How to calculate retained earnings in the balance sheet. The formula for calculating retained earnings

Retained earnings are the balance of net profit for previous years. In the article, we will understand in more detail what retained earnings (uncovered loss) is, how it is formed, how it is reflected in the balance sheet, what problems arise when using it, and how the CFO can solve them.

In the concept of retained earnings, many are confused by the word "retained". Let's figure it out. Further, for an easier perception of the material, we will understand the retained earnings as profit.

What is retained earnings and how is it formed

Retained earnings are the balance of net profit for the previous reporting years of the company. Retained earnings like own source financing, can grow annually and ensure business development. In terms of balance sheet items, this means that the annual increase in equity capital is accompanied by a shift between the balance sheet asset items. For distribution of profits, a decision of the general meeting of participants is required (see also about corporate income tax ).

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Accounting policy The document regulates the rules for reflecting the company's income and expenses, long-term and current assets, advances from buyers, loans, as well as taxes payable

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Retained earnings in the balance sheet

Net profit during and at the end of the reporting period is reflected in the balance sheet account 99.

Retained earnings for the years of the company's activity are accumulated on the credit of the active-passive account 84 "Retained earnings", and uncovered loss - on debit. The negative value of this section in the balance sheet can speak both of the first years of the company's existence, and of a long-term loss.

Accounting for retained earnings

V balance sheet for accounting, line 1370 "Retained earnings (uncovered loss)" is used. It would be correct to request an analyst for account 84, which is synthetic and it is recommended to open sub-accounts for analytical purposes:

84.1 - profit to be distributed - the amount of profit that the business owners decided to distribute;
84.2 - loss to be covered;
84.3 - retained earnings in circulation - the amount of profit that it was decided to leave in circulation;
84.4 - used profit - the amount of profit that was allocated to expand the activities of the enterprise.

Accounting entries

Information about accounting entries by directions of use of profit and is summarized in table 1.

Table 1... The main areas of use of net profit

Direction of use of retained earnings	Direct wiring	Impact on retained earnings and equity
Direction of use of retained earnings		Impact on retained earnings and equity
Formation of reserve capital
Additional capital formation		Decrease, but movement within equity capital
Repayment of losses of previous years		Movement within retained earnings
Increase the authorized capital		Decrease, but movement within equity capital
Payment of dividends		Decrease in retained earnings and equity
Investments		Movements within retained earnings

If you do not conduct analytics on account 84, then the information will be depersonalized as well as in the balance sheet and on the change in the initial balances of the equity capital components, we will only see the formation of reserve, additional and authorized capital (if they were formed specifically this year). But fixing the distribution of profits for everything that does not change the balance of account 84 - covering losses, investments - will not work, and by default it can be assumed that the profit was really not distributed. In addition, many are really sure that if the profit is distributed, then it should go off the balance sheet, forgetting that without this there will be no increase in assets.

Problems and use of retained earnings

Most of the misunderstandings and disputes are related to the directions of the use of profits, although they are generally accepted, should be indicated in the charter. But very often, when we defended the business plan, the annual report and touched upon the topic of the distribution of funding sources, one could hear: "the enterprise has not distributed all the profit of the enterprise", "if all the profit was distributed, why did it remain in the balance sheet?" etc.

Why is this happening? The main reason is that there is no single document that would regulate all disputes on this issue. Russian legislation does not contain special provisions that govern the distribution of profits, and should be guided by the general norms of laws. At the same time, the laws themselves about Joint Stock Companies and Limited Liability Companies do not talk about how to reflect the distribution of retained earnings in accounting. Accounting regulations contain information on how to calculate profit, but there is only a mention of how to spend it in the chart of accounts without specifics. Tax office, usual auditing do not control whether the amount of retained earnings is correctly determined; it can be confirmed by the results of the annual inventory and individual order during the audit.

The controversy is aggravated by the fact that each of its participants looks only from the point of view of their subject specialization: an accountant - from the point of presence of entries in the chart of accounts, a lawyer - from a position of consistency with legislation, a financial manager - taking into account the economic nature of sources and the need for funding.

