The balance sheet is a document that most fully reflects the movement of funds within an enterprise or organization, as well as their amount at the beginning and end of a certain period. The balance sheet consists of several sections, each of which, in turn, is divided into lines.
The first section of the form is called "Non-current assets". What is it, and what lines does it contain?
Section "Non-current assets" in the balance sheet
Non-current assets are fixed assets and fixed assets invested in tangible objects and values that are used in production, but, at the same time, are not spent in its process, unlike current assets. can participate in the production process repeatedly, while their value is transferred to the cost of finished products gradually in the form of depreciation.
Section I of the balance sheet includes the following lines:
1110 - intangible assets
Intangible assets (IA) are assets that do not have a physical embodiment, however, representing a certain value for their owner.
NMAs include:
- trademarks/service marks;
- literary and scientific works, as well as objects of art;
- inventions and utility models;
- know-how; - selection achievements;
- business reputation (goodwill) - the name of the company in the market, which, if sold, may have a certain value.
The main criterion by which intangible assets can be distinguished is their alienability, i.e. the possibility of transferring the right to use them to a third party, despite the absence of a physical embodiment. This means that the qualification of an employee, his intellect, knowledge and skills cannot be recognized as intangible assets.
1120 - research and development results
This line contains information on the amount of funds spent on research and development work. In this case, only those works for which the results are obtained are taken into account:
- subject to legal protection, regardless of whether they are properly executed or not;
- in accordance with the provisions of the current legislation, not subject to legal registration.
The expenses incurred for the implementation of R&D include:
- the cost of materials purchased for the performance of work;
- remuneration of employees and services of third parties;
- deductions for social needs (including insurance premiums);
- equipment depreciation;
- the cost of specialized equipment and tooling purchased for the project;
- costs for the maintenance and operation of installations and structures directly involved in R&D;
- other expenses, if they are related to the performance of such work.
1130 - fixed assets
Fixed assets are material values that are used by the enterprise in the production process and for management purposes for a period exceeding 12 months.
- building;
- structures;
- equipment;
- Computer Engineering;
- measuring instruments;
- vehicles;
- tools;
- perennial plantations;
- breeding stock, etc.
Fixed assets of the enterprise are accounted for on account 01, with the exception of funds provided for temporary use or possession for the purpose of generating income - they are accounted for on account 03 as part of profitable investments in material assets.
1140 - profitable investments in material assets
Such investments include fixed assets that are intended to be provided to third parties for the purpose of obtaining material benefits.
1150 - financial investments
This line contains information on the amount of material investments, the maturity of which exceeds 12 months from the date of their transfer for use. The amount of investments at the end of the reporting period is indicated taking into account the adjustment made by the enterprise during this period.
Such investments may include:
- securities;
- contributions to the authorized capital of both third-party and own subsidiaries;
- loans granted to other organizations, deposits, as well as accounts receivable formed as a result of the assignment of a debt claim.
1160 - deferred tax assets
A deferred tax asset is a part of deferred income tax that allows you to reduce the amount of tax payable to the budget in the following reporting periods.
1170 - other non-current assets
This line contains information about all assets that are not included in the listed categories, provided that their maturity exceeds 12 months.
Such assets may include:
- investments in other non-current assets and expenses for the completion of previously started R&D;
- prepaid expenses, such as a lump-sum payment for the right to use;
- the cost of young perennial plantations that cannot be exploited at the present time;
- the amount of advances transferred as payment for works and services for the construction of fixed assets.
1100 - total for section I
The value indicated in this line characterizes the total amount of non-current assets available to the enterprise. The line should contain information for three reporting periods - as of December 31 of the current year, as of December 31 of the last and the year before last.
So, non-current assets are the funds of an enterprise that are not spent in the production process, but transfer their value to the cost of manufactured products in the form of depreciation. In the balance sheet, all non-current assets are divided into 7 large groups, each of which includes assets characterized by certain characteristics.
What is included in non-current assets, what are investments in VNA, what is included in them in the balance sheet, how do such assets differ from current assets - the answers to these and other questions are in this material.
What are non-current assets
Non-current assets (CHA) is a part of the organization's property that is used in activities for more than 1 year or several production cycles. Participation in the production of this property differs from materials that, after processing, turn into finished products. Physical form is optional: non-current assets include trademarks, licenses, stocks and bonds.
