We take inventory into account in a new way: transition to FSBU 5/2019 from PBU 5/01

For whom the new FSBU 5/2019 “Reserves” has been released?

Federal Standard 5/2019 was approved by Order of the Ministry of Finance dated November 15, 2019 No. 180n.
Accountants began working on the basis of the new provisions without fail from January 1, 2021. However, those who wished could use them back in 2021 by including a condition for this in the accounting policy. All organizations that maintain accounting records and prepare reports in accordance with domestic legislation must comply with the requirements laid down in the standard. An exception is provided only for companies operating in the public sector. Small enterprises, which were allowed by Law No. 402-FZ to keep records according to simplified rules, will be able to choose for themselves whether to apply the standards in their work or not.

Inventory accounting according to FAS 5/2019: we figure out what an accountant needs to know

In 2021, organizations must keep records of inventories in accounting registers in accordance with the requirements of the Federal Accounting Standard FSBU 5/2019 “Inventories”, approved by Order of the Ministry of Finance of the Russian Federation dated November 15, 2019 No. 108n. And quite a few publications have already appeared in which their authors share their vision of the requirements of FSBU 5/2019.

Now that the work shift for submitting VAT returns has ended, you can take a slight breath, wipe away the sweat of work and see what urgently needs to be done in 2021, so that later it will not be excruciatingly painful at the end of the first quarter.

And it will be necessary (as usual, retroactively) to make changes to the accounting policies in order to simplify (or, conversely, complicate) the accounting of inventories in the registers of this very accounting.

And once again I would like to note that the introduced FSBU, in contrast to the now invalid PBU 5/01, allows an organization to keep track of inventories in the most convenient way for itself. This convenience lies, first of all, in the fact that you can now choose the method of accounting for a particular category of inventory based on the specific operating conditions of your organization.

For example, the procedure for accounting for inventories purchased for management needs. These include not very expensive office furniture, almost all office equipment, stationery, etc., etc., etc.

Previously, everyone (with the exception of organizations that have the right to maintain accounting records and prepare financial statements in a simplified form) were required to account for the purchased stationery on balance sheet account 10 “Materials”, and only then write off as administrative expenses by posting: Debit account 10 Credit account 26 ( or 44).

And this despite the fact that the purchased two packs of printer paper, or a dozen and a half pens, were immediately distributed to employees, and were not kept for a long time by the supply manager (or, as he is sometimes called now, the office manager).

Now the organization has the right to choose the procedure for recording all this clerical detail, depending on the established procedure for its purchase, storage and distribution to employees.

Let's say a relatively small company purchases all the office supplies it needs within a two-three week, or maybe a month, requirement. The office manager (in the old way - the supply manager) does not have any nook in which reserves sufficient for the uninterrupted operation of the office for two to three years are carefully stored. Everything that is purchased is immediately distributed to departments (with appropriate documentation, of course). Well, once or twice a month, requests for needs for the next period are collected.

And the cost of purchased inventories as expenses.

So, the accounting department received documents from the supplier, which indicated the quantity and price of purchased stationery, and distribution sheets, according to which all of them were transferred to the departments. After this, the accounting department writes off everything purchased for administrative expenses with the entry:

Debit account 26 (44) Credit account 60 (71)

Please note, once again, that the cost of purchased inventory is written off, and not the inventory itself as an item.

The household equipment received by the employee remains with him for the entire established useful life.

No, of course, we do not encourage you to keep a piecemeal record of paper, pens, rulers and other small things. But furniture, calculators, laptops, air conditioners and other equipment must have a last name, first name and patronymic, that is, be registered with a specific employee who signed for their receipt at the time. He must also present them upon request, for example, when conducting an inventory. And if a laptop issued six months ago has disappeared somewhere, and the employee who used it cannot clearly explain how this happened, then the organization will have to compensate for its cost.

Upon dismissal, all previously issued equipment will also need to be returned.

There is no point, we repeat, there is no point in returning ballpoint pens received six months or a year ago (three pieces), multi-colored stickers (two packs) and a blue stationery ruler 30 cm long (one piece). But a laptop, a table lamp, as well as a table, an armchair and two chairs for visitors must be handed over to the successor (or business executives).

But there are other organizations that still operate in the old fashioned way. There, the purchase of all necessary office supplies is carried out two or three times a year (or even less often) in fairly large quantities (since wholesale purchases are much cheaper per unit of goods).

Everything purchased is not distributed to employees, but is placed in the holy of holies - a specially designated room where everything needed for the smooth operation of the office for the next year and a half or two is stored in exemplary (for an office manager) order.