Distribution of return on investment

There is an opinion that there is no need to distribute profit on investments. In some fairly respected sources, you can read the categorical "... profit to spend only on dividends, the acquisition of assets is still spent" real "money, not profit." Here, two basic concepts are substituted: a source of financing and a cash flow. Cash flow is required in order to pay dividends as well. If, when planning activities, we laid down a certain level of net profit, and it was received, then it is registered in the proceeds through the price of the product / work / service of the enterprise, and with proper management of the working capital it will be provided cash flow(the exception will be for transactions that are not accompanied by cash flow).

With regard to investment, the following should be noted. If the volume of investments is such that the planned depreciation is sufficient to cover the needs and pay these costs by including it in the price of the product / service / work, then the return on investment will not be distributed precisely because of the absence of economic need and the profit remains undistributed.

Let's say the size of the investment program is much larger than the total source of depreciation. Then it makes economic sense to distribute the profit to finance the investment. It is quite logical that at the same time, as a source, everything remains on the balance sheet of the enterprise, since a new asset is created and the company is capitalized.

Example

Let's look at an example. Business transaction: we purchased a fixed asset (hereinafter - fixed assets) worth 118 thousand rubles. VAT included

table 2... Asset acquisition transactions

the name of the operation	Direct wiring	Amount, thousand rubles
the name of the operation		Amount, thousand rubles
The emergence of an obligation to pay fixed assets
Reflection of input VAT
OS put into operation
Payment to the supplier for the OS
VAT accepted for deduction
Use of net profit for the purchase of fixed assets

If loans are attracted for the purchase of fixed assets, then the question does not arise why, after payment and entry of the object, the balance of account 66 does not decrease. Exactly the same happens when the source of investment financing becomes the profit of previous years: the credit balance on account 84 remains unchanged. The only difference is that the profit remains on the balance sheet of the enterprise, and the loan goes away after it is repaid. Such profit is accumulated on subaccount 84.4 - used profit.

Let's say we are planning to simply increase sales without purchasing additional fixed assets and making long-term capital investments, and we need to increase current assets. This is also an enterprise development strategy. Can we use our profits for this? In this case, the profit should be left undistributed, but the cash flow accompanying it works for the development of the enterprise.

If you adhere to the logic of subaccounts to account 84, then the profit that you decided not to distribute temporarily is reflected in subaccount 84.3. The decision on its distribution can be made at any time, and not only at the end of the year. To do this, you need to hold a special thematic meeting and approve the decision. Until this decision is made, the profit is in circulation. It can be involved in the operating cycle of an enterprise in the form of a cash flow with the aim of further increasing sales. In case of successful activity, additional net profit can be generated. She can be as free Money placed on a deposit or VAT and also generate additional profit or temporarily close the need for operating loans and borrowings and allow you to save on interest. But it is important to understand that in this case we are not talking about profit as a source of financing, but about free cash flow, which, given a definitely high level of solvency, corresponds to it. The profit itself remains undistributed until the decision of the owners and shareholders.

Is it possible to distribute the profit to repay the loan

Now there is a point of view that the profit can be distributed to repay the loan. This reasoning is also based on the substitution of the concept of a source of funding and cash flow. The payment for the use of credit resources is interest rate for the period of the contract; for the use of profit as a source of development of the enterprise, dividends are paid to the founders, but the mechanism of their formation is different. In my opinion, there is no economic sense to replace the nature of the source of funding, and for a guaranteed release of the cash flow, you can temporarily not distribute the profit for other purposes, i.e. leave on the same as in the example with an increase current assets on subaccount 84.3 - retained earnings in circulation. In fact, for the financier, it is the sum of the solvency maintenance benchmark. If a decision is made to direct this profit to dividends, to long-term investments, he must be ready to withdraw this amount from circulation or redistribute without threatening the company's solvency and liquidity.

