actual contribution will be four times higher than the share to which the rights of our investor will apply.
Shares, like all property and property rights, are reflected on the balance sheet of the enterprise, subject to the existence of ownership rights to these objects.
According to Art. 145 of the Civil Code of the Russian Federation, according to the rights certified by the security, securities are divided into:
- bearer securities (rights belong to the bearer of the security);
- registered securities (the rights belong to the person named in the security);
- order securities (the rights belong to the person named in the security, who can exercise these rights himself or appoint another authorized person by his disposal (order).
Depending on the designation of the owner, shares are either registered, the owners of which are registered in the register, and bearer shares, the owners of which are not registered in the register.
Registered shares are shares, information about the owners of which must be available to the issuer in the form of a register of owners of securities, the transfer of rights to which and the exercise of the rights assigned to them require mandatory identification of the owner.
The requirements for the content of the register of shareholders are the basis for organizing operational accounting of the movement of shares. The required registry details are:
- about joint stock company;
- on the size of the authorized capital;
- on the number of shares announced for issue;
- on the par value of shares announced for issue;
- on the categories (types) of shares announced for issue;
- on the number of shares issued in circulation;
- on the par value of the shares issued in circulation;
- on the categories (types) of shares issued in circulation;
- about splitting shares;
- on consolidation of shares;
- about the company’s shares purchased by the enterprise at its own expense (quantity, nominal value, categories (types));
- about each shareholder;
- on the payment of dividends.
The register of shareholders is maintained either directly by the joint-stock company, or on its behalf - by a bank, investment institution (except for an investment consultant), depository, or specialized registrar.
Joint stock companies with more than 1,000 shareholders are required to entrust the maintenance of the register of shareholders to any of the above organizations.
The moment of transfer of rights to the securities themselves and the rights secured by them depends on the method of storing and recording the securities: in a depository or a special system for maintaining a register of shareholders. The moment of transfer of rights to securities from the issuer or buyer to the acquirer is presented in the table.
Table 1
Transfer of rights to securities
and exercise of rights secured by securities
In the subaccount “Shares and shares” of account 58 “Financial investments”, investment objects are reflected in accordance with clause 44 of the Regulations on accounting and financial reporting in the Russian Federation in the event that ownership of the securities belongs to the enterprise. If the ownership of the securities has not yet transferred to the enterprise, then the amounts contributed to the account of the financial investment objects to be acquired are shown in the asset balance sheet under the item debtors.
However, under the accounts receivable item, until the rights to the security are recognized, expenses for the acquisition of shares can be reflected only under one item - the amounts paid in accordance with the agreement to the seller. Other expense items, in particular:
- amounts paid to specialized organizations and other persons for information and consulting services related to the acquisition of securities;
- remunerations paid to intermediary organizations with the participation of which securities were purchased;
- expenses for paying interest on borrowed funds used to purchase securities before they are accepted for accounting
cannot be reflected in accounts receivable due to the fact that the services have already been provided and accepted. These costs should be reflected either as a corresponding asset, or as a deferred expense item, or as losses. It seems advisable to open a special sub-account “Expenses for the acquisition of securities” in account 58 “Financial investments” to account for these costs.
Depending on how the shares were received, accounting is carried out according to different schemes.
In the event that an enterprise is the founder of another enterprise, then financial investments in shares are accepted for accounting in the assessment, according to the constituent documents. And the difference between the balance sheet valuation of the property transferred as a contribution to the authorized capital and the valuation of the shares agreed upon by the founders is reflected in account 91 “Other income and expenses”.
Example
The initial cost of the fixed asset, which is made as a contribution to the authorized capital, is equal to 100,000 rubles. The amount of accrued depreciation for this object is 40,000 rubles. The founders established that the contribution of the participant who made this fixed asset as a contribution to the authorized capital is equal to 80,000 rubles.
The accounting scheme for transactions involving contributions to a newly created enterprise will look like this:
Debit 02 Credit 01 - 40,000 rub. - accrued depreciation is written off; Debit 58.1 Credit 01 - 60,000 rub. (100,000 - 40,000) - a fixed asset item contributed as a contribution to the authorized capital is written off; Debit 58.1 Credit 91.1 - 20,000 rub. (80,000 - 60,000) - reflects the difference between the balance sheet valuation of the fixed asset and the valuation of the contribution to the authorized capital.
