Comparative analysis of expenses in accounting and tax accounting

Classification of expenses

A complete list of all expenses that are included in non-operating expenses can be found in Art. 256 of the Tax Code of the Russian Federation. We will look at the main ones.

Incidental costs directly related to production

Among others, there are such expense items as:

1. Costs of maintaining company property in acceptable condition.
2. Payment of interest to shareholders or creditors.
3. The difference appeared due to currency fluctuations. Such costs will be attributed to non-operating expenses only if you exchanged money at a rate that differs from the official one.
4. Various legal expenses. They include not only attorney fees, but also state fees.
5. Various fines and penalties levied by counterparties. They must be recorded in the financial statements. Almost any enterprise that produces any material product has canceled orders or outright unsuccessful industries that are not profitable. All this requires non-operating expenses.
6. Provision for doubtful debts. It will help minimize losses if a company that has borrowed a significant amount cannot pay it back.
7. Discounts, bonuses and other goodwill gestures provided to customers or employees.
8. Conservation of funds. This will help save money if the company does not plan to invest it anywhere in the near future.

This is where the costs that have a direct impact on your production end. But there are also losses, which are also equivalent to non-operating expenses.

Losses

This category of spending is much clearer and easier to understand. It includes the following types of expenses:

1. Losses that occurred last year, but were identified only in current reporting. A little advice to all novice businessmen that will help reduce losses: do not delay in paying your debts, pay them off at the first convenient opportunity.
2. Losses that a company suffers due to production downtime. The latter may be caused by internal reasons or be seasonal - the reason is not important, you will still have to pay.
3. Bad debts written off. You will only encounter them if your debt fund is not large enough.
4. Losses from natural disasters. For example, the costs of restoring production after a flood.

You can get acquainted with the full list of non-operating expenses by opening paragraph 2 of article 256 of the Tax Code of the Russian Federation.

Comparative analysis of expenses in accounting and tax accounting

The concept of expenses and the procedure for their recognition
.
In accounting, the definition of an organization's expenses is contained in paragraph 2 of PBU 10/99. In accordance with this definition, expenses of an organization
are recognized as
a decrease in economic benefits as a result of the disposal of assets (cash, other property) and (or) the occurrence of liabilities, leading to a decrease in the capital of this organization, with the exception of a decrease in contributions by decision of participants (owners of property).

To recognize expenses for both accounting and tax purposes, certain conditions must be met.

To recognize expenses in accounting, the conditions established by paragraph 16 of PBU 10/99 must be met:

• the expense must be made in accordance with a specific contract, the requirements of legislative and regulatory acts, and business customs;
• the amount of expenditure can be determined;
• there is certainty that a particular transaction will result in a reduction in the economic benefits of the entity.

Please note that in order to recognize an expense, all the above conditions must be met. If at least one of the conditions is not met, then the organization’s accounting records recognize not an expense, but a receivable.

Paragraph 17 of PBU 10/99 establishes that expenses are subject to recognition in accounting, regardless of the intention to receive revenue, operating or other income and the form of the expense (cash, in kind and other).

Expenses are recognized in the reporting period in which they occurred, regardless of the time of actual payment of funds and other form of implementation (assuming the temporary certainty of the facts of economic activity).

In order to determine what is an expense for tax purposes, you should refer to Article 252 of Chapter 25 “Organizational Income Tax”, Part Two of the Tax Code of the Russian Federation. Paragraph 2 of this article states that expenses are recognized

justified and documented expenses (and in cases provided for in Article 265 of the Tax Code of the Russian Federation, losses) incurred (incurred) by the taxpayer.

Justified expenses mean economically justified expenses, the assessment of which is expressed in monetary form.

Documented expenses mean expenses supported by documents drawn up in accordance with the legislation of the Russian Federation. Any expenses are recognized as expenses, provided that they are incurred to carry out activities aimed at generating income.

Thus, to recognize expenses for tax purposes, they must meet the following conditions:

• expenses must be justified;
• documented;
• produced to carry out activities aimed at generating income.