Retained earnings audit

In order to avoid the distribution of already distributed profits and in the future not to face a sudden loss of solvency, it is very important to carry out a high-quality audit when inventorying retained earnings in the balance sheet.

As follows from the very definition of retained earnings, the audit should be carried out in two directions. First, check the formation of retained earnings itself, which corresponds to the audit of net profit for each year. Then comes the verification of the correctness of the decision of the founders in terms of fulfilling the legislative restrictions on dividends for LLCs and JSCs and the formation of reserve capital for JSCs. And after confirming this, the compliance of the amounts of distributed profit and intended use with the decisions made, as well as the timing of their execution, is inspected. The latter applies not only to dividends, but also to the formation of the authorized capital of the subsidiary. The roles of accounting, corporate and finance are different, but the goal is the same - the correct allocation and disposal of such a source of funding as profit.

For an accountant, the decision of the founders is the primary document on which he conducts business transactions on the distribution of profits in the accounting. It is important for the financial manager to confirm the economic feasibility of the source and the security of its cash flow. The corporate department confirms that there are no existing legal restrictions for such allocation and that the decisions are documented.

Separately, I would like to cancel the importance of restoring the distribution of profits, which may be required based on the results of the audit. If corporate documents on the distribution of profits were not drawn up, and the economic meaning of distribution is confirmed when analyzing the activities of the enterprise, then it is necessary to draw up all decisions, and bring the analyst 84 accounts in line in order to make the correct decisions on the sources of financing in the future.

Joint-stock, other companies and other organizations the amount not covered in the manner prescribed by law at the expense of their own sources.

Uncovered loss is determined taking into account payments to the budget and other expenses paid out of the account, and shows the amount of uncovered loss at the reporting date, regardless of the time of its formation.

A loss may result from:

excess of expenses over income from financial and economic activities and non-operating transactions;
revealing significant mistakes of previous years in the reporting year;
changes.

Reasons for receiving uncovered loss:

obtaining an actual negative from the company's activities due to the excess of costs over revenues;
influenced financial condition company changes in accounting policies;
errors found in the current year, made in previous years, which affected the financial result.

In accounting, the uncovered loss is reflected in a separate account "Retained earnings (uncovered loss)" (see), is recorded on its debit, and the amounts directed to cover the loss are credited. The debit balance of the account can be shown either in the asset of the balance sheet (its currency increases by this amount), or in the liabilities of the balance sheet with a decrease by the amount of the uncovered loss of the balance sheet currency.

The loss (both of past years and of the current year) can be covered by the (fund) and earmarked contributions from the owners of the company. If the available sources to pay off the uncovered loss of the reporting year are not enough, the uncovered loss is left in the balance sheet. If the organization does not have sources to cover losses, then the founders of the company may decide to cover them through additional contributions.

Writing off the balance sheet loss of the reporting year is reflected in the credit of the account "Retained earnings (uncovered loss)" in correspondence with accounts: "Authorized capital" - when bringing the amount of the authorized capital to the value net assets organizations; "Reserve capital" - when using reserve capital funds to repay the loss; "Settlements with founders" - when the loss of a simple partnership is repaid at the expense of targeted contributions of its participants, etc.

On the account "Retained earnings (uncovered loss)" is organized in such a way as to ensure the formation of information on the directions of use of funds.

Uncovered loss - the final financial result obtained based on the results of the organization's activities for the reporting year; characterizes the decrease in its capital. Distinguish uncovered loss, excluding the decision to cover the loss in whole or in part due to the relevant sources (distribution of the loss between the participants) and uncovered loss subject to the decision to cover the loss(distribution of loss between participants) - the first is shown in as a net loss, the second - in (section "Capital and reserves").

The indicator refers to the section of capital and reserves, calculated as the difference between gross profit and payments to shareholders (dividends on ordinary and preferred shares), tax levies, penalties.