If an enterprise acquires shares of a company after its creation, then in this case, in account 58 “Financial investments” the shares will be accounted for at the actual costs of their acquisition, regardless of the nominal valuation of the shares, as noted above.
Example
The company purchased 100 shares with a par value of 100 rubles. for 1 share at a price of 110 rubles. for 1 share. The shares were paid for before the entry was made in the register of shareholders. At the same time, the company paid the intermediary organization a commission in the amount of 0.5% of the transaction - 55 rubles. and VAT 20% - 11 rub.
The accounting scheme for transactions for the acquisition of shares will be as follows:
Debit 60 Credit 51 - 11,000 rub. - 100 shares paid; Debit 60 Credit 51 - 66 rub. - the commission of the intermediary organization has been paid; Debit 58.5 Credit 60 - 66 rub. - expenses for the acquisition of shares (commissions); Debit 58.1 Credit 60 - 11,000 rub. - shares are accepted for balance at the seller’s price; Debit 58.1 Credit 58.1 - 66 rub. - expenses for the acquisition of shares were written off due to an increase in the value of shares.
There may be cases when shares are acquired on the basis of an exchange agreement.
Example
Shares worth RUB 80,000. purchased in exchange for fixed assets with an initial cost of 100,000 rubles. with the amount of accrued depreciation in the amount of 40,000 rubles, then the entries in the accounting accounts will be made as follows:
Debit 02 Credit 01 - 40,000 rub. - the amount of accrued depreciation is written off; Debit 58.1 Credit 01 - 60,000 rub. - a fixed asset item contributed as a contribution to the authorized capital is written off.
When income or dividends due on shares and shares are announced, the income of their recipients arises (recognizes) precisely after the announcement, and not at all when the money arrives. Therefore, upon receipt of notification of the amount of income due, the following entry is made:
Debit 76.3 "Calculations for dividends due and other income"
Credit 91.1 "Other income"
It is curious that the money may never arrive, but the income is already considered received.
Problems associated with accounting for financial investments often do not have a clear solution, and we will look at several practical examples.
Example
Company A contributed to the authorized capital of company B the right to use some areas of its building, valuing this right at 10 million rubles, the period of use is 10 years.
Practice has developed several solutions.
Option 1
Debit 58.1 “Units and shares” Credit 83 “Additional capital”
Advantages. The loan correctly shows the resulting capital gain as a result of the transaction. True, this increase occurs only for ten years, and every year this increase will decrease, since during each year the accountant must make an entry:
Debit 83 “Additional capital” Credit 91.1 “Other income”
Flaws. In this case, the real loss of opportunities associated with the use of fixed assets is not reflected, since there was actually a change in the asset structure of the balance sheet of company A: there were fixed assets, and instead of them financial investments arose.
Option 2
Debit 58.1 "Units and shares"
Credit 01 subaccount "Fixed assets contributed to the capital of a third party organization."
Advantages. A special contractual sub-account is introduced, which allows, in accordance with the requirement of priority of content over form, to correctly reflect the actual cost of fixed assets at the disposal of company A.
Flaws. An artificial sub-account is created, additional entries appear, the value of fixed assets owned by company A is distorted, and the benefits it receives from the financial investments made remain unclear.
Option 3
Debit 58.1 "Units and shares" Credit 98 "Deferred income" Debit 98 "Deferred income" Credit 91.1 "Other income"
According to paragraph 47 of the methodological recommendations on the procedure for forming indicators of an organization’s financial statements in the event that the organization receives securities (shares) free of charge, including under a gift agreement, “these assets are reflected in the balance sheet in the same way as the procedure for reflecting funds for targeted financing.” The procedure for reflecting funds for targeted financing by commercial enterprises provides for the balances of amounts of funds received for targeted financing (from the budget, from other organizations and citizens) to be reflected in the group of items “Deferred income”. These balances are reduced as non-operating income is recognized in the reporting period:
- upon release for the purpose of the organization’s activities of inventories purchased using targeted funds;
- when calculating depreciation on property acquired using these funds;
- upon completion and delivery of scientific research works, etc.
Consequently, only when recognizing the use of assets received free of charge, deferred income should be included in the income of the reporting period. Obviously, the use (or receipt of profit) of securities can be confirmed only at the time of accrual of income (dividends) on these securities. However, the very fact that an enterprise has shares indicates that it has the right to receive income and participate in the management of the enterprise that issued the securities.
