- a security that certifies the amount of the deposit - a written certificate of the bank on the deposit of funds.
Types of financial investments and their evaluation
The implementation of financial investments should be preceded by a thorough analysis of the market of financial assets, which contributes to the choice of the best option that ensures the reliability and profitability of investments.
Financial investments- investments in and securities of other organizations, acquisition costs; funds lent on the territory of Russia and abroad; deposits in credit institutions; receivables acquired on the basis of assignment of the right to claim, etc.
In accordance with PBU 19/02 "Accounting for financial investments", the financial investments of an organization for accounting purposes must include the following assets: government and municipal securities, securities of other organizations, including debt securities, in which the date and value of redemption defined (bonds, bills); contributions to the authorized (share) capital of other organizations (including subsidiaries and affiliates); loans granted to other organizations, deposits in credit institutions, receivables acquired on the basis of assignment of the right to claim, etc.
As part of financial investments, contributions of a partner organization under a simple partnership agreement are also taken into account (Table 12.1).
Composition of financial investments
To accept assets as financial investments for accounting, the following conditions must be met at a time:- the presence of properly executed documents confirming the existence of the organization's right to financial investments and to receive funds or other assets arising from this right;
- transition to the organization of financial risks associated with financial investments (the risk of price changes, the risk of the debtor's insolvency, liquidity risk, etc.);
- the ability to bring economic benefits (income) to the organization in the future in the form of interest, dividends, or an increase in their value (in the form of the difference between the sale (repayment) price of a financial investment and its purchase price, as a result of its exchange, use in paying off the obligations of the organization, increase in the current market value, etc.).
- own shares redeemed by the joint-stock company from shareholders for subsequent resale or cancellation;
- bills of exchange issued by the organization - drawer and received by the organization - seller in settlements for goods sold, products, work performed, services rendered (as payment for these goods (work, services), if the payer for them is the buyer himself;
- investments of the organization in real estate and other property having a tangible form, provided by the organization for a fee for temporary use (temporary possession and use) in order to generate income, i.e. assets having a tangible form, such as fixed assets, inventories, as well as intangible assets that are not financial investments;
- precious metals, jewellery, works of art and other similar valuables not acquired for normal activities.
The accounting unit of financial investments is chosen by the organization independently in such a way as to ensure the formation of complete and reliable information about these investments, as well as proper control over their presence and movement. Depending on the nature of financial investments, the procedure for their acquisition and use, the unit of financial investments may be a series, batch, etc., a homogeneous set of financial investments.
The organization maintains analytical accounting of financial investments in order to provide information on accounting units of financial investments and organizations in which these investments are made (issuers of securities, other organizations in which the organization is a participant, borrowing organizations, etc.).
Organizations need to keep analytical records of financial investments. The organization can form in analytical accounting additional information about the financial investments of the organization, including in the context of their groups (types).
Paragraph 6 of PBU 19/02 specifically stipulates what information about securities should be disclosed in this case. For government securities and securities of other organizations accepted for accounting, at least the following information must be formed in analytical accounting: the name of the issuer and the name of the security, number, series, etc., nominal price, purchase price, expenses associated with acquisition of securities, total quantity, date of purchase, date of sale or other disposal, place of storage. Peculiarities of assessment and additional rules for disclosure in financial statements of information on financial investments in dependent business entities are established by a separate regulatory act on accounting.
Receipt and initial assessment of financial investments
In accordance with the Civil Code of the Russian Federation, securities are the movable property of an organization. Like any other property, they are subject to mandatory monetary valuation of reflection in accounting. Financial investments, when accepted for accounting, are divided into two groups: for which it is possible to determine the current market value and for which this cannot be done. The first group includes quoted securities, shares (if the share fund founder regularly publishes their price), as well as other financial investments, the current value of which is documented. In this case, financial investments are accepted for accounting at their original cost.
The initial cost of financial investments purchased from other organizations for a fee is the amount of the organization's actual expenses for their acquisition, except for value added tax and other refundable taxes (except for cases provided for by the legislation of the Russian Federation on taxes and fees).
The actual costs of acquiring assets as financial investments are:- amounts paid in accordance with the contract to the seller;
- amounts paid to organizations and other persons for information and consulting services related to the acquisition of these assets. If an organization is provided with information and consulting services related to making a decision on the acquisition of financial investments, and the organization does not make a decision on such an acquisition, the cost of these services is charged to the financial results of a commercial organization (as part of operating expenses) or an increase in the expenses of a non-profit organization of that the reporting period when it was decided not to purchase financial investments;
- remuneration paid to an intermediary organization or other person through which assets are acquired as financial investments;
- other costs directly related to the acquisition of assets as financial investments.