The key difference from working capital is the ability to generate income for the organization for a long time.
An indirect sign of classifying property as non-current is its liquidity, i.e. the rate at which property can be sold at market value. According to this criterion, BHA has the lowest liquidity: it will take a significant amount of time to sell at the fair value of the plant.
Non-current assets: what applies to them
Non-current assets include the following types of property:
- Intangible assets (IA). As intangible assets, developed computer programs, inventions, patents, know-how and trademarks should be taken into account.
- Research and development results. This type of VNA includes expenditures on completed scientific, design or technological work (R&D). An example of R&D is a method of production aimed at reducing the cost of finished products.
- Exploration Assets (PA) are typical for mining enterprises that are engaged in the search and exploration of minerals. PA include costs associated with engineering and geological surveys and not associated with the purchase or creation of fixed assets.
- Fixed Assets (FA) - real estate, machinery and other equipment that is recognized by the FA in accordance with the accounting data and accounting policy of the company. They are necessary for the existence of a business, they determine the efficiency of production and sales volumes.
- Profitable investments in material values Property that was originally created or acquired to generate rental income. This income is directly related to the property and may not affect the main activities of the enterprise. * Financial investments are long-term investments in financial instruments: securities, contributions to the authorized capital of other companies, deposits and loans issued with a repayment period (interest accrual) of more than 12 months.
- Deferred tax assets (DTA) is the part of deferred income tax that will result in a reduction in the amount of tax payable to the budget in subsequent periods. It may arise when the loss of the previous year is carried forward to the next tax periods.
- Other noncurrent assets- these are other types of property that has been used in the work of the enterprise for more than 12 months. For example, equipment that requires a long installation, or deferred expenses with a write-off period of more than 1 calendar year.
We have listed what non-current assets include. Now let's move on to a more detailed consideration.
Other noncurrent assets
Other VNAs include:
- Equipment with a long installation period. If, in accordance with the technical norms and rules, the assembly takes more than 12 months, it must be included in other VNA.
- Deferred expenses with a repayment period of more than 12 months.
- Amounts of advances listed for construction projects. This advance payment paid to the contractor will be credited over the construction period. Therefore, it is disclosed in the financial statements as part of the VNA.
Analysis of non-current assets
There are several options for conducting the analysis. The most common method is calculation of property use efficiency indicators . For example, capital productivity, capital-labor ratio, profitability, payback and others. Such coefficients must be considered in the dynamics of different periods.
The popular approach is costly. It shows the composition and structure of expenses incurred by the organization for the maintenance and repair of fixed assets. The other side of this method is the assessment of the costs of creating intangible assets and R&D. The growth of such expenses should be accompanied by a detailed assessment of the possible income that the organization can receive after the completion of R&D and the creation of intangible assets.
A separate analysis is required to assess the risks associated with investments in profitable investments in material assets. The assessment of their value can be affected not only by the potential profitability in the future, but also by the significant risks of owning and using the property. Risks can lead to adverse consequences for the organization as a whole. For example, losses from writing off contributions to authorized capital may affect the deterioration of the company's financial position.
An important element of performance evaluation is the dynamics of changes in the SHA. This indicator directly affects the volume of the tax burden on businesses and, when using all the opportunities provided for by the Tax Code, allows you to reduce payments to the budget.
Non-current assets in the balance sheet, accounting
Let us give a brief analysis of the VNA accounting. For initial investments, account 08 Investments in non-current assets is provided. It is used when accumulating the costs of ongoing R&D, construction work and the purchase of finished fixed assets. Similarly, accounting for profitable investments in tangible assets and intangible assets is kept. The costs accumulated on account 08 are written off, when ready, to the accounts provided for accounting for certain types of assets.
Accounting for investments in financial instruments is carried out using account 58 Financial investments. Investment amounts are directly reflected in this account in correspondence with cash accounts. IT is accrued and written off through account 68 "Calculations on taxes and fees". Accounting for other VNA is carried out in the following order:
- the cost of equipment with a long installation cycle is reflected in account 07;
- long-term RBP are accounted for on account 97;
- advances for construction projects should be credited to the debit of account 60.
Low liquidity of objects of some types of equipment and real estate entails the need for periodic revaluation. Moral and physical depreciation, as well as financial risks can significantly reduce the value of property. The reverse situation is also possible, when, under the influence of internal and external factors, the cost of VNA objects may increase. The revaluation should be reflected in accounting in accordance with the requirements of the legislation on accounting.