And an employee who has run out of paper, or whose chair has broken, goes to a stern but fair business manager. He, for the sake of order, having reprimanded the crooked spendthrift, for whom you can’t get enough paper (the third pack in six months), or chairs (this is the second in a year), gives out everything requested. But before that, he forces you to sign three or four journals (the pages in which are numbered, stitched and sealed).

Given this procedure for supplying the organization with everything necessary, in our opinion, it is optimal to leave the old procedure for accounting for inventories purchased for management needs. That is, the acquisition of inventories for management needs based on the supplier’s settlement documents and their receipt by the corresponding financially responsible person is reflected in the entries:

Debit account 10 Credit account 60 (71)

And only after the keeper of pencils and chairs submits statements to the accounting department for issuing employees what they need, it will write off their cost from his account:

Debit account 26 (44) Credit account 10

The decision to switch to a new inventory accounting procedure for management needs, or to leave the old one, is now completely left to the organization’s management. This is directly stated in the last paragraph of paragraph 2 of FSBU 5/2019.

An organization may decide not to apply this Standard to inventories held for management purposes. In this case, costs that, in accordance with this Standard, should have been included in the cost of inventories, are recognized as expenses of the period in which they were incurred.

Please note that it can , but is not obligated . Therefore, it is also possible to leave the old order, in which all office supplies are first passed through the 10th account, and only then written off as expenses. Accounting rules are not violated. Everything now depends on the procedure established in the organization for the provision, storage and consumption of reserves intended for management needs. And this is not the responsibility of the accounting department.

The organization decides to switch from the beginning of this year to writing off purchased office supplies as soon as they are purchased. Last year, we worked according to the scheme that had been established for decades, that is, first they arrived, and then they wrote off.

Here, too, there are two options to choose from as to what to do with the balance of inventory listed with the supply manager (office manager) as of 01/01/2021.

You can still leave them in his account and write them off only after submitting the distribution sheets to the accounting department. This is if the warehouse is in order, and the cost of the inventory remaining from last year is significant for the organization.

But, let’s say, according to the papers, our office manager still has small items worth a couple of thousand rubles, distributed several months ago without filing statements, invoices, etc. Conduct an investigation with interrogation of suspects, drawing up protocols and identifying the thieves?

It is possible, of course, so that in future it will be discouraging. But the actual costs of such investigative activities can be many times more expensive than the cost of something that is unclear where it went.

This is where the management of the organization can take advantage of clause 47 of FSBU 5/2019. That is, make a retrospective recalculation of the value of inventories intended for management needs.

And to put it more simply, you can write off their cost in January ( the cost, not the inventory itself ) by posting:

Debit account 84 Credit account 10.

And once again we would like to draw your attention to the fact that FAS 5/2019 in the issue under consideration leaves the right to choose the method of accounting for management reserves to the organization. That is, whatever is more profitable for management (more convenient, simpler, etc.), so can be done.

Accounting must only show both the advantages and disadvantages of both one and the other method.

What applies to reserves according to FSBU 5/2019

The definition that the federal standard gives to the concept of “reserves” is as follows:

This concept, in comparison with what PBU 5/01 gave, has been expanded by including new elements in the list:

In general, the list includes:

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The standard also contains an indication of what does not apply to reserves. This:

• financial assets;
• valuables belonging to other persons, but located in the organization, for example, in storage, processing, maintenance;
• valuables received by a non-profit organization for subsequent free transfer to other persons.

Next, we will consider in what cases inventories are recognized and how they are valued in accounting.

How the assessment rules have changed

The main innovation of the federal standard is that now inventories will have to be assessed twice - upon receipt and after recognition. Moreover, in the first case, the rules for valuing different types of reserves will differ significantly from each other.

Valuation of inventories at recognition

All inventories must be recognized at actual cost. But what will shape it?

Inventories excluding finished goods and work in progress

For the bulk of inventories, the actual cost will be the amount of expenses aimed at acquiring assets, delivering them, and bringing them to a condition suitable for use or sale.

If inventories are received free of charge or settlements with their supplier are made in non-cash terms, then the inventories will have to be measured at fair value. In the first case - supplies received free of charge. In the second - the transferred property. This value is determined by IFRS 13 Fair Value Measurement.

Important! Costs associated with storage will no longer form the actual cost of inventories, except in cases where storage is one of the cycles of the technological process.

Work in progress and finished goods

The actual cost of these types of inventories is formed by the following costs:

• material;
• for wages;
• social security contributions;
• depreciation.