General business and other similar expenses are not included in the actual costs of acquiring financial investments, unless they are directly related to the acquisition of financial investments.
The actual costs of acquiring assets as financial investments can be determined (decrease or increase) taking into account the amount differences that arise in cases where payment is made in rubles in an amount equivalent to an amount in a foreign currency (conditional monetary units) before the assets are accepted as financial assets. investment in accounting.
If the amount of costs (except for the amounts paid in accordance with the agreement to the seller) for the acquisition of such financial investments as securities is insignificant compared to the amount paid in accordance with the agreement to the seller, the organization has the right to recognize such costs as other operating expenses of the organization in that reporting the period in which the specified securities were accepted for accounting.
The initial cost of financial investments made as a contribution to the authorized (share) capital of an organization is their monetary value, agreed by the founders (participants) of the organization, unless otherwise provided by the legislation of the Russian Federation.
The initial cost of such financial investments as securities received by an organization free of charge from founders or other organizations and persons is recognized as:
- their current market value on the date of acceptance for accounting. For the purposes of this Regulation, the current market value of securities means their market price calculated in accordance with the established procedure by the organizer of trading on the securities market;
- the amount of money that can be received as a result of the sale of received securities as of the date of their acceptance for accounting - for securities for which the market price is not calculated by the organizer of trading on the securities market.
The initial cost of financial investments acquired under agreements providing for the fulfillment of obligations (payment) in non-monetary means is the cost of assets transferred or to be transferred by an organization. Assets transferred or to be transferred by an entity are valued at the price at which, in comparable circumstances, the entity would normally charge similar assets.
If it is impossible to establish the value of assets transferred or to be transferred by the organization, the cost of financial investments received by the organization under agreements providing for the fulfillment of obligations (payment) in non-monetary funds is determined based on the cost at which similar financial investments are acquired in comparable circumstances.
The initial cost of financial investments made on account of the contribution of a partner organization under a simple partnership agreement is their monetary value agreed by the partners in the simple partnership agreement.
The initial cost of financial investments, the value of which upon acquisition is determined in foreign currency, is determined in rubles by converting foreign currency at the rate of the Central Bank of the Russian Federation, effective on the date of their acceptance for accounting.
Securities that do not belong to the organization on the basis of the right of ownership, economic management or operational management, but are in its use or disposal in accordance with the terms of the agreement, are accepted for accounting in the assessment provided for in the agreement.
The initial cost of financial investments, at which they are accepted for accounting, may change in cases established by law and these Regulations.
For the purposes of subsequent evaluation, financial investments are divided into two groups: financial investments, for which the current market value can be determined in accordance with the procedure established by these Regulations, and financial investments for which their current market value cannot be determined.
Financial investments, for which the current market value can be determined in accordance with the established procedure, are reflected in the financial statements at the end of the reporting year at the current market value by adjusting their valuation for the previous reporting date. This adjustment can be made monthly or quarterly.
The difference between the assessment of financial investments at the current market value as of the reporting date and the previous assessment of financial investments is credited to the financial results of a commercial organization (as part of operating income or expenses) or an increase in income or expenses of a non-profit organization in correspondence with the financial investments account.
Financial investments, for which the current market value is not determined, are subject to reflection in accounting and in financial statements as of the reporting date at their original cost.
When acquiring financial investments at the expense of borrowed funds, the costs of received loans and borrowings are taken into account in accordance with Accounting Regulation PBU 10/99 "Expenses of the Organization" and Accounting Regulation PBU 15/01 "Accounting for Loans and Credits and Costs of Their Maintenance".
One of the main components of financial investments are securities. The following types of securities are admitted to circulation in accordance with the Civil Code of the Russian Federation on the Russian stock market: government bonds, bonds, bills of exchange, checks, deposit and savings certificates, bank savings books to bearer, single and double warehouse certificates (and each part thereof), bills of lading, shares, privatization securities, housing certificates, as well as derivative securities - option certificates.
All securities must contain mandatory details. Their absence or discrepancy entails the invalidity of the transaction made through them.