According to clause 11 of the accounting regulations "Expenses of the organization" (PBU 10/99), expenses associated with the write-off of other assets, including securities, are operating expenses and are reflected in account 91 "Other income and expenses."
Income from the sale of securities is accounted for under the credit of subaccount 1 “Other income” of account 91 “Other income and expenses” in correspondence with account 62 “Settlements with buyers and customers”.
Correspondence of accounts for accounting for the sale of equity securities:
Debit 91.2 Credit 58.1 - the book value of the equity security is written off; Debit 62 Credit 91.1 - income from the sale of securities is reflected; Debit 91.2 Credit 60 - commission accrued to intermediary enterprises for the sale of securities;
The financial result from the sale of securities was revealed:
Debit 91.9 Credit 99 - profit; Debit 99 Credit 91.9 - loss.
In the event of bankruptcy of an enterprise issuing securities, when it becomes impossible to obtain income from them, such securities must be written off, and the resulting losses must be reflected as non-operating expenses in subaccount 2 “Other expenses” of account 91 “Other income and expenses”.
According to clause 3.5. the procedure for reflecting transactions with securities in the accounting records; investments in shares listed on the stock exchange or at special auctions, the quotation of which is regularly published, are reflected in the financial statements at the minimum of the values: market or balance sheet. Balance sheet indicators are formed according to data from two accounts - account 58 “Financial investments” and account 59 “Reserves for the depreciation of investments in securities”. Investments in securities in account 58 are reflected at the actual costs of their acquisition or at the valuation of investments recorded in the constituent documents when the enterprise was created. Adjustment of the value of securities when forming balance sheet indicators is carried out using a reserve for depreciation of securities.
In accordance with the provisions of Art. 270 of the Tax Code of the Russian Federation "amounts of deductions to the reserve for depreciation of investments in securities created by organizations in accordance with the legislation of the Russian Federation, with the exception of amounts of deductions to reserves for depreciation of securities made by professional participants in the securities market in accordance with Article 300 of this Code" in are not taken into account for tax purposes.
58.2 "Debt securities"
Among the many differences between shares and shares, on the one hand, and other securities, the decisive factor is that the former are perpetual, while the validity of the latter is strictly limited to a set time period. It follows that perpetual securities, such as shares, under the going concern assumption, should be carried at purchase price, subject to the requirement of prudence.
One of the important aspects of accounting for debt securities is the issue of the moment of recognition of ownership of these securities and, therefore, the moment of reflection of these securities in account 58 “Financial investments”. The grounds for recording purchased securities in the financial investment account, depending on the type of securities and the procedure for accounting and storage, are given in Table No. 2.
Table 2
The moment of transfer of ownership of debt securities and recording as financial investments
| Type of security | Procedure for accounting and storage of securities | Moment of transfer of ownership | |
|---|---|---|---|
Bond |
Bearer documentary |
From the owner |
Obtaining a certificate |
In the depository |
|||
Registered undocumented |
In the depository |
Making a credit entry in the acquirer's securities account |
|
In the registry system |
Making a credit entry on the acquirer’s personal account |
||
Registered documentary |
In the depository |
Making a credit entry in the acquirer's securities account |
|
In the registry system |
Receiving a security certificate and making a credit entry to the acquirer’s personal account |
||
Treasuries |
In a depository authorized by the Ministry of Finance of Russia |
Receiving a statement from a securities account |
|
From the owner |
Drawing up a transfer and acceptance certificate |
||
The accounting and valuation procedures for debt securities generally correspond to the accounting procedures for equity securities. This paragraph discusses only the features of accounting for debt securities.
In accordance with clause 44 of the regulations on accounting and financial reporting, “for debt securities, the difference between the amount of actual acquisition costs and the nominal value during their circulation period is allowed to be attributed to financial results evenly as the income due on them accrues...”.
The excess of actual acquisition costs over their nominal value is written off to the credit of account 58 “Financial investments”. If the actual acquisition costs are below par, then the difference is added to the debit of account 58 “Financial investments”. The valuation of securities is adjusted so that by the time the bonds are redeemed, their book value corresponds to their par value.
Professional securities market participants may revalue bonds purchased for the purpose of generating income from their sale as prices on the stock exchange change.
