The rules for accounting for securities are specified in the chart of accounts No. 94n. They must be accounted for in account 58. It is called “Financial Investments”. You can create subaccounts No. 1 and No. 2 for the account. Let's take a closer look at the rules for accounting for securities.
Question: How is the acquisition of shares traded on the organized securities market (OSM) reflected in accounting? The organization, under a purchase and sale agreement, acquired uncertificated shares at a price of RUB 1,000,000. The organization did not incur any other costs associated with the acquisition of shares. As of the last day of the month of acquisition of shares, their market value was RUB 1,020,000. For income tax purposes, income and expenses are determined using the accrual method. Interim financial statements are prepared at the end of each calendar month. View answer
What are securities?
Securities are documents confirming special property rights. Let's look at their types:
- Shares that give the right to receive part of the JSC's profits in the form of dividends.
- Bonds pay their face value as well as interest.
- A share gives the right to part of the company's property.
- A promissory note implies confirmation that one participant in the relationship must pay money to the other participant within a given period.
- Based on the check with the specified amount, the banking institution pays the funds to the other participant.
Typically, commercial firms purchase stocks and bonds.
How does a lender account for transactions under a securities lending agreement when taxing profits?
Features of securities valuation
Accounting for securities involves valuation. It can be carried out in various directions:
- Nominal cost. This is the price that is indicated on the paper itself. Considered a conditional value. That is, it does not reflect the actual cost of the paper.
- Market price. It is formed based on the values of supply and demand. The greater the demand, the higher the price. This type of cost gives an idea of the actual cost of the paper for a certain period.
- Book value. Represents the cost on the basis of which securities are recorded on the balance sheet.
- Accounting value. This is the value that is recorded in the accounting accounts.
- Liquidation value. It represents the cost of the liquidated joint-stock company, accrued per share.
If there is a difference between the nominal and market valuation, appropriate entries are made.
How to maintain tax accounting for securities denominated in foreign currency ?
What is the book value of a share?
The book value (accounting) value of a share may differ significantly from its par value. This is not a completely constant value and it changes from year to year. BSA reflects the amount of capital per ordinary share. To calculate this indicator, official data from a joint stock company is traditionally used:
- balance sheet;
- JSC charter;
- data on the issue of securities (relevant decisions of the joint-stock company).
Total book value of shares
The total book value of shares is the total assets of the enterprise on the balance sheet, from which all liabilities are subtracted. Essentially, this is equity capital or, in other words, the net assets of the company.
The company's net assets are formed directly from its own funds.
The simplest method of calculation is based on the information contained in the official balance sheet. The formula for calculation is as follows:
BA = (line 1600 – DU) – (line 1400 + line 1500 – DBP)
- BA – book value;
- line 1600 – this line of the balance sheet reflects the total amount of assets;
- DE – debts on contributions to the authorized capital of the company (in the balance sheet they are reflected in accounts 75 and 80);
- line 1400 – long-term liabilities;
- line 1500 – short-term liabilities;
- DBP – deferred income.
It is important to exclude DBP (deferred income) from the amount of total debt. This kind of income appears when the company’s funds are replenished from any sources free of charge, for example:
- free receipt of fixed assets, buildings, structures;
- government assistance;
- subsidies.
In the company's balance sheet, deferred income is reflected in line 1530.
Book value per share
Based on the total book value, it is easy to calculate the accounting (book) value of one share - BSA.
This indicator is especially important for traders and investors who consider it in dynamics and in relation to the market price.
To calculate book value per share (BAV), we relate net assets (BA) to the total number of common shares issued and sold.
Accounting rules for bills of exchange
Bills of exchange are recorded in account 58, subaccount 2. They belong to debt securities. The debit direction displays the arrival and multiplication of the number of bills, and the credit direction shows the disposal. Let's look at the entries used to keep records:
- DT58.2 KT62. Receiving paper.
- DT91.2 KT58.2. Write-off of paper costs.