Purchase of securities
When acquiring securities for a fee, their initial cost includes:- amounts paid to the seller;
- the cost of information and consulting services related to the acquisition of these securities;
- remuneration to intermediaries;
- other costs directly related to the purchase of securities.
This list does not include interest on loans received for the purchase of securities (clause 3.2 of the order of the Ministry of Finance dated January 15, 1997 No. 2). From January 1, 2003, interest on such loans does not increase the value of financial investments (securities) recorded on balance sheet account 58 "Financial investments". They should be attributed to operating expenses (sub-account 91/2 "Other expenses").
The only exception is the case when the company uses the received loan for advance payment. Then it is necessary to increase the receivables by the amount of interest (clause 15 PBU15/01). But this must be done before the papers are accepted for accounting. Also, the cost of purchasing securities does not include general business expenses (unless they are directly related to this purchase).
Example. The organization purchased 100 bonds of a third party. The price of each bond is 450 rubles. The brokerage commission amounted to 540 rubles. (including VAT - 90 rubles).
The accountant must make the entries:
- debit of account 19 "Value added tax on acquired valuables", credit of account 76 "Settlements with various debtors and creditors" - 90 rubles. - reflects VAT on brokerage services;
- debit of account 58/2 "Debt securities", credit of account 76 "Settlements with various debtors and creditors" - 45,450 rubles. (45,000+
+ 540 - 90) - the bonds are credited to the balance sheet.
In accordance with the Tax Code of the Russian Federation, securities are not subject to VAT, so there is no need to reflect input VAT on them.
The sale and purchase agreement may provide that securities (as well as services for their acquisition) are paid for in rubles at the foreign exchange rate on the day the buyer transfers the money. In such a situation, the purchase price is adjusted (increased or decreased) by the amount of the sum differences. True, this can only be done before the papers are accepted for accounting.
As a rule, most of the purchase costs are directly the cost of securities. If the share of all remaining costs does not exceed 5% of the amounts paid to the seller, then they can be treated as operating expenses.
Example. Let's use the condition of the previous example.
Other costs for the purchase of bonds amounted to 1% (540 rubles - 90 rubles) / 45,000 rubles, which is less than 5%. Therefore, the accountant can take them into account either on subaccount 58/2 "Debt securities", or on subaccount 91/2 "Other expenses". In the second case, you need to make the wiring:
- debit of account 76 "Settlements with various debtors and creditors", credit of account 51 "Settlement accounts" - 45,000 rubles. (100 pieces * 450 rubles) - money was transferred to pay for bonds;
- debit of account 76 "Settlements with various debtors and creditors", credit of account 51 "Settlement accounts" - 540 rubles. — remuneration paid to the brokerage company;
- debit of account 19 "Value added tax on acquired valuables", credit of account 76 "Settlements with various debtors and creditors" - 90 rubles. - reflects VAT on brokerage services.
Financial investments, depending on the terms for which they are made, are divided into 2 types: long-term and short-term.
The term of return of long-term financial investments exceeds 1 year. Such investments include contributions to the authorized capital of other organizations, including expenses abroad for the acquisition of shares, interest-bearing bonds, and the provision of loans.
The term of return or repayment of short-term financial investments does not exceed 1 year. This type of financial investment also includes investments in securities, the maturity of which is not set without the intention to receive income for more than one year.
To account for financial investments, account 58 "Financial investments" is intended.
The procedure for recording loans in the accounts of loans is as follows:
reflection of the amount of money transferred on loan to another organization:- debit of account 58/3 "Granted loans",
- credit of account 51 "Settlement accounts";
- debit of account 76 "Settlements with different debtors and creditors,
- credit of account 99 "Profit and loss";
- credit of account 76 "Settlements with different debtors and creditors".
The party receiving the borrowed funds is obliged to pay value added tax to the budget.
When repaying loans received, the following entry is made in accounting:
- debit of account 51 "Settlement accounts",
- credit of account 58 "Financial investments".
In the modern world, many individuals and legal entities carry out investment activities. The most attractive are long-term financial investments. This is due to the mass of their advantages over other earning options. It is worth knowing what financial investments are.
Concept definition
A long-term financial investment is an investment of a financial asset or capital by an individual, legal entity or enterprise for a period that exceeds one year. They are funds that are directed to the authorized capital of other companies. They can invest in the purchase of securities. They are also long-term loans received from third-party enterprises.