One-time amount of write-off of the difference between the acquisition costs and the nominal value of the bonds (RS) determined by the formula:
RS = (N - GP) : ChM, Where
N- face value of the bond;
Salary- costs of purchasing bonds;
World Cup- the number of months of the bond's circulation period.
Example
On December 30, 1999, 94,000 rubles were transferred from the current account. for bonds with an issue date of January 1, 2000 with a total nominal value of 100,000 rubles. The maturity of the bonds is one year. Bond income is 18% per annum.
Calculation of required indicators:
1. Bond income:
- annual - 18,000 rub. (100,000 * 18: 100);
- monthly - 1,500 rub. (18,000:12)
2. Monthly amount of write-off of the difference between the par value of the bonds and the costs of their acquisition:
3. RS = (100,000 - 94,000) : 12 = 500 rub.
Debit 76 (broker) Credit 51 - 94,000 rub. - money was transferred to the broker for the bonds; Debit 58 Credit 76 (broker) - 94,000 rub. - received bonds from a broker; Debit 76 (agent) Credit 91 - 18,000 rub. - income on the bond was accrued (every month - 1,500 rubles, per year - 18,000 rubles); Debit 58 Credit 91 - 6,000 rub. - the difference between the par value of the bonds and the costs of their acquisition was additionally accrued (every month - 500 rubles, per year - 6,000 rubles); Debit 51 Credit 76 (agent) - 18,000 rubles. - income from bonds was received; Debit 76 (agent) Credit 58 - 100,000 rub. - transferred to the paying agent for repayment of the bond; Debit 51 Credit 76 (agent) - 100,000 rub. - money received for redeemed bonds.
In this case, the final result from this bond transaction is income in the amount of 24,000 rubles. It consists of the interest received (18,000 rubles) and the difference between the par value of the bonds and the costs of their acquisition (6,000 rubles). This difference was gradually written off in equal parts (500 rubles per month) to the organization’s income during the circulation period of the bonds.
Example
On December 30, 1999, 108,400 rubles were transferred from the current account. for bonds with an issue date of January 1, 2000 with a total nominal value of 100,000 rubles. The maturity of the bonds is one year. Bond income is 18% per annum.
Monthly amount of write-off of the difference between the costs of purchasing bonds and their nominal value:
RS = (108,400 - 100,000) : 12 = 700
The following entries will be made in the organization's accounting:
Debit 76 (broker) Credit 51 - 108,400 rub. - money was transferred to the broker for the bonds; Debit 58 Credit 76 (broker) - 108,400 rub. - received bonds from a broker; Debit 76 (agent) Credit 91 - 18,000 rub. - income on the bond is accrued; Debit 91 Credit 58 - 8,400 rub. - the difference between the costs of purchasing bonds and their nominal value was written off (every month - 700 rubles, per year - 8,400 rubles); Debit 51 Credit 76 (agent) - 18,000 rubles. - income from bonds was received; Debit 76 (agent) Credit 58 - 100,000 rub. - transferred to the paying agent for repayment of the bond; Debit 51 Credit 76 (agent) - 100,000 rubles. - money received for redeemed bonds.
In this case, the amount of interest on the bonds was, as in the previous example, 18,000 rubles. However, this income was reduced by the difference between the actual costs of purchasing the bonds and their nominal value (RUB 8,400). Hence the final result of the transaction - a profit of 9,600 rubles. (18,000 - 8,400).
This procedure for writing off the difference between the amount of actual costs for the acquisition of debt securities and their nominal value allows this difference to be attributed to financial results more evenly (throughout the entire circulation period of the securities). At the same time, it can be written off against financial results at a time (upon redemption or sale of securities), since paragraph 44 of the regulations on accounting and financial reporting states that a uniform write-off is “allowed.” The disadvantage of a one-time write-off is the uneven reflection in the accounting of income or expenses of the enterprise. The difference received from the revaluation of securities, in accordance with Art. 251 and 270 of the Tax Code of the Russian Federation is not taken into account when determining the tax base for income tax. Non-operating income for tax purposes includes interest on debt securities (clause 6 of Article 250 of the Tax Code of the Russian Federation).
The choice of one of two options for writing off this difference should be determined by the accounting policy of the organization.