The volume of retained earnings covers the development costs of the company (for example, the purchase of new production facilities), is stored in the form of cash (for example, cash balances) or valuable papers... A leveraged business uses this financial flow to pay off loans and borrowings; stable companies form from retained earnings reserve fund to cover unforeseen expenses.

Factors

The volume of retained earnings is affected by:

Net profit volume. If the company has not paid dividends in the current year and it has no deferred tax liabilities, the standards accounting(RAS and IFRS) do not differentiate between retained and net profit.
The amount of dividend payments. Organizations that increase reserve funds or face urgent expenses are forced to reduce the amount of dividend payments, which increases the amount of retained earnings.
Taxation standards. The increase in the tax burden on business and the receipt of benefits from regulatory authorities affects the amount of tax collections. For example, the Federal Tax Service of Russia canceled benefits for the payment of property tax - the company's expenses are growing, retained earnings are decreasing.
Business strategy. Acquisition of new land plots, production facilities, Vehicle, change of organizational and legal form increases tax burden, change work efficiency.

Formation methods

RAS provisions prescribe the amount of retained earnings to be reflected as part of the company's capital and reserves in the balance sheet liability. The strategy for using these funds is chosen by the owners of the company. For example, 70% goes to the reserve fund, the rest is paid in the form of dividends.

Accumulated profit is accounted for by two methods:

Cumulative - the amount of retained earnings at the end of the reporting year is formed on an accrual basis. The accountant of the company keeps records from the moment of opening the enterprise, losses are covered by the income of previous periods. This method is used by small businesses.
Method of calculation by years - the volume is divided into several sub-accounts to display a detailed picture of the distribution of finance. For example, account 84.03 reflects retained earnings in circulation (amounts issued to personnel for a report or stored in the cash register).

The dynamics of receipt and expenditure of retained earnings is reflected in the reporting form No. 3 on changes in capital. Small businesses may not include the document in the general report, large companies add explanatory note.

The results of the year are of interest primarily to the owners of the company, who expect either to receive dividends or otherwise dispose of the net profit. But this profit is determined by accounting data. And who other than an accountant has the best idea of the organization's plight? We will look at how to correctly calculate the amount that owners can distribute for dividends.

We close the year - we reveal the current profit

The balance sheet reform should be carried out as of December 31st. It represents the closing of financial performance accounts.

But before talking about this, remember that at the end of each month, accounts 90 and 91 have zero balance. The financial result for the month on these accounts is transferred from subaccount 90-9 “Profit / loss from sales” (91-9 “Balance of other income and expenses”) to account 99 “Profit and loss”. To account 99, some organizations open sub-accounts 99-1-1 "Profit / loss from ordinary activities" and 99-1-2 "Balance of other income and expenses".

However, during the year, sub-accounts to accounts 90 and 91 have balances. And only with the reformation of the balance, they are reset to zero. So, the debit of subaccount 90-1 "Revenue" is closed on the credit of subaccount 90-9 "Profit (loss) from sales", and from the credit of subaccount 90-2 "Cost of sales" (90-3, 90-4 ...) amounts are written off to the debit of subaccount 90-9. Subaccounts to account 91 "Other income and expenses" are closed in the same way.

Often, subaccount 99-9 “Profit and Loss Balance” is opened to account 99 “Profit and Loss”, on which the amount of net profit / loss for the year will be formed. At the end of the year, all other sub-accounts opened to account 99 are closed to it. In this case, at the end of the year, the balance of other sub-accounts opened to account 99 is transferred:

<если>at the end of the year, these sub-accounts have a credit balance, then it is written off to the credit of sub-account 99-9;
<если>at the end of the year, these sub-accounts have a debit balance, then it is written off to the debit of sub-account 99-9.

After that, the balance of subaccount 99-9 is transferred to account 84.

Attention

Profit distributions for dividends are recognized at the date of the decision by the participants.