Classification of financial investments
The object of investment is fixed and working capital. They can also be targeted financial contributions, securities, intellectual property in which funds are invested. According to the object, long-term investments are divided into:
- Securities. This type is considered portfolio investment. In this case, bonds and shares are purchased for a period of more than a year. Most often, with such investments, the investor does not have the desire to earn on speculation. Long-term investments of this type are divided into two groups:
Investing in securities to complete a partial acquisition of a joint-stock company. This will allow the investor to participate in the management of the organization.
Investment of capital for the purpose of its preservation. This option is not common, which is explained by the fact that securities are highly liquid assets. However, investors still use them if they are owned by stable joint-stock companies and are not subject to significant fluctuations.
In addition, securities can be private and public, depending on who issues them.
- Debt securities. The most common type of them are bills. The holder of the bill receives the capital, which he transferred to the holder within a predetermined period. Long-term financial investments of this type are usually large sums. They are provided for a period of more than a year, since during this period it is possible to improve the financial condition of the company.
- Investments in the authorized capital of outside firms contribute to profit after the development of this company. This investment is also long-term, as a small number of organizations can recoup all costs in a short time.
- Loans. Their provision is similar to promissory notes. However, in this case, debt obligations are formed on the basis of a guarantee or an agreement.
Having familiarized yourself with the main types of investments, you should determine what contributions to enterprises can be.
Other types of investments
Long-term financial investments also include deposits in enterprises that provide loans. The investor provides funds issued to citizens as a loan. This investment involves receiving a certain percentage of the payment. This type of investment is mainly carried out for several years.
Investments can also be made in the authorized capital of partnerships. They represent an organizational and legal form. The latter allows you to receive capital sufficient to start a business by summing up the funds contributed by the co-founder. Accordingly, the investor will receive a percentage of the partnership's profits.
Income is distributed among the co-founders in accordance with the amount of capital contributed by each of them. Long-term investment in communities allows for productive business management. Profit will have to wait more than one year. However, this depends on the specific case.
What values do not apply to financial investments?
It should be noted that financial investments are not:
- Own shares that were redeemed by a shareholder of the company for the purpose of their cancellation or resale.
- Promissory notes received by the selling organization from the issuing company in the process of settlement for services rendered, products provided or work performed.
- Investments in property presented in a tangible form by a company. At the same time, only temporary use is available for the purpose of making a profit.
- Works of art, precious metals and similar valuables that are purchased for income.
In the event of the purchase of the listed values, the investor cannot accept them as a financial investment.
Actual costs for the purchase of assets
Assets that represent cash, financial investments or other valuables require the following actual costs to acquire:
- Amounts that are paid to the seller in accordance with the concluded contract.
- Expenses aimed at paying for the provided consulting and information services related to the purchase of assets. Their cost relates to the financial results of a commercial organization, and non-profit - to the increase in costs. The accounting period during which the decision on the acquisition of financial investments was made is taken into account.
- The rewards that were paid to the person or company that completed the asset purchase assignment.
It is worth noting that long-term financial investments do not include costs similar to those listed above, aimed at the acquisition process.
Financial investments in financial statements
The following information is subject to disclosure, taking into account the materiality requirement, in the financial statements:
- The method according to which financial investments are valued in the balance sheet when they are disposed of.
- Consequences resulting from a change in the method of the relevant assessment.
- The price of financial investments, which determines their current market value.
- The difference between the indicators that the assessment of financial investments helped to obtain and the current market value.
- The difference between original and face value when buying debt securities over their maturity.
- Type and price of the deposit, which is encumbered with collateral.
- The type and price of retired securities after they have been transferred to another person or company through a gratuitous transaction.
- Information about the reserve for depreciation, indicating its type, amount and amount.
- Information about granted loans and debt securities. Such financial investments in the balance sheet must be displayed without fail.
All necessary information should be provided in the reporting in a timely manner in order to avoid violation of the law.
Conditions for accepting assets for accounting
In order to take into account financial investments, the following conditions must be met without fail:
- The presence of reliable documents with the correct execution, which indicate the existence of the company's rights to make deposits and receive assets.
- Organization of financial risks associated with making financial investments.
- Long-term financial investments must be capable of generating economic benefits for the company. It is expressed in the form of dividends, interest or capital gains.
In the presence of all the factors listed above, it is possible to produce accounting for assets of this type.
Tasks of analysis of financial investments
The evaluation of financial investments is aimed at solving the following tasks:
- Evaluation of investment efficiency.