The procedure for recognizing expenses for profit tax purposes is determined depending on the method of expense recognition chosen by the taxpayer - the cash method (Article 273 of the Tax Code of the Russian Federation) or the accrual method (Article 272 of the Tax Code of the Russian Federation). When using the accrual method, expenses are recognized as follows:

For transactions with specific deadlines, expenses are recognized in the reporting (tax) period in which these expenses arise based on the terms of the transactions.

If the transaction does not contain such conditions and the connection between income and expenses cannot be clearly defined or is determined indirectly, the expenses are distributed by the taxpayer independently.

For transactions lasting more than one reporting (tax) period, expenses are recognized evenly and in proportion to income.

The taxpayer's expenses, which cannot be directly attributed to the costs of a specific type of activity, are distributed in proportion to the share of the corresponding income in the total volume of all income of the taxpayer.

Having analyzed the above, you can notice the main difference in the recognition of expenses for accounting and tax purposes. If in accounting expenses are recognized regardless of the intention to receive revenue, operating or other income, then for profit tax purposes any expenses are recognized as expenses, but provided that they are incurred to carry out activities aimed at generating income.

Classification of expenses.

In accounting, all expenses of an organization, depending on the nature, conditions of implementation and directions of its activities in accordance with paragraph 4 of PBU 10/99, are divided into expenses from ordinary activities and other expenses

. Other expenses, in turn, are divided into expenses:

• operating rooms;
• non-operating;
• emergency.

For profit tax purposes, expenses, depending on their nature, as well as the conditions for implementation and areas of activity of the taxpayer, are divided into expenses associated with production and sales, and non-operating expenses

.

Some expenses with equal grounds can be attributed simultaneously to several groups of expenses, therefore, in such a situation, the taxpayer is given the right to independently determine which group he will assign such expenses to.

Grouping expenses.

When generating expenses for ordinary activities in accounting in accordance with paragraph 8 of PBU 10/99, their grouping must be ensured by the following elements:

• material costs;
• labor costs;
• contributions for social needs;
• depreciation;
• other costs.

For management purposes, accounting organizes the accounting of expenses by cost items, while the list of cost items is established by the organization independently.

For tax accounting purposes, expenses associated with production and (or) sales are divided into:

• for material expenses;
• labor costs;
• the amount of accrued depreciation;
• other expenses.

In addition, production and sales costs incurred in the reporting period are divided into direct costs and indirect costs. The procedure for determining direct and indirect costs is given in Article 318 of the Tax Code of the Russian Federation.

Having examined the classification of expenses for accounting purposes and for profit tax purposes, we will note that in accounting, contributions for social needs as part of expenses for ordinary activities are allocated to a separate group. In tax accounting, contributions for social needs are not allocated to a separate group and, since they are not included in labor costs, they are included in other expenses associated with production and sales.

Types of expenses.

The accounting concept of “expenses for ordinary activities” in tax accounting corresponds to the concept of “expenses associated with production and sales.”

Expenses for ordinary activities according to paragraph 5 of PBU 10/99 are:

• expenses associated with the manufacture and sale of products, the acquisition and sale of goods, the performance of work and the provision of services (in tax accounting they are included in expenses associated with production and sales);
• expenses the implementation of which is associated with the provision for a fee for temporary use (possession and use) of its assets under a lease agreement, if this type of activity is the subject of the organization’s activities. In tax accounting, in accordance with subparagraph 1 of paragraph 1 of Article 265 of the Tax Code of the Russian Federation, organizations that present their property on a systematic basis for a fee for temporary use and (or) temporary possession and use of their property, expenses associated with production and sales, are considered expenses associated with this activity.
• expenses, the implementation of which is associated with the provision for a fee of rights arising from patents for inventions, industrial designs and other types of intellectual property, if this type of activity is the subject of the organization’s activities. For profit tax purposes, organizations that systematically represent, for a fee for temporary use and (or) temporary possession and use, exclusive rights arising from patents for inventions, industrial designs and other types of intellectual property, expenses associated with such activities are included in costs associated with production and sales.
• expenses associated with participation in the authorized capitals of other organizations, if the subject of the organization’s activities is participation in the authorized capitals of other organizations. For the purpose of calculating income tax, income from equity participation in other organizations, in accordance with paragraph 1 of Article 250 of the Tax Code of the Russian Federation, is included in non-operating income, therefore we can say that expenses associated with participation in other organizations should be included, accordingly, in non-operating expenses of the organization .
• expenses in the form of depreciation, that is, expenses to reimburse the cost of fixed assets, intangible assets and other assets that are depreciable.