It may turn out that when you prepare annual accounting reports, the approximate amount of dividends will already be known - for example, it is recommended by the board of directors based on preliminary data on financial results... Please note that you do not need to make 2012 entries based on this account 84. The transactions for the distribution of real dividend amounts must be reflected in 2013. However, the announcement of their recommended amount can be viewed as an event after the reporting date. nn. 3, 5, 10 PBU 7/98... And the Ministry of Finance advises in the explanations to the reporting to report on how the profit will be distributed in the future. Recommendations approved By letter of the Ministry of Finance dated 19.12.2006 No. 07-05-06 / 302.

We study the indicators of net profit in the reporting

In accounting, data on the amount of total profit are found in two forms:

For information on situations in which you can reflect transactions on account 84 during the year, read:

in the balance sheet- line 1370 "Retained earnings (uncovered loss)", it reflects the total balance of account 84 in terms of retained earnings (uncovered loss). The formation of this indicator, as a rule, is influenced by all changes in account 84 that occurred during the reporting year. Moreover, they can affect both the retained earnings of the current year and the profit of previous years.

When forming the indicator of line 1370, of all the transactions reflected in account 84, only transactions on the expenditure of special funds are not taken into account, the accounting of which is kept by some organizations on separate sub-accounts to account 84;

in the income statement(in the statement of financial results) - line 2400 "Net profit (loss)", the amount of net profit (loss), which was received in 2012, is shown here. p. 23 PBU 4/99 It is defined as the amount that was debited from account 99 to account 84 during the reformation of the balance sheet. Thus, in the income statement we see profit / loss that is not calculated on an accrual basis for all previous years, but only identified for the reporting year.

If in the annual reporting the value of line 1370 of the balance sheet is equal to the value of line 2400 of the statement of financial results, there are no special difficulties: most likely, this is the amount of net profit that the owners can claim to distribute.

But that rarely happens. Moreover, often neither one nor the other line accounting statements does not give an idea of how much profit the owners can distribute among themselves.

How much can the owners share among themselves?

Let's see what are the most common options for accounting for profit accountants use in practice. It often depends on how they themselves or the owners of the company go to the amount of profit that can be distributed to dividends.

"Cumulative" option for accounting for profit

With this accounting option, no sub-accounts are created on account 84 to separate the financial result of the current year and previous years (we will not consider the situation when special funds are taken into account on account 84).

On the complexities of taxation of dividends paid based on the results of distribution of profits of previous years, read: 2011, no. 24, p. 4

In such a situation, it is quite easy for an accountant to determine the amount that owners can distribute for dividends. This, as a rule, will be the amount of profit accumulated on account 84. By the way, just such a variant of accounting for profit - on an accrual basis from the beginning of the company's "life" - was recently supported by the Supreme Arbitration Court The decision of the Supreme Arbitration Court of November 29, 2012 No. VAS-13840/12.

In this case, the profit received in the current year is automatically used to cover the losses of previous years. Thus, the account balance will already be after deducting the loss.

EXPERIENCE EXCHANGE

General Director of the auditing firm Vector Development LLC

“In practice, it is often assumed that all the net profit reflected in account 84 and, accordingly, in the balance sheet of the organization, is available for distribution. This procedure is not prohibited by law, therefore, the owner can dispose of all the accumulated profit, and not just the profit of the current year.

Another position is based on textbooks on IFRS and other similar sources, which, in turn, are focused on countries where shareholders regularly take dividends and profits of previous years simply do not remain in companies.

We traditionally have a different attitude to profit - do not take it right away, leave it for the development of the organization. But this does not mean that later this profit is no longer available for the property owner ”.

"Weather" option for accounting for profit

This option occurs quite often, as evidenced by questions from readers coming to our editorial office. With it, the profit / loss of each year is reflected in the accounting on account 84 separately. Some accountants take into account all the profits / losses of previous years in bulk and open such sub-accounts to account 84:

84-1 "Retained earnings of the reporting year";
84-2 "Uncovered loss of the reporting year";
84-3 "Retained earnings of previous years";
84-4 "Uncovered loss of previous years".

With such an organization of accounting, profit the reporting year will represent the credit balance of subaccount 84-1 "Retained earnings of the reporting year".