The valuation of VNA is reflected in the balance sheet (lines 1110 - 1190). In this reporting form, each type of VNA must be deciphered as of December 31 of the reporting year and the two previous years. Exceptions - for newly created and liquidating companies. Additional information on the structure and methods of accounting for VNA should be described in the notes to the balance sheet. Changes in SHE must be shown in the income statement (line 2450).
If the organization performed the revaluation of property using account 83, you must indicate this data in section 1 of the statement of changes in equity (line 3212). A breakdown of transactions related to the purchase and sale, as well as the upgrade of fixed assets, must be reflected in the appropriate lines of the cash flow statement.
Adult animals received free of charge, assessed at market value, are reflected in the debit of account 08 "Investments in non-current assets" in correspondence with the loan: for productive livestock - account 91 "Other income and expenses", subaccount 1 "Other income"; for working cattle - accounts 98 "Deferred income", sub-account 2 "Grants".
The costs of completed operations for the formation of the main herd are written off from account 08 of account 01 "Fixed assets", subaccount 4 "Working and productive livestock".
Subaccount 08-8 "Establishment and cultivation of perennial plantings" takes into account the costs of establishing and growing perennial plantations.
Analytical accounting of costs for laying and growing perennial plantations is carried out by types of perennial plantations, years of planting and their location. For example: the cost of growing an apple orchard planted in 1999 in team No. 4; expenses for laying and growing a plum orchard planted in 2000 in department No. 5, etc.
Since the technology and nature of production processes during the laying and cultivation of perennial plantations are similar to the general production technology in the plant growing industry, the costs for this sub-account are taken into account under the same items as for the plant growing industry.
A feature of accounting for investments in non-current assets for the establishment and cultivation of perennial plantations is that on account 08 "Investments in non-current assets" they are accounted for only within one calendar year, although the process of growing plantations lasts several years, that is, only costs incurred in current calendar year (from January 1 to December 31 of this calendar year).
At the end of the calendar year, the costs of the current year for laying and growing perennial plantations are written off from the credit of account 08 "Investments in non-current assets", subaccount 8 "Establishment and cultivation of perennial plantations" to the debit of account 01 "Fixed assets", subaccount 5 "Perennial plantations", where a group of analytical accounts by types of young perennial plantations has been opened for these purposes. Consequently, at the end of 2001, the costs from the analytical sub-account 08-8 - the costs of growing a plum orchard planted in 2000 in branch N 5 - from account 08-8 will be debited to account 01-5 to the analytical account "Young plum orchard planted in 2000 in branch no. 5.
An analytical entry for the amount of next year's costs for growing a plum orchard will be made after 2002, etc., that is, annually the costs of caring for young plantations from account 08 "Investments in non-current assets" will be added to the cost of young plantations recorded on account 01 "Fixed assets" in the analytical accounts of young perennial plantations.
In some cases, from the young of perennial plantations, even before the onset of the period of normal fruiting, a crop is obtained. Harvesting costs are additionally taken into account as part of the cost of caring for young plantations on the debit of subaccount 08-8, and the resulting products are debited to account 43 "Finished products", subaccount 1 "Crop production" from the credit of subaccount 08-8 at prices of possible sale.
Sub-account 08-9 "Other investments" takes into account the costs of radical land improvement. The group of costs for radical land improvement includes non-inventory costs (not associated with the creation of structures), drainage, irrigation and other reclamation work, cultural and technical measures for surface improvement of land (planning of land plots), uprooting areas for arable land, clearing fields from stones and boulders (cutting hummocks, clearing thickets, cleaning reservoirs, etc.).
Accounting for the costs of radical land improvement is carried out according to the elements and cost items established for crop production.
Analytical accounting of costs for radical land improvement is carried out for each land plot separately, indicating the volume and cost of each type of reclamation and cultural work (drainage, irrigation, uprooting of shrubs, cutting tussocks, clearing the land from stones and boulders, etc.). At the end of the year, all costs are written off from account 08 "Investments in non-current assets", sub-account 9 "Other investments" to account 01 "Fixed assets".