- DT58.2. KT51. The company bought the bills from another party.
- DT58.2 KT62. The paper is sent for payment to another person.
- DT91.2 KT58.2. Write-off of the book value of the paper.
If bills of exchange are sold, this transaction is recorded in account 91. However, account 91 is relevant only if the sale of securities is not considered the basic activity of the company. If this is a basic activity, account 90 will be required. To record transactions involving securities, account 58 is used.
Question: What differences between accounting and tax accounting may arise if in accounting the value of retiring securities that are not traded on the organized securities market (OSM) is determined by the average initial cost, and for profit tax purposes - by the FIFO method? How are these differences reflected in accounting in accordance with the Accounting Regulations “Accounting for calculations of corporate income tax” PBU 18/02, approved by Order of the Ministry of Finance of Russia dated November 19, 2002 N 114n? View answer
Which account to use for own shares/shares
By virtue of the Chart of Accounts for accounting the financial and economic activities of organizations and the Instructions for its application (approved by order of the Ministry of Finance of Russia dated October 31, 2000 No. 94n), account 81, entitled “Own shares (shares)”, is intended for accounting for own shares (redemption/cancellation). "
Note that accounting for own shares (shares) is active. That is, it can only be on the debit of account 81.
This account reflects information about the availability and movement of its shares, purchased by the joint-stock company from shareholders for their subsequent resale or cancellation.
Other business companies (LLC, etc.) and partnerships use it to account for the share of a participant acquired by the company/partnership itself for transfer to other participants or third parties.
Also see: When You Don't Have to Pay Tax on the Sale of Stocks.
Bond Accounting Rules
Accounting rules are approved in “Accounting for expenses on loans”. The debt to the bond owner is indicated as a loan obligation. For correspondence, accounts 66 and 67 are used. Which account should be used? This is determined by the type of debt on the bonds: short-term or long-term. For short-term debts, account 66 is used, and for long-term debts, account 67. Consider the types of accounting entries:
- DT76 KT51. Buying bonds.
- DT91.2 KT58.2. Debt identified.
- DT91 KT58.2. Amortization.
- DT58.2 KT91. Write-off of the difference between the initial and nominal valuation of securities.
- DT51 KT62. Receiving payments on papers.
If the funds paid are greater than the nominal value of the security, the amount of the difference is included in the structure of other income.
Share Accounting Rules
To account for shares, accounts 58.1, 81 and 76 are needed. Accounting must solve the main task - control over the movement of shares of the company itself, as well as acquired shares. Postings are used to reflect the purchase, disposal, and sale of securities. Shares are the primary property of an enterprise that is included in the authorized capital. For this reason, the account 80 often appears in postings.
Let's look at the accounting entries used to account for shares:
- DT58.1 KT76. Purchase of shares.
- DT76 KT91. Calculation of interest on securities.
- DT91 KT58. Write-off of the value of securities disposed of due to sale.
- DT59 KT91. Write-off of the reserve formed due to depreciation.
- DT58 KT60. Accounting for the acceptance of securities on the balance sheet.
If a company has purchased shares, it must send a corresponding notification to the tax office. Also, the fact of purchase is recorded in the documentation. The purchase of shares must be reflected in the quarterly report. However, an accountant may also record relevant information in documents at the time of purchase. For example, this could be the preparation of sales and purchase agreements.
Accounting for financial investments
To account for the presence and movement of investments of organizations in government securities, shares, bonds, in the authorized capital of other organizations, as well as loans provided to other organizations, use account 58 “Financial investments”. The account is active, balance.
The debit of account 58 reflects the financial investments made by the organization in correspondence: D-t 58 K-t 51, 52, 91, 90.
For the loan, accounts 58 reflect the repayment (redemption) and sale of securities in correspondence: D-t 91 K-t 58, as well as the repayment of loans in correspondence: D-t 51, 52 K-t 58.