Sometimes such subaccounts are not opened, but the owners want to receive data on the profit of the last year. It can be calculated like this:

In the balance sheet, some accountants for these purposes reflect separately the profit / loss of the reporting year and the profit / loss of previous years. For this, decoding lines can be provided to line 1370 "Retained earnings (uncovered loss)". For example:

line 1372 "Retained earnings (uncovered loss) of the reporting year";
line 1373 "Retained earnings (uncovered loss) of previous years".

With such a reflection, the reporting becomes more understandable to the owners. However, even with this option for accounting and reporting, the accountant must warn the owners that it is impossible to focus on the profit of the reporting year without looking back at the previous results of the company's activities.

Making a profit is the goal of creating any Russian commercial company. After taxation, retained earnings (hereinafter also referred to as NP) remain, which can be distributed by the owners of the company for certain needs at their discretion (for example, for dividends in proportion to the shares in the authorized capital), as well as accumulated on its accounts. Since the beginning of the company's activity, NP has been accumulated on an accrual basis. This profit is the company's net profit. Retained earnings of previous years are recorded in the company's balance sheet according to the accounting data.

Undestributed profits

There are several options for distributing such profit. They are governed by the provisions of the relevant legislation. Russian Federation.

For example, the distribution of profits to members or shareholders or an investment in the authorized capital of the respective company is regulated by:

for LLC - pp. 7 p. 2 of Art. 33, paragraph 1 of Art. 18 of the Law of 08.02.1998 N 14-ФЗ "On LLC";
for JSC - pp. 11.1 clause 1 of Art. 48, paragraph 5 of Art. 28 of the Law of 26.12.1995 N 208-FZ "On JSC".

There are other options for using NP.

In accounting, NP is accumulated on Account 84.

Analytical accounting of NP must be kept in such a way that the relevant information is formed depending on the chosen option for using the funds.

Retained earnings of previous years in the balance sheet

The corresponding sum indicator is reflected in the balance sheet.

Drawing up the same reporting ends the summing up of the company for the reporting period.

The need to pass the balance sheet and its form are established by clause 1 of Art. 14 of the Law on Accounting dated 06.12.2011 N 402-FZ and Appendix 1 to the Order of the Ministry of Finance dated 02.07.2010 No. 66n, respectively.

For small businesses (with some exceptions), the balance sheet and report form is contained in Appendix 5 to the above Order of the Ministry of Finance of the Russian Federation.

An example of reflection in the balance sheet:

According to account 84 in OOO NP (including previous years), it amounted to one hundred thousand rubles.

In 2016, at the general meeting, it was decided to use fifty percent of the net profit for dividends.

The operation is executed by posting: Debit 84 Credit 75 - 50,000 rubles.

In the balance sheet for 2016, the corresponding line reflects the amount of 50,000 rubles.

It is important to take into account that in the Russian Federation there are no restrictions on the allocation of dividends to non-profit companies of previous years, because in practice there may be no net profit for the reporting year. If, at the same time, according to the balance sheet, there is such a profit of previous years and the company decides to distribute it to dividends without creating special funds for this, then such payments are subject to income tax (Letter of the Ministry of Finance of the Russian Federation dated 05.10.2011 N ED-4-3 / [email protected] ).

It is also important to understand that NP is transferred to the balance sheet according to account 84, namely, the balance on credit 84 of account is transferred to the corresponding balance sheet line.

If the company incurs a loss in the reporting period, it is automatically compensated for by the positive indicator of such NP of previous years.

Annual reports, including a balance sheet, a statement of financial results and an explanatory note, must be submitted before the expiration of three months after the end of the reporting year (subparagraph 5 of paragraph 1 of article 23 of the Tax Code of the Russian Federation).

Failure to submit on time will result in punishment:

for an organization - a fine of 200 rubles (tax sanction);
for an official of an enterprise - a fine in the range of three hundred to five hundred rubles (administrative sanction).