Sub-account 08-9 "Other investments" also takes into account the costs associated with the construction of temporary title and non-title structures. Organizations - developers keep records of overhead costs for construction in an economic way by cost groups, in particular:
Administrative and economic expenses for construction;
Expenses for maintenance of construction workers;
Expenses for the organization of work on construction sites.
Overhead costs are monthly allocated to the production of construction and installation works or to the costs of erecting temporary (non-title) buildings and structures in proportion to direct costs.
Accounting for non-capital work is carried out according to analytical accounts:
1 "Construction of temporary (titular) structures";
2 "Construction of temporary (non-title) structures";
3 "Other non-capital works".
The costs of erecting temporary (titular) buildings and structures, as well as performing work on the conversion of other buildings and structures for servicing construction, are reflected separately in the case when the settlements of the construction organization with the developer are carried out as a whole for the completed complex (finished building products), taking into account the costs for the construction of temporary (titular) buildings and structures included in the cost of construction and installation works and object estimates. In the process of performing work, a construction organization can reserve on account 96 "Reserves for future expenses" at the expense of the cost of construction and installation works, funds for the construction of temporary (titular) buildings and structures.
If the costs associated with the erection of temporary (titular) buildings and structures are not included in the estimated cost of construction and installation works and object estimates, and they are calculated separately, then the costs for such objects are accounted for by construction organizations on account 20 "Main production" in general order. After acceptance, these objects are reflected on the balance sheet of the developer.
The cost of objects that are not related to fixed assets come into the composition of temporary (non-title) structures on the debit of sub-account 10-11 "Inventory and household supplies". The cost of temporary (non-title) structures, buildings, fixtures and devices (on-site storerooms, offices of work foremen, sheds, distributing steam, air and electricity within the working areas, etc.) as they are accepted are included in temporary (non-title ) structures under sub-account 10-11 "Inventory and household supplies". Upon completion of the work, the cost of demolition and dismantling of objects stopped by construction, developers performing work in an economic way, are attributed to the cost of work as part of overhead costs.
For non-capital works, the costs of which are taken into account on the analytical account 2 "Construction of temporary (non-title) structures", reflect only direct costs without overhead costs. The costs recorded on analytical accounts 1 "Construction of temporary (title) structures" and 3 "Other non-capital works" are reflected taking into account overhead costs.
As non-capital works are completed (the commissioning of temporary title and non-title structures), they are debited from account 08 "Investments in non-current assets" to the debit of account 01 "Fixed assets" or account 10 "Materials", subaccount 11 "Inventory and household supplies" and at the same time, depreciation is charged on fixed assets on the credit of account 02 "Depreciation of fixed assets" and the debit of account 96 "Reserves for future expenses" - when creating a reserve for the construction of temporary structures.
The same sub-account reflects the costs to be written off in accordance with the established procedure for the unrealized and finally terminated construction, as well as the costs of demolition, dismantling and protection of facilities.
Organizations - developers write off these costs as a decision is made to write them off. Until the issue of writing off is resolved, they are taken into account on sub-account 08-9 "Other investments" in the general manner.
The costs of temporarily or permanently stopped construction, for which there is no decision to write off, are allocated in the analytical accounting under subaccount 08-9 "Other investments" in a special group.
The balance on account 08 "Investments in non-current assets" characterizes the amount of the organization's capital investments in construction in progress, as well as pending transactions for the acquisition of fixed assets, intangible and other non-current assets, including the costs of forming the main herd and laying, growing perennial plantings.
Analytical accounting on account 08 "Investments in non-current assets" is carried out for the costs associated with the construction and acquisition of fixed assets - for each facility under construction or acquired. At the same time, the construction of analytical accounting should provide the possibility of obtaining data on the costs of:
Construction works and reconstruction; drilling operations; installation of equipment requiring installation; purchase of equipment that does not require installation, as well as for tools and inventory provided for by estimates for capital construction; purchase of equipment requiring installation, but intended for stock; acquisition of buildings and structures; laying and growing perennial plantations, carrying out cultural and technical work on lands that do not require drainage; design and survey work, other capital investment costs;
According to the costs associated with the formation of the main herd - by animal species (cattle, pigs, sheep, horses, etc.), in some cases - and by breed;
For costs associated with the acquisition of intangible assets - for each acquired object.