In accounting, a business entity must divide all costs into direct and indirect. The procedure for such division is best provided for in accounting policy. Direct costs will be attributed to specific products, and indirect costs will have to be distributed by type. Methods of distribution should also be reflected in accounting policies.

Nuances of recognizing inventory upon receipt

For certain categories of business entities, the FSB determines the nuances of recognizing inventories.

1. Organizations that keep records in a simplified way have the right to recognize values ​​without taking into account discounts and deferment conditions.
2. Retail companies will be able to recognize goods at sales price with separate accounting for markups.
3. For trading enterprises, funds spent on the procurement and delivery of goods to central warehouses are taken into account in sales costs.

Valuation of inventories after recognition

We have already become acquainted with the first quantity, let’s deal with the second. Net realizable value is the price less the estimated costs of producing, preparing for sale and selling inventory.

If actual cost exceeds net realizable value, inventory is impaired. This usually happens over time, due to obsolescence, etc. In this case, the organization is required to create a reserve for the amount of the specified excess. The book value will be formed from the actual cost of inventories minus the reserve.

For organizations with simplified accounting, creating a reserve is not necessary.

Main innovations

Analysis of the document shows significant changes compared to PBU 5/01. Let's look at the main points of these changes.

First of all, the FSB defines reserves as a category (clause 3). These are the assets used:

• for a period of no more than a year;
• in period 1 of the operating cycle.

In addition, the rules for their accounting have been updated:

1. “Work in progress” is now also included in the inventory category, and the organization should determine the rules for accounting for work in progress (clause 3, clause 27): in the amount of only direct costs, standard costs according to plan or actual, and not based on the cost of materials and raw materials.
2. The unit of measurement of inventories is established by the organization and after acceptance for accounting can be changed (clause 6).
3. In some cases, part of the cost of inventories can be taken into account as interest on a loan (loan): if inventories are purchased on an installment plan for more than a year or a shorter period accepted by the organization (clause 13).
4. A procedure has been established for determining the cost of materials purchased not for money: for exchange, free of charge. The legislator uses the concept of “fair value” of property, rights, works, services (clauses 14, 15).
5. The rules for determining the actual cost of “work in progress” and finished products have been clarified. It excludes expenses associated with defects, poor organization of the production process, various emergency situations, and in general any costs not intended directly for production (clause 26).
6. The provision for impairment is created using a new formula. Instead of the difference between the actual cost and the current market value, the difference between the actual cost and the net selling value is used for calculation. Net sales value, in turn, is the current market value minus production costs, costs of preparation for sale, costs of sale - estimated values ​​(clauses 29, 30). It is clear that, other things being equal, the reserve will need to be increased.
7. One of the reasons for writing off inventories may be circumstances in which no economic benefit is expected from these inventories in the future (clause 41-c).

On a note! It is proposed to determine fair value according to the principles of International Financial Reporting Standard (IFRS) 13 “Fair value measurement” (applied in the Russian Federation in accordance with the Ministry of Finance Regulation No. 217n dated 12/28/15). Fair value is the price that could be received in an orderly market transaction at the measurement date.

We write off inventories - what has been updated

The new standard requires inventory to be written off at a specific point in time. It could be:

• recognition of sales revenue;
• making other write-offs of inventories;
• lack of prospects for economic benefits from further use;
• impossibility of use in statutory activities - for non-profit organizations.

In this case, expenses should reflect the book value of inventories. For each of these cases, costs will be taken into account separately.

The methods for writing off inventories remain the same as those currently in effect and are enshrined in PBU 5:

• at the cost of each unit;
• at average cost;
• at the cost of the first inventory received by the organization - the FIFO method.

The chosen method must be fixed in the accounting policy.

How to reliably disclose information about reserves in reporting

The amount of information that must be disclosed in the financial statements regarding reserves is large. In addition to the book value at the beginning and end of the reporting period, it is necessary to reflect information regarding:

• reconciliation of inventory balances at actual cost and impairment at the beginning and end of the reporting period and inventory movements for the same period;
• the reasons that led to the restoration of the reserve;
• the book value of assets for which the organization has restrictions, for example collateral;
• methods for calculating the cost of inventories, and if they change in the new reporting period, it is necessary to disclose information about the consequences of such a change;
• advances and deposits transferred to suppliers, carriers and inventory processors.

How to apply FSB 5/2019 from January 1, 2021

There are significant differences between the provisions of the previously used PBU 5/01 and FAS 5/2019 “Inventories”, therefore it is necessary to establish the transition method in the accounting policy:

1. Prospective - the provisions begin to apply only to those facts of activity that occurred after the implementation of the standard, i.e. after January 1, 2021.
2. Retrospective - the provisions of the standard apply not only to future periods, but also to past periods. In this case, account balances are recalculated in accordance with the new requirements.