When selling debt securities, the following entries are made:
Debit 62 “Settlements with buyers and customers” Credit 91.1 “Other income” - the sale of securities is reflected; Debit 91.2 “Other expenses” Credit 58.2 “Debt securities” - securities written off; Debit 51 “Current accounts” Credit 62 “Settlements with buyers and customers” - money received from the buyer.
Enterprises whose main activity is the purchase and sale of securities, when recording such transactions, instead of account 91 “Other income and expenses”, use account 90 “Sales”.
58.3 Loans granted
This subaccount takes into account settlements that arise under loan agreements, or more precisely, under loans provided.
Entries in the accounting accounts of loan transactions should be made on the basis of payment orders for the transfer of funds (if the subject of the loan agreement is cash) or primary documents for the disposal of material assets (if the subject of the loan agreement is other things specified generic characteristics).
When transferring funds to the borrower, the loans provided are reflected in the debit of account 58.3 “Granted loans” in correspondence with account 51 “Current accounts” or other cash accounts. When transferring property to the borrower, account 58.3 “Loans provided” corresponds with property accounting accounts, for example, 10 “Materials”, 41 “Goods”, 43 “Finished products”.
The repayment of the loan is reflected in the debit of account 51 “Current accounts” or other accounts for cash and property and the credit of account 58.3 “Loans provided”.
If one of the ways to ensure the fulfillment of obligations under a loan agreement is a pledge, and provision is made for the transfer of the pledged property (item) to the pledgee into possession (mortgage) (Articles 329 and 338 of the Civil Code of the Russian Federation), the pledged property in the lender’s accounting must be accounted for in account 002 “Commodity material assets accepted for safekeeping."
If one of the ways to ensure the fulfillment of obligations under a loan agreement is a guarantee, then the receipt of guarantees to secure the fulfillment of obligations and payments under the loan agreement should be accounted for in account 008 “Securities for obligations and payments received”. The collateral amounts should be written off as the debt is repaid.
The correspondence of accounting accounts for accounting for the provision of loans to other organizations is presented in Table 3.
Table 3
| No. | Contents of operations | Debit | Credit | Primary document |
|---|---|---|---|---|
Cash loan issued |
58.3 | 51 | ||
|
002 008 |
Pledge agreement, Certificate of acceptance and transfer of property |
||
Upon termination of the loan agreement |
||||
Receipt of borrowed funds from the borrower is reflected |
51 | 58.3 | Bank account statement |
|
|
002 008 |
Certificate of acceptance and transfer of property |
||
The loan provided can be interest-free or interest-bearing. In the latter case, the accrual of interest due may be reflected as follows:
Option 1. The borrower's obligations are reflected in account 76 "Settlements with other debtors and creditors":
Debit 76 "Settlements with various debtors and creditors"
Credit 91.1 "Other income"
When interest is received from the borrower, the following entry is made:
Debit 51 “Current accounts” Credit 76 “Settlements with various debtors and creditors.”
Option 2. In accordance with the provisions of Order No. 60n of the Ministry of Finance of Russia dated June 28, 2000, the borrower’s obligations are reflected together with the amount of the principal debt under the loan agreement in account 58.3 “Loans provided”:
Debit 58.3 “Loans provided” Credit 91.1 “Other income”
Upon receipt of interest from the borrower:
Debit 51 “Current accounts” Credit 58.3 “Loans provided”
58.4 "Deposits under a simple partnership agreement"
Contribution of comrades in accordance with Art. 1042 of the Civil Code of the Russian Federation recognizes everything that they contribute to the common cause (money, other property, etc.). Monetary valuation of deposits is made by agreement between partners.
Accounting for transactions under this agreement is carried out in accordance with the instructions for reflecting in accounting transactions related to the implementation of a simple partnership agreement, approved by Order of the Ministry of Finance of Russia dated December 24, 1998 No. 68n.
In accordance with paragraph 4 of these instructions, confirmation of receipt of a property contribution for a partner organization and, therefore, reflection on account 58.4 “Contributions under a simple partnership agreement” is a memo on the receipt of property by a partner conducting common affairs, or the primary accounting document on receipt of property ( copy of the invoice, receipt for the receipt order, etc.).
It should be noted that, according to the provisions of the instructions, the transfer of property under a simple partnership agreement must be reflected in the accounting records of the partner organization through sales accounts. For example, when transferring a fixed asset, the following accounting entries must be made:
Debit 91.2 “Other expenses” Credit 01 “Fixed assets” - the original (replacement) cost of the fixed asset is written off; Debit 02 "Depreciation of fixed assets"
Credit 91.1 “Other income” - accrued depreciation is written off; Debit 58.4 "Deposits under a simple partnership agreement"
Credit 91.1 “Other income” - reflects the contribution under the simple partnership agreement.
If the contractual valuation of the contribution under a simple partnership agreement exceeds the balance sheet valuation of the transferred fixed assets, the difference will be reflected as income on account 99 “Profits and losses”:
Debit 91.9 "Balance of other income and expenses"
Credit 99 "Profits and losses"
However, when transferring property under a simple partnership agreement, there is no transfer of ownership, and therefore property transfer transactions should not be reflected through sales accounts. The balance sheet valuation of the transferred property is reflected directly in account 58.4 “Deposits under a simple partnership agreement” in correspondence with the property accounting accounts. In this case, the difference between the book value of the property and its valuation under the agreement is reflected in account 91 “Other income and expenses” (on debit or credit). For example:
Debit 02 "Depreciation of fixed assets" Credit 01 "Fixed assets" - accrued depreciation of fixed assets is written off; Debit 58.4 "Deposits under a simple partnership agreement"
Loan 01 “Fixed Assets” - reflects the contribution under the simple partnership agreement. Debit 58.4 "Deposits under a simple partnership agreement"
Credit 91.1 "Other income". - the excess of the valuation of the contribution under the simple partnership agreement over the book value of the fixed asset is reflected.
Upon termination of a simple partnership agreement, the return of property is reflected in the credit of account 58.4 “Deposits under a simple partnership agreement” in correspondence with the property accounting accounts.
It is necessary to pay attention to the fact that depreciable property is transferred by the enterprise maintaining the balance sheet of the simple partnership at its residual value, which must be reflected by the partner organization as the initial value:
Debit 01 “Fixed assets” Credit 58.4 “Deposits under a simple partnership agreement”
According to clause 20 of PBU 6/01, the organization must determine the useful life of an item of fixed assets when accepting the item for accounting.
If, as a result of the division of property, a partner is entitled to a share in excess of the amount of his contribution, then account 91.1 “Other income” is credited for the difference.
Analytical accounting for account 58 "Financial investments"
Since, in essence, as we have already seen, this account should be classified as a group of settlement accounts, then analytical accounting for each sub-account should be organized in the context of settlements with each entity that accepted the investments of our enterprise.
Investments within one financial group for subsequent data consolidation must be allocated to a separate accounting section.
Two general comments about the nature of maintaining account 58 “Financial Investments”
1. Relationship between account balance 58 “Financial investments” and balance sheet items.
The balance sheet asset is divided into non-current and working capital items. The criterion is one year. This means that expenses capitalized for a period of more than a year are recognized as non-current, and those capitalized for a period of less than a year are considered working capital. In this regard, the usual practice was to have two accounts:
- "Long-term financial investments"
- "Short-term financial investments."
The compilers of this chart of accounts combined these two accounts. They could be guided by the following considerations:
1) when a security is purchased, even if it is a fixed-term security, the administration, as a rule, does not know for what period this security was purchased, and even if the administration knows this, circumstances can still force it to sell this security at any moment;
2) to reflect financial investments in the balance sheet and in the appendix to the balance sheet (form No. 5), it is necessary to maintain their division into long-term and short-term, which obliges the administration of the enterprise, represented by the chief accountant, when leaving the balance sheet, to decide which amounts should be included in the first, and which ones in the second section of the balance sheet, without changing the very value of the balance of account 58 “Financial investments”. In this case, only subaccount 58.3 “Loans provided” does not raise doubts, since the loans are urgent in nature and the likelihood that the loans will be repaid before the expiration date is insignificant. For all other subaccounts, based on analytical accounting data, it is necessary to differentiate which investment amounts should be included in which section of the balance sheet. In this case, the accountant should be guided only by his professional judgment, which is based on the integrity of his approaches and, as a result, leads to reliable financial statements.
This approach is fraught with great danger, as it can lead to subjectivity and arbitrariness, because the smaller the share attributed by the accountant to long-term assets, the higher his liquidity and solvency indicators.
Sometimes accountants, instead of one account, keep two accounts 58.1 - “Long-term financial investments” and 58.2 “Short-term financial investments”, i.e. maintain the old order. This deprives accounting of the flexibility it needs and contradicts the very idea of the chart of accounts compilers.
2. Assessment of financial investments
Financial investments accounted for in subaccounts 58.1 “Units and shares” and 58.2 “Debt securities” must be reflected in accordance with the requirement of prudence, i.e. If the market valuation of securities is higher than what was paid for them, then their valuation does not change.
If the market valuation of securities is lower than what was paid for them, then they must be valued at market value (see account 59 “Provisions for impairment of investments in securities”).
Please note that in the chart of accounts there are accounts related to bill circulation. Moreover, if we proceed from the already established tradition, we should note that the drafter assumes the division of all bills according to the function they perform. If a bill of exchange is issued against a loan of money, then it is a financial security, and it is accounted for in account 58 “Financial investments”.
If a bill of exchange is issued for services, goods or any other tangible and intangible assets, then it is considered as a commodity bill, and accounting in this case is kept in the accounts:
- 60 "Settlements with suppliers and contractors";
- 62 "Settlements with buyers and customers";
- 76 "Settlements with various debtors and creditors."
Other options are also possible, the meaning of which boils down to the account on which the debt arises; settlements with bills of exchange are also taken into account for the same account.
Account 58 “Financial investments” is used by legal entities to display information about the organization’s invested funds in securities (shares, bonds, etc.), shares in the authorized capital of other companies (including interdependent ones), as well as summarizing information about loans provided.
Account 58 in accounting is a collective account that reflects data on the enterprise's invested assets in securities (public and private), authorized capital of other companies, and the provision of loans to individuals and legal entities (with the exception of company employees).
In addition to account 58, sub-accounts are opened:
58.1 - information is summarized on purchased shares of the joint-stock company, shares in the authorized capital of other companies
58.2 - information about investments in public or private debt securities (bonds, etc.) is displayed;
Account 58 - active. The debit displays financial investments in securities in correspondence with the corresponding accounts for recording valuables transferred as investments (for example, money from accounts 50,51,52). Repayment or sale is carried out in accounting according to Kt58 in correspondence with the account. 91 (90).
Investments in securities, the current value of which is determined, are subject to monthly or quarterly revaluation in order to include assets in the annual financial statements. The adjustment amount is applied to the company’s financial results (91.01, 91.02)
For debt securities that are not traded on the market, the difference between the original price and the nominal price is applied to the financial results of the organization’s activities evenly over the period of their circulation and receipt of income.
58.3 - mutual settlements for borrowed amounts presented to legal entities and individuals are displayed. An exception is loans issued to employees of the enterprise.
Information about the loans provided is entered in Dt58 (in case of partial or full repayment, the amount is taken into account in Kt58).
58.4 - information about the presence of a share in the common property of a simple partnership is taken into account.
Analytical monitoring
Analytical monitoring of financial investments is carried out by objects of deposits (the company's counterparties - issuers, organizations whose share in the authorized capital belongs to the company and borrowers), as well as separately by type of investment.
Attention! Investments in interdependent companies are shown separately on account 58
Regulatory regulation
The use of account 58 to record information on investing funds of legal entities in securities, authorized capitals of third-party enterprises, and providing loans is carried out in accordance with the Chart of Accounts (Order of the Ministry of Finance dated October 31, 2000 No. 94), PBU 19/02 and other legislative documents.
Common business transactions, accounting entries
- Display of completed financial investments
Dt58.01,58.02 Kt50 - in cash;
Dt58.01,58.02 Kt51 - through a current account
Dt58.01,58.02 Kt52 - through a foreign currency account
Dt58.01,58.02 Kt76 - acquisition of shares and bonds from various creditors
- Providing borrowed funds (except for company employees)
Dt58.03 Kt50,51,52
- Free receipt of shares and bonds
Dt58.01,58.02 Kt98.2
- Repayment of loans provided
Dt50,51,52 Kt58.03
- Disposal of shares, bonds
Dt90.02 Kt58.01,58.02 - for those organizations whose main activity is the sale of securities
Dt91.02 Kt58.01,58.02 - for other companies
- Cost adjustment
Dt58 Kt91 - revaluation, increase in book value
Dt91.02 Kt58 - markdown, reduction in book value