ACCOUNT 08 "INVESTMENTS IN NON-CURRENT ASSETS"
CORRESPONDES WITH ACCOUNTS:
N p / p | Corresponding account |
|
By account debit Calculation of the amount of depreciation of own and leased fixed assets for capital investments | ||
Calculation of the amount of depreciation of intangible assets for capital investments | ||
Attribution of the cost of equipment transferred for installation | ||
current assets- assets that are intended for use within a short period of time (up to 12 months).
Current assets include: Stocks, Accounts receivable, Financial investments, Cash and cash equivalents, etc.
Current assets are also called "current assets".
The term "current assets" in English is current assets.
All assets in accounting are divided into current and non-current. Normative documents do not define the meaning of these terms, but define the list of assets that are included in them. From the list of non-current assets, we can conclude that non-current assets include assets intended for use for a long time, i.e. useful life, lasting more than 12 months or normal operating cycle, if it exceeds 12 months. All other assets are current assets.
to current assets, for example, include: Inventories, Accounts Receivable, Financial Investments, Cash and Cash Equivalents, etc.
The division into these two categories of property is important from an economic point of view. Thus, current assets can be quickly converted into cash. The greater the share of current assets, the higher the liquidity of the organization.
Current assets in the balance sheet
The division of the organization's assets into current and non-current is reflected in the balance sheet. So, the left side of the balance sheet, called the Asset, reflects all the assets owned by the organization. The asset consists of two sections "Non-current assets" and "Current assets".
| Name of indicator | The code |
|
ASSETS I. Non-current assets |
|
|
Intangible assets |
1110 |
|
Research and development results |
1120 |
|
Intangible search assets |
1130 |
|
Tangible Exploration Assets |
1140 |
|
fixed assets |
1150 |
|
Profitable investments in material values |
1160 |
|
Financial investments |
1170 |
|
Deferred tax assets |
1180 |
|
Other noncurrent assets |
1190 |
|
Total for Section I |
1100 |
|
II. current assets |
|
| 1210 | |
|
Value added tax on acquired valuables |
1220 |
|
Accounts receivable |
1230 |
|
Financial investments (excluding cash equivalents) |
1240 |
|
Cash and cash equivalents |
1250 |
|
Other current assets |
1260 |
|
Total for Section II |
1200 |
| 1600 |
Current assets include:
1) Stocks
Stocks - assets in the form of raw materials and materials, goods for sale, etc.
2) Value added tax on acquired valuables
Value Added Tax on Acquired Valuables - value added tax accepted for accounting on acquired valuables, which is deductible upon the occurrence of additional conditions.
3) Accounts receivable
Accounts receivable - the debt of debtors (debtors) to the organization (creditor).
4) Financial investments
Financial investments (with the exception of cash equivalents) are state and municipal securities, securities of other organizations, etc., the maturity (maturity) of which does not exceed 12 months.
5) Cash and cash equivalents
Cash means cash on hand and demand deposits.
Cash equivalents are highly liquid financial investments that can be easily converted into a known amount of cash and are subject to an insignificant risk of changes in value.
6) Other current assets
Such current assets may include, for example, missing or damaged material assets, in respect of which a decision has not been made to write them off as part of production costs (sales expenses) or to guilty persons (shown in the debit of account 94 “Deficiencies and losses from damage to valuables).
Financial analysis of current assets
Own working capital
For financial analysis use the indicator Own working capital.
Own working capital (Working capital) - the difference between the organization's current assets and its short-term liabilities.
The SOS indicator is used to assess the ability of an enterprise to pay off short-term obligations by realizing all its current assets. The more own working capital of the organization, the more financially stable it is. A negative SOS indicates potential financial risks for the organization.
Current liquidity ratio
The current liquidity ratio is the percentage of the organization's short-term assets to its short-term liabilities.
The current liquidity ratio characterizes the extent to which current assets cover short-term liabilities. The recommended value for this ratio is 200%. In this case, the company can cover all of its short-term liabilities and will have liquid funds to carry out its activities.
Current assets in law
Article 656 of the Civil Code of Russia, which governs the Enterprise Lease Agreement, specifies the categories of property related to working capital:
“Under a lease agreement for an enterprise as a whole as a property complex used for entrepreneurial activities, the lessor undertakes to provide the lessee for a fee for temporary possession and use of land plots, buildings, structures, equipment and other fixed assets included in the enterprise, to transfer in the manner