- Analysis of the structure and composition of financial investments.
- Determination of their direction.
- Analysis of sources of financing of assets of this type.
To perform accounting of deposits in the Chart of Accounts, an active inventory account 58 is used, for which the following accounts are opened:
- Debt securities.
- Shares and shares.
- Provided loans.
Depreciation of financial investments
A depreciation of an investment is a significant and sustained decrease in its value. The estimated value is the difference determined between the book value and the amount of the reduction in the value of financial investments. This indicator should be determined for those deposits for which the market value is not calculated. The depreciation of long-term financial investments is characterized by the following conditions:
- The carrying value of investments significantly exceeds the estimated value at the reporting date.
- The estimated value of the investment has been reduced during the reporting period.
- There is no likelihood of a significant increase in the estimated value.
Signs of depreciation of financial investments
Depreciation of assets most often occurs when a company that is an issuer of securities shows signs of bankruptcy. It is also possible when carrying out transactions for the purchase and sale of securities at a price that is less than their real value. A significant impact on depreciation will be provided if the sources of long-term investments do not generate income, as well as if it is significantly reduced.
Under such conditions, the company should perform a test to determine whether there are signs of a permanent decline in the value of assets. If the fact of impairment is confirmed by verification, the entity must create a special allowance between the carrying and estimated values.
Reflection of the reserve for depreciation of investments in the financial statements
The formed reserve should be reflected in the debit of account 91. For the loan, account 59 is specially allocated for it. At the same time, its amount is used to form the value of financial investments in the balance sheet. It is the difference between the book value and the created reserve. At the same time, the considered reserve allows covering the received losses on operations with assets.
The composition of long-term financial investments should be checked by the organization for depreciation at least once a year (if any of the above signs are present). The amount of the created reserve should increase if the audit reveals a high probability of a decrease in the estimated value of the investment.
Financial investments are a very effective way to get good profits. Of course, where big money is circulating, it is impossible to do without risks and losses. Let's look at what financial investments are, what types of investments exist and what risks there are.
Accounting for financial investments
To obtain complete data on the presence and movement of the enterprise's deposits in government securities, shares and bonds of third-party firms, as well as obtaining information on the issuance of loans from its assets to other organizations, 58 "Financial Investments" is intended.
The accountant monitors the movement of the company's funds and transfers and issues these funds. It is guided by the provision on accounting, namely PBU 9/99 "Income of the organization"
The role of financial investments and what they include
Accounting reporting is very important in the activities of the enterprise. Accounting for PV plays one of the main roles there. Without them, it is not possible to conduct business activities at many enterprises. The first place in accounting is occupied by financial investments, because it is thanks to them that the greatest flow of cash injections into the enterprise occurs, thereby increasing its well-being.
In simple terms, PV is an investment of your assets. These include the following:
- investments of one firm in the authorized capital of another;
- valuable bills;
- granting by one enterprise of monetary credits to another;
- deposits, etc.
Financial investments are included in accounting as monetary losses for the investor. From the amount of investments, the company will receive the expected income in the form of dividends.
Conditions of existence and types of financial investments
PV is understood by us as cash injections into property, the acquisition of the opportunity to participate in the affairs of other companies. PVs are divided according to the following parameters:
Purpose of purchase:
- acquired for profit;
- received for resale.
By speed of receipt:
- long-term (received for a period exceeding 1 year);
- short-term (obtained for a period not exceeding 1 year).
For relations with the capital of the company:
- received for the formation of the company's capital;
- received for subsequent investment in valuable documents.
Long-term infusions of funds include funds invested in the development of other enterprises or directed to the purchase of shares in third-party firms. They also include long-term loans that were transferred to other firms in order to receive interest on the amount repaid.
Short-term investments include securities that are in great demand, all kinds of bonds and stocks, short-term financial support for other firms, and certificates of deposit.
The sources of obtaining PV include personal capital and funds temporarily received from outside.
Personal capital includes:
- funds raised from reserve capital;
- unspent profit;
- unspent deductions for the restoration of fixed assets.
Funds received from outside include:
- amounts received as a result of a loan or credit;
- advances;
- credit debt.
To accept assets as PV, the following set of requirements must be met simultaneously:
- the company has properly executed financial papers, which are a confirmation of ownership of the FV;
- transfer along with investments and financial risks (risk of price increase or decrease, bankruptcy of the debtor);
- the ability to generate income for the company in the form of profit in the form of interest.