When choosing the retrospective option of switching to a new standard, it is necessary to adjust the indicators in correspondence with score 84.

Here are examples of transactions in accordance with FAS 5/2019, if the organization chooses the second method:

In the ready-made solution from K+ you will find examples of other accounting entries when transitioning to a new standard in a retrospective manner. Get free trial access to the system.

Easier or more difficult?

It is definitely not easy to answer this question. On the one hand, the document contains many innovations that bring inventory accounting closer to international standards, and on the other hand, accountants are already having to solve emerging problems associated with the application of the Federal Accounting Standards.

Here are some typical examples:

1. The current PBU 6/01 for fixed assets accounting provides for the possibility of some fixed assets of low value (clause 5) being classified as inventories to account 10. The new FAS 5/2019 limits inventories to a useful life of less than 12 months or one production cycle. Consequently, at the moment there is no possibility to apply the specified norm of PBU 6/01. Before the implementation of FSBU 6/2020, experts advise writing off such fixed assets of low value immediately as expenses, having prescribed this method in the accounting policy. The current documents do not contain an unambiguous solution to how to get out of the situation.
2. The fair value of the property will have to be determined locally. It is similar to the market one, but does not relate to the abstract market, but to the judgment of a specific person about the value of an object. In essence, this is a subject for the accountant's professional assessment, for which he is entirely responsible.
3. A comparative analysis of PBU 10/99 (clause 11) and FSBU 5/2019 (clauses 31, 43-a) shows a contradiction: contributions to reserves are attributed to other expenses, while the restoration of the corresponding reserve should be attributed to the reduction in the cost of goods sold (amount of expenses , recognized in this period). However, the current PBU 9/99 (clause 7) speaks of the need to classify such amounts as other income. One option, if the reserve is small, is to use clause 7.4 of PBU 1/2008; Based on the principle of uniformity and rationality, do not apply FSBU 5/2019 in this part. If this is not possible, additional accounting forms are used for more complete disclosure of information.

Thus, the application of FSBU 5/2019 without a thorough study of the document is impossible. It is important to exclude a superficial approach, analyze and bring the company’s LNA, primarily accounting policies, into line with it.

Results

From 01/01/2021, most organizations must introduce the norms of the new accounting standard FSBU 5/2019 into their work. Reporting for 2021 will be prepared in accordance with them. FSBU is not used in the public sector, and “kids” will be able to choose whether or not to use it in their work. In addition, the standard itself offers various concessions to organizations that keep records in a simplified way.

The replacement of the old PBU with the new FSBU led to significant changes in inventory accounting. The changes affected work in progress, which previously did not belong to the concept of “inventories,” the assessment of inventories, the procedure for their write-off, and the rules for disclosing information about inventories in reporting.

Sources:

• Order of the Ministry of Finance of Russia dated November 15, 2019 No. 180n “On approval of the Federal Accounting Standard FSBU 5/2019 “Inventories””
• Accounting Regulations “Accounting for Inventories” PBU 5/01

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What is known about the new standard

Order of the Ministry of Finance No. 180n dated 11/15/19 approves the document itself and also contains its full text. The message of the Ministry of Finance No. IS-accounting-27 dated 10/04/20 contains a number of important clarifications on its application.

You are allowed to choose how to use the document (clause 47 of the Federal Book of Accounting Standards):

• retrospectively;
• promising.

In the first case, its application begins from the moment of occurrence of the facts of economic life that it affects, as if the document was already in force when they occurred. In practice, this means the need to recalculate the indicators for the 2 previous years, since they are reflected in the reporting for the current year.

The second approach eliminates the need for any recalculation; new rules begin to be applied to indicators only from the beginning of the year. This point must be reflected in the accounting policy.

The standard does not apply unambiguously or in connection with certain conditions:

• budgetary organizations;
• micro-enterprises maintaining simplified accounting;
• organization in relation to inventories for management activities.

It definitely does not apply in the public sector.

For micro-businesses, the rule applies only in connection with the use of simplified accounting. If an organization for some reason does not have the right to apply such accounting, the standard is mandatory for it. With regard to inventories used for management needs, the decision remains with the organization. Costs included in the cost of inventories according to the standard are expensed in the period in which they were incurred.

Let us note that the use of FSBU 5/2019 was not prohibited by law until 2021, by decision of the organization.