To account for the costs of acquiring financial investments, use either a separate subaccount to account 58 “Financial investments”, or a subaccount to account 76 “Settlements with various debtors and creditors” - 76/8 “Settlements for the acquisition of securities”, with the subsequent capitalization of financial investments directly to account 58 (subject to transfer of ownership of securities).
— When prepaying expenses for the acquisition of securities, the following entries are made in accounting:
- Dt 76, subaccount 8 “Calculations for the acquisition of securities” Kt 51 - for the amount of the transferred advance;
- Dt 58 Kt 76, subaccount 8 “Settlements for the acquisition of securities” - securities are capitalized.
— When receiving securities under a simple partnership agreement: D-t 58 K-t 80.
— When securities are received free of charge, an entry is made at their market value: D-t 58 K-t 98/2.
The exchange rate difference from the additional valuation of securities due to changes in the exchange rate is reflected in the form: D-t 58 K-t 91.
The following subaccounts can be opened for account 58:
58/1 “Units and shares”; 58/2 “Debt securities”; 58/3 “Loans provided”; 58/4 “Deposits under a simple partnership agreement.”
Analytical accounting of financial investments is carried out by type of investment (shares, shares, bonds) and the objects in which these investments are made (organizations that sell securities, organizations that borrow).
When using the journal order form of accounting, entries on the credit of account 58 are made in journal order No. 8. Debit entries are reflected in journal orders No. 2, 2/1, 8 in correspondence: D-t 58 K-t 51, 52, 76.
All securities held at the enterprise must be registered in the securities book. The book must be numbered, laced, sealed and signed by the manager and chief accountant.
Example of bond accounting
The company bought bonds of a banking institution in the amount of 1,500 rubles. The par value of the securities was 1,000 rubles. In this case, an expense occurs in the form of payment to the issuer. The maximum maturity period is 2 years. The owner of the bonds receives an income of 40% per annum every 6 months. In this case, the following transactions are performed:
- DT76 KT51. The cost of bonds in the amount of 1,500 rubles was transferred to the issuer.
- DT58.1 KT76. Fixation of the book value of securities in the amount of 1,500 rubles.
- DT76 KT91. Accrual of dividends in the amount of 300 rubles.
- DT51 KT76. Transfer of dividends in the amount of 300 rubles.
- DT91 KT58. Fixation of the share of reduction in the value of bonds.
This example lists the minimum number of transactions. However, in practice, as a rule, the number of transactions can reach 20.
IMPORTANT! In accounting, securities are recorded at their book value.
The bond issuer will use these shares:
- DT51 KT67. Issue and sale of securities at par value, if the par value is less than the purchase price.
- DT51 KT67. Issue and sale of securities at purchase price, if the nominal value is greater than the purchase price.
- DT51 KT98. The positive difference between the purchase price and the nominal value is taken into account. It is recognized as income in subsequent periods.
- DT97 KT67. A negative difference has been created.
- DT26 KT67. Interest accrued.
The write-off of differences between the nominal and purchase prices is recorded using these entries: DT98 KT91 and DT91 KT97.
Errors that often occur when accounting for securities
Errors in accounting can be significant or insignificant. The former can influence the decisions of managers and raise questions among regulatory authorities. Therefore, the occurrence of major errors is unacceptable. Let's look at common accounting errors that are significant:
- Entering incorrect entries. For example, this could be the use of incorrect accounts or incorrect transaction amounts.
- Incorrect accounting of the buyer's bill. The security must be recorded in account 58. However, if the buyer has issued a bill of exchange, it must be recorded in the debit of account 62. If the person has transferred the security to third parties, the security is classified as short-term debt.
- When a company receives a bill of exchange free of charge, it does not notify the tax office about it. This is also a significant mistake, since reports must also be sent to the Federal Tax Service on gratuitous receipts.
- Expenses arising from the sale of securities are recorded as expenses. However, this is incorrect, since sales expenses cannot reduce tax payments.
A significant mistake is also the lack of primary documentation. Postings are always based on documents.