Tracking financial investments
This type of investment is transferred to accounting in the total amount of expenses for the investor. From this amount, the company will receive the expected income. PV are taken for accounting at the cost that was originally.
According to the available PV, the main part of the costs are the costs that were transferred to the seller. The remaining expenses for receiving injections can be regarded by the enterprise as other, and they will be taken into account on 91 “Other income and expenses”. And accounting for investments that are considered major will be accounted for on another account - on account 58, called "Financial Investments".
The available expenses for the purchase of assets are:
- the amount that was transferred to the seller under the relevant agreement;
- payment for the provision of services by third parties, as a consultation on the transfer of assets;
- settlement with intermediary firms that accompany the transaction;
- interest on loans or credits taken to acquire assets;
- other expenses associated with the purchase.
The initial cost of financial investments
The initial monetary value of PV is the amount that was spent on their purchase, after deducting all due taxes. The value of the cash investment of an enterprise or firm received under an agreement when paid without cash is considered the value of the assets that were transferred. Their final value is calculated from the ordinary price at which the firm under other circumstances evaluates these funds.
The initial investment amount is based on their cost in the market. The extent to which assets depend on the market cost is calculated based on what operations are carried out with them. The company's cash injections include amounts used to pay interest on loans for the acquisition of assets before they are registered with the company's accountant.
Profit and expenses on financial investments
Benefits for these types of investments are income from any areas of activity or other receipts that comply with the accounting regulations.
Expenses that are associated with the issuance of loans and credits to other firms are considered other expenses of the organization and have a corresponding account. Also, these expenses include payment for services provided by the bank for the storage of cash investments, the provision of any paid information and the preparation of the necessary documentation at the request of the depositor.
Assessment of risk factors for financial investments
Speaking about the topic of finance, the concepts of profit and risks are inextricably linked with each other. In this context, risks are understood as possible losses associated with financial injections. Before investing your funds in any assets, you need to carefully analyze and try to predict possible losses.
The risk associated with financial investments is divided into 2 groups:
Systematic
It depends on the current situation in the country.
Political and economic changes not only in our country, but also in the world as a whole is a big risk for financial investments. Rising and falling prices, changes in the exchange rate, interest rates and economic instability in general, have a great influence on the increase in risks associated with monetary investments.
Unsystematic
It includes the risk of falling prestige and the economic component of the enterprise that was the object of financial investments. The company may go bankrupt, and its securities will significantly lose value or even depreciate.
The main stages of calculating the risks associated with the injection of own funds into securities:
- the amounts of income and the probability of their receipt are predicted;
- a possible deviation from the amount of possible income is predicted;
- the coefficient of possible deviation is calculated.
The longer the period for which you need to plan risks, the more difficult it is to get an accurate forecast.
The economy of our country is extremely unstable, and the longer the period for which you need to get a forecast, the greater the risk associated with cash investments.
Conclusion
Financial injections and their accounting is a separate chapter in accounting and a separate expense item. Currently, all reputable companies and firms are investing their funds in order to further generate income. This is especially beneficial for deposits related to foreign currency. The dollar and euro exchange rates are constantly jumping, but if you catch the moment when one of these currencies is at its peak, you can make a huge profit.
From all of the above, we can conclude that PV are very profitable and bring considerable profit to the enterprise that makes these investments. This is considered the same type of income as, for example, the profit from the sale, and is subject to all relevant taxes. But there are certain risks that must be calculated before making injections of your funds.
In contact with
The concept of financial investments
This term refers to assets that bring tangible benefits to the company in the future. For example, dividends received on purchased shares, interest on loans issued, etc. Financial investments include:
- Securities issued by state or commercial companies, including debt (bonds, promissory notes);
- contributions to the management company of third-party companies, including subsidiaries and dependent business units;
- interest-bearing loans;
- deposits in credit institutions;
- repurchased under an assignment agreement, accounts receivable;
- contributions of the company-partnership on the basis of the contract.
Not considered financial investments:
- shares of your own company acquired from shareholders;
- promissory notes issued by the firm to the counterparty-supplier of goods/services;
- investments in assets used in production or leased.
The main criterion that distinguishes a financial investment is its ability to generate income in the future. Therefore, interest-free loans issued by the company also do not fall under the definition of financial investments.