For profit tax purposes, expenses associated with production and sales in accordance with Article 253 of the Tax Code of the Russian Federation include:

• expenses associated with the manufacture (production), storage and delivery of goods, performance of work, provision of services, acquisition and (or) sale of goods (work, services, property rights);
• expenses for maintenance and operation, repair and maintenance of fixed assets and other property, as well as for maintaining them in good (up-to-date) condition;
• expenses for the development of natural resources;
• research and development expenses;
• expenses for compulsory and voluntary insurance;
• other costs associated with production and (or) sales.

Other and non-operating expenses
.
Both accounting and tax accounting contain the concept of “non-operating expenses”. But in accounting, non-operating expenses, along with operating and emergency expenses, are classified as other expenses.

The list of operating expenses is given in paragraph 11 of PBU 10/99. In accordance with it, the operating expenses of an organization include expenses associated with the following types of activities of the organization that are not core for this organization:

• expenses associated with the provision for a fee for temporary use (temporary possession and use) of the organization’s assets:
• costs associated with the provision for a fee of rights arising from patents for inventions, industrial designs and other types of intellectual property;
• expenses associated with participation in the authorized capitals of other organizations;
• expenses associated with the sale, disposal and other write-off of fixed assets and other assets other than cash (except foreign currency), goods, products;
• interest paid by an organization for providing it with funds (credits, borrowings) for use;
• expenses related to payment for services provided by credit institutions;
• contributions to valuation reserves created in accordance with accounting rules (reserves for doubtful debts, for depreciation of investments in securities, etc.), as well as reserves created in connection with the recognition of contingent facts of economic activity;
• other operating expenses.

According to paragraph 12 of PBU 10/99, non-operating expenses of the organization include the following expenses of the organization:

• fines, penalties, penalties for violation of contract terms;
• compensation for losses caused by the organization;
• losses of previous years recognized in the reporting year;
• amounts of receivables for which the statute of limitations has expired, and other debts that are unrealistic for collection;
• exchange differences;
• the amount of asset depreciation;
• transfer of funds (contributions, payments, etc.) related to charitable activities, expenses for sporting events, recreation, entertainment, cultural and educational events and other similar events;
• other non-operating expenses.

Having analyzed the above lists of operating and non-operating expenses, we will see that they are open, therefore, other similar expenses of the organization may be included in the above-mentioned expenses.

The extraordinary expenses of an organization, based on clause 13 of PBU 10/99, reflect expenses that arise as a consequence of emergency economic circumstances (natural disasters, fires, accidents, nationalizations and other circumstances).

The list of non-operating expenses is given in Article 265 of the Tax Code of the Russian Federation. According to paragraph 1 of Article 265 of the Tax Code of the Russian Federation, non-operating expenses for profit tax purposes include reasonable costs for carrying out activities not directly related to production and (or) sales. Despite the fact that this list is quite extensive, it remains open, which means that any reasonable expenses of the organization that are not directly related to production and (or) sales will be included in non-operating expenses for profit tax purposes. At the same time, organizations should remember that any expenses are recognized as expenses, provided that they are incurred to carry out activities aimed at generating income.

Types of expenses.

In accounting, in accordance with paragraph 3 of PBU 10/99, the following disposal of assets is not recognized as expenses of the organization:

• in connection with the acquisition (creation) of non-current assets (fixed assets, construction in progress, intangible assets, etc.). Expenses for the acquisition (creation) of non-current assets form the initial cost of such objects.
• contributions to the authorized (share) capitals of other organizations, acquisition of shares of joint-stock companies and other securities not for the purpose of resale (sale). These expenses relate to the financial investments of the organization.
• under commission agreements, agency and other similar agreements in favor of the principal, principal and the like.
• in advance payment for inventories and other valuables, works, services. Prepayment amounts represent the organization's receivables and are reflected in the accounts of settlements with suppliers and contractors.
• in the form of advances, deposits to pay for inventories and other valuables, works, services.
• to repay loans received by the organization.

As we can see, the above list is closed.

The list of expenses not taken into account for profit tax purposes is contained in Article 270 of the Tax Code of the Russian Federation. This list consists of 49 items, but remains open, that is, other expenses not included in the list, incurred by the organization and not meeting the criteria specified in paragraph 1 of Article 252 of the Tax Code of the Russian Federation, must be included in expenses not taken into account for tax purposes .

Having analyzed Article 270 of the Tax Code of the Russian Federation, we will see that for the purpose of calculating income tax, the following expenses are not taken into account, corresponding to expenses that are not recognized as such in accounting:

• in the form of expenses for the acquisition and (or) creation of depreciable property, as well as expenses incurred in cases of completion, additional equipment, reconstruction, modernization, technical re-equipment of fixed assets, with the exception of expenses specified in paragraph 1.1 of Article 259 of the Tax Code of the Russian Federation (paragraph 5 of Article 270 Tax Code of the Russian Federation);
• in the form of a contribution to the authorized (share) capital, a contribution to a simple partnership (clause 3 of Article 270 of the Tax Code of the Russian Federation);
• in the form of property (including money) transferred by a commission agent, agent and (or) other attorney in connection with the fulfillment of obligations under a commission agreement, agency agreement or other similar agreement, as well as in payment of expenses made by the commission agent, agent and (or) by another attorney for the principal, principal and (or) other principal, if such costs are not subject to inclusion in the expenses of the commission agent, agent and (or) other attorney in accordance with the terms of the concluded agreements (clause 9 of Article 270 of the Tax Code of the Russian Federation);
• in the form of property, work, services, property rights transferred in advance payment by taxpayers who determine income and expenses on an accrual basis (clause 14 of Article 270 of the Tax Code of the Russian Federation);
• in the form of property or property rights transferred as a deposit or pledge (clause 32 of Article 270 of the Tax Code of the Russian Federation);
• in the form of funds or other property that are transferred under credit or loan agreements (other similar funds or other property, regardless of the form of registration of borrowings, including debt securities), as well as in the form of funds or other property that are used to repay such borrowings (clause 12 Article 270 of the Tax Code of the Russian Federation).

Thus, all other expenses not taken into account for profit tax purposes will be recognized as expenses in accounting. This leads to the following situation: the profit generated in accounting will be less than taxable profit, that is, a constant difference arises between accounting and taxable profit.

The emergence of a permanent difference and a permanent tax liability
.
If a difference arises between accounting and tax accounting data, organizations should be guided by PBU 18/02.

Income and expenses that form accounting profit (loss), that is, are taken into account for accounting purposes, but are excluded from the tax base for income tax, both in the current reporting period and in all subsequent reporting periods, in accordance with paragraph 4 of PBU 18/ 02 and are constant differences. That is, permanent differences are differences between accounting and tax accounting that will never be eliminated.

Organizations must organize analytical accounting of permanent differences. According to PBU 18/02, organizations have the right to determine for themselves the procedure for generating information about permanent differences (in accounting statements, spreadsheets, and other registers). Analytical accounting implies not only the allocation of individual subaccounts, but the isolation of individual amounts and data. Permanent differences can be reflected in accounting in special sub-accounts to those accounting accounts in which assets and liabilities that form permanent differences are recorded.

In accordance with paragraph 7 of PBU 18/02, a permanent tax liability is understood as the amount of tax that leads to an increase

tax payments. The permanent tax liability represents the amount of income tax, determined as the product of the permanent difference that arose in the reporting period and the income tax rate established by the legislation of the Russian Federation.

A permanent tax liability is recognized in the reporting period in which the permanent difference arose and leads to an increase in tax payments for income tax in the reporting period. The amount of permanent tax liability can be calculated based on the amount of all permanent differences (for all income and all expenses) that arose in a given reporting (and not tax, but accounting) period, determined by the analytical accounting method.

The reporting periods for income tax are the first quarter, half a year and nine months of the calendar year, and for taxpayers who calculate monthly advance payments based on the actual profit received - a month, two months, three months and so on until the end of the calendar year. This allows, basically, to combine the periods of tax and interim accounting reporting. The tax period for income tax is a calendar year, which coincides with the reporting period for accounting purposes.

In accounting, a permanent tax liability is reflected in a separate subaccount, for example, as follows:

Example 1.

In January, Kontakt LLC carried out a gratuitous transfer of fixed assets to a non-profit organization. The initial cost of the object (excluding VAT) is 150,000 rubles, depreciation accrued at the time of transfer is 90,000 rubles. The organization determines income and expenses using the accrual method; advance payments for income tax are paid monthly based on the actual profit received.

In accordance with paragraph 29 of PBU 6/01, the cost of fixed assets that are disposed of or are not constantly used for the production of products, performance of work and provision of services, or for the management needs of the organization is subject to write-off from accounting. Disposal of an asset also occurs in the case of its gratuitous transfer.

A decrease in the economic benefits of an organization as a result of the disposal of assets, in this case the disposal of fixed assets, in accordance with paragraph 2 of PBU 10/99 is recognized as an expense of the organization. At the same time, according to paragraph 11 of PBU 10/99, expenses associated with the sale, disposal and other write-off of fixed assets are recognized as operating expenses of the organization.

For profit tax purposes, in accordance with paragraph 16 of Article 270 of the Tax Code of the Russian Federation, the organization’s expenses in the form of the value of gratuitously transferred property are not taken into account.

In this case, the amount of expenses that are taken into account when forming accounting profit exceeds the amount of expenses accepted for profit tax purposes. This excess is a permanent difference.

It is necessary to make entries in accounting using the following names of subaccounts:

01-1 “Fixed assets in operation”;

01-2 “Disposal of fixed assets”;

91-2-2 “Permanent differences.”

In accordance with PBU 18/02, the cost of gratuitously transferred fixed assets and expenses associated with such transfer are classified as permanent differences. In this case, the permanent difference will be 60,000 rubles, that is, the residual value of the object.

A permanent tax liability that arose in an organization in January and amounted to 14,400 rubles (60,000 x 24%) will increase the organization’s income tax and will be reflected in the accounting records with the following entry:

End of the example.

You can find out more about issues related to expenses in accounting and tax accounting in the book of JSC “BKR-Intercom-Audit” “Expenses of the organization”.

This material was prepared by a group of consultants and methodologists of JSC "BKR-Intercom-Audit"

Source: ROSEK

How to record non-operating expenses?

Now let’s figure out how to properly draw up such documents. When preparing an accounting report and thinking about recording costs that are not directly related to production, you need to fill out 91 accounts called “Other expenses and income.” The specific subaccount is 91-2, called “Other expenses”.

If you are faced with the task of filling out a tax return and you have already reached losses, pay attention to line No. 200. This is where information of this type is recorded. Do not forget to enter the amount of all expenses for a specific period.

Since we started discussing preparing a tax return, we should mention filling out Schedules and other non-obvious lines. For example, in line 201 of the second Appendix to the second sheet of the declaration, interest paid on loans and securities issued by the company is always written.

In line 202, you must indicate the amount of contributions to the social reserve that protects people with disabilities. One line later, in field 204, you should reflect all costs aimed at eliminating fixed assets (fixed assets) and intangible assets (intangible assets). Field 203 must be left blank.

Please also note that for line 205 you will have to calculate the amount that is paid as contractual sanctions, if any were awarded to your organization. As a result, the sum of indicators in lines 201–205 should not be greater than the figure indicated in line 200 (the total number of costs appears there).

Regarding non-operating expenses, a simple rule applies, which indicates the need to fill out fields No. 300, 301 and 302. We indicate the total number, past unpaid debts and written off loans, respectively. Make sure that the sum of fields 301 and 302 does not exceed the figure indicated in line No. 300.

ACCOUNTING

Non-operating income is accounted for in various accounting accounts, including those related to subsection 6200 “Other income”.

This subsection includes the following groups of accounts:

– 6210 “Proceeds from the disposal of assets”, which reflects transactions related to the receipt of income from the sale of assets, for example: fixed assets, intangible assets, financial assets;

– 6220 “Income from gratuitously received assets,” which reflects transactions related to the gratuitous receipt of assets;

– 6230 “Income from government subsidies”, which reflects transactions related to the receipt of government subsidies;

– 6240 “Income from the recovery of impairment losses on non-financial assets”, which reflects income from the recovery of impairment losses on a non-financial asset;

– 6250 “Income from exchange rate differences”, which reflects transactions related to the receipt of income from exchange rate differences arising as a result of reporting in the reports the same number of units of foreign currency, expressed in the reporting currency using different exchange rates;

– 6260 “Income from operating leases”, which reflects transactions related to the receipt of income from assets transferred under operating lease;

– 6270 “Income from changes in the fair value of biological assets”, which reflects transactions related to the receipt of income from changes in the fair value of biological assets;

– 6280 “Income from reversing an impairment loss on financial assets,” which takes into account income from reversing an impairment loss on a financial asset;

– 6290 “Other income”, which reflects transactions related to the receipt of other income not specified in the previous groups.

The table shows IFRS that must be used to account for certain types of non-operating income:

The table shows the correspondence of accounts for accounting for non-operating income:

What to do to reduce non-operating costs?

All of the above is useless without understanding how to reduce the costs faced by the company. Unfair handling of documentation will negatively affect your enterprise in the future; it would be much more correct to take a responsible approach to the distribution of your own funds:

• try to better analyze each enterprise which you plan to issue loans;
• work on creating a reliable fund , it will definitely help minimize financial losses;
• be restrained with discounts, consult with economists before reducing the price of a particular product.

We wish you good luck in your work. We hope that our recommendations will help you work correctly with all non-operating expenses of your company.

Sources:

Procedure for recognizing expenses using the accrual method

Expenses. Grouping expenses

Depreciable property

Letter of the Ministry of Finance dated July 10, 2015 No. 03-03-06/39817

Types of non-operating income

Non-operating income is now equated to:

1. Received through participation in the activities of another enterprise.
2. Arising when making payments in foreign currency, when the difference turns out to be positive due to the exchange rate. The same applies to situations when currency is bought or sold.
3. Proceeds from the transfer of property for rent.
4. Interest on borrowed obligations.
5. Penalties, fines, and other listed amounts to compensate for any damage.
6. Payments for the use of intellectual rights.
7. Funds received when a debt is written off due to the expiration of a creditor's statute of limitations.
8. Profit from transactions with financial instruments.
9. Profit received from adjustments.
10. Proceeds from excise operations.
11. Profit of controlled foreign economic entities.
12. Excess inventory items discovered during inventory.
13. Proceeds from charity.
14. OS objects received under international agreements.
15. Profit from transactions involving participation in a partnership.
16. Previously unaccounted revenue discovered in another reporting period. It is better to avoid such situations, otherwise you may run into fines from the Federal Tax Service.
17. Funds from the equivalent of securities or property transferred to the target capital.
18. Any rights or property received as a gift, etc.

More details about what definitely cannot be classified as indirect income are stated in Article 251 of the Tax Code of the Russian Federation.

Don't forget to include these incomes in non-operating income

Taxpayers often miss out on certain types of profit, which are also considered non-operating, thereby, wittingly or unwittingly, underestimating the tax base. However, these revenues to the organization’s budget are included in non-operating income:

• interest on issued loans, deposits, promissory notes (both in relations with counterparties and with the Central Bank);
• market value of materials obtained as a result of dismantling written-off property;
• charitable contributions received by the company and targeted donations used for the stated purpose;
• assessment of written-off and returned printed products;
• correction of calculated profit due to changes in calculation methods;
• plus the difference between deductions and excise taxes.

NOTE! Understating profits due to the omission of certain items of income, committed due to intent or lack of knowledge, is fraught with troubles on the part of the regulatory tax authorities: this may well be regarded as tax evasion.