According to the investment period, financial investments are short-term (investment for up to 1 year) and long-term (for a period of more than 1 year). To reduce investment risks, companies invest in various financial projects, the totality of which forms an investment portfolio.
Accounting for financial investments
Regulates the accounting of financial investments PBU19/02. Account 58 is defined as a chart of accounts for combining information about investments made, and since investments are classified into categories, it is customary to open subaccounts for each of them. For example, on c. 58/1 reflects the acquired shares and shares, and on the account. 58/2 - promissory notes and bonds. However, it should be borne in mind that deposits are recorded on account 55/3 "Deposit accounts".
In accounting for investments, it is necessary to maintain strict analytics by type of investment and with the obligatory reflection of the following information:
- the name of the issuer;
- designation and details of the security;
- cost;
- number;
- date of purchase/disposal;
- storage.
The implementation of investments (i.e., the acquisition of investments) is recorded in the debit of the account. 58 on the value of the costs incurred. The credit of account 58 reflects the disposal of investments. The income received from investments is reflected in other income of the company.
What is included in financial investments in the balance sheet
Information about investments in the balance sheet is reflected depending on the category that determines the period of investment. So, financial investments in line 1170 of the balance sheet are a reflection of the value of acquired shares, bills, shares and other securities. The same line of the “Non-current assets” section also reflects the amounts invested in the share capital of other companies, investments under concluded agreements on joint activities, the amounts of interest-bearing loans issued, and also takes into account the amounts of deposits on deposits opened in credit institutions. In a word, line 1170 records the amounts of long-term investments (items 2, 3 PBU 19/02), i.e. those with a maturity of more than 1 year after the reporting date.
The cost of short-term financial investments, i.e. in the company's turnover for less than 1 year, is included in financial investments in the balance sheet already in the second section "Working capital", in line 1240.
When compiling annual financial statements, the company compiles notes to the balance sheet and income statement, deciphering information on financial investments in detail in tables 3.1 and 3.2, which are included in the list of standard notes to the balance sheet.
Topic 10. Accounting for financial investments
The concept and types of financial investments.
Evaluation of financial investments in accounting.
Accounting for equity investments.
Accounting for debt financial investments.
Loan accounting.
The concept and types of financial investments.
Accounting for financial investments is regulated by the Accounting Regulation "Accounting for financial investments" (PBU 19/02) dated 10.12.02 No. 126n. Financial investments can be made by the organization:
1) into securities (shares, government bonds, corporate bonds, deposits, financial and commodity bills, checks and other derivative securities);
2) in the form of contributions to authorized capitals;
3) in the form of long-term and short-term loans provided.
Financial investments of the second and third groups can be made in monetary and material forms.
Financial investments are accepted for accounting under the simultaneous fulfillment of the following conditions:
availability of properly executed documents confirming the ownership of the organization;
transition to the organization of financial risks (the risk of insolvency, the risk of price changes, etc.);
the ability to deliver economic benefits to the organization.
Investments do not include:
own shares repurchased from shareholders for subsequent sale or cancellation;
bills of exchange issued by the organization-drawer to the organization-seller in settlements for goods sold, products, work performed, services rendered;
investments in movable and immovable property, having a material form, provided by the organization for a fee for temporary use;
precious metals, jewellery, works of art and other similar valuables not acquired for normal activities.
Accounting for financial investments is carried out on an active account 58 "Financial investments", to which the following sub-accounts can be opened:
58-1 "Shares and shares";
58-2 "Debt securities";
58-3 "Granted loans";
58-4 "Contributions under a simple partnership agreement", etc.
Evaluation of financial investments in accounting.
Financial investments are accepted for accounting at their original cost, which is understood as the amount of actual acquisition costs. The initial cost of financial investments includes:
the cost of acquiring financial investments in accordance with the contract;
the cost of information and consulting services;
the cost of commission fees of the intermediary;
other costs associated with the acquisition of financial investments.
For financial investments, for which an assessment is provided for in accounting at the current market value, during the reporting period, an additional assessment or markdown may be carried out:
Debit 58, credit 91.1 - revaluation due to an increase in the current market value of a financial investment;
Debit, 91.2, credit 58 - markdown due to a decrease in the current market value of the financial investment.
If there are signs of impairment of financial investments, for which the current market value is not determined, the organization should check whether there are conditions for a sustainable decrease in the value of these financial investments. If an impairment test confirms a sustained significant decline in the value of financial investments, the entity establishes an allowance for the impairment of financial investments. at the expense of other expenses. The reserve is accounted for on account 59 “Reserves for the depreciation of financial investments”. The creation of a reserve is reflected in the posting: debit 91-2, credit 59.
In the financial statements, the value of such financial investments is shown net of the amount of the formed provision for depreciation. If, based on the results of the check for depreciation of financial investments, an increase in their estimated value is revealed, then the amount of the previously created reserve for the depreciation of financial investments is adjusted towards its decrease and increase in the financial result (as part of other income): debit 59, credit 91-1.
Evaluation of retiring financial investments is carried out in one of the following ways:
1) at the initial cost of each unit of financial investments;
2) at the average initial cost;
3) at the initial cost of the first financial investments in terms of time of acquisition (FIFO method).
The use of one of the methods is provided for by the accounting policy of the organization for a certain group or type of financial investments.
If financial investments have a current market value reflected in accounting, then they are disposed of based on the latest assessment.
Accounting for equity investments.
Equity financial investments are understood as investments of third-party organizations in shares for the purpose of participating in the management of an organization or obtaining speculative income, as well as the acquisition of a share in the authorized capital of third-party organizations for the purpose of participating in the management of an organization.
Example 1
Organization "Vega" acquired 10 shares for 12,000 rubles. The nominal value of one share is 1000 rubles. The cost of consulting services provided by a third party amounted to 118 rubles, incl. VAT 18 rub.
The value of the acquired shares is reflected:
Debit 58-1 "Shares and shares", credit 51 "Settlement accounts" -12,000 rubles.
Included in the original cost of the shares are the costs of consulting services:
Debit 58-1 "Shares and shares", credit 51 "Settlement accounts" -100 rubles.
Reflected VAT on consulting services:
Debit 19 "VAT on acquired values", credit 51 "Settlement accounts" - 18 rubles.
Thus, the initial value of the share will be:
(12000 rubles + 100 rubles): 10 shares = 1210 rubles.
Accounting for debt financial investments.
Debt financial investments are understood as financial investments in debt securities (government bonds, bonds of organizations, checks, deposits, financial bills and bills of exchange). As a rule, bonds are sold at a discount, which is paid to the holder on redemption in excess of the amount paid. In addition, bonds can also provide for annual interest payments.
Example 2
The organization purchases a package of bonds with a circulation period of 4 years. The nominal value of the bond package is 18,000 rubles. The actual acquisition costs amounted to 12,000 rubles. Bonds are accepted for accounting. At the end of the reporting year, income on bonds in the amount of 2,000 rubles was accrued.
The actual cost of purchased bonds is reflected:
Debit 58.2, credit 76 - 12,000 rubles.
2. Income on bonds accrued:
Debit 76, credit 91.1 - 2000 rubles.
3. Bond income received:
Debit 51, credit 76 - 2000 rubles.
4. The difference between the nominal and actual value of the purchased bonds was written off as income accrues in proportion to the maturity of the bonds:
Debit 58-2, credit 91-1 "Other income" - 1500 rubles.
((18,000 rubles - 12,000 rubles): 4 years).
Accounting entries 2-4 are made over the next 3 years, which allows by the end of the fourth year on the debit of account 58-2 to form their face value, at which they will be repaid by the issuer to the holder. Upon redemption, a register is made:
Debit 51, credit 58-2 - 18,000 rubles.
5. Accounting for loans granted.
Granted loans are debt obligations for the provision of funds (other property) by one legal entity or individual to another legal entity (individual) without the participation of a bank. According to paragraph 7 of PBU 9/99 “Income of the organization”, the amount of interest on the granted loan in the investor's accounting is subject to inclusion in other income.
Example 3
The organization provided a cash loan to a legal entity for a period of 6 months in the amount of 100,000 rubles. under 30% per annum. According to the agreement, interest is accrued and paid monthly. After the expiry of the specified period, funds were received to repay the loan.
Short-term loan provided:
Debit 58-3, credit 51 - 100,000 rubles.
2. Monthly interest on the provided loan is accrued:
Debit 76, credit 91.1 - 2500 rubles.
(100,000 rubles * 30% : 12 months)
3. Interest received under the loan agreement:
Debit 51, credit 76 - 2500 rubles.
4. Returned a short-term loan:
Debit 51, credit 58-3 - 100,000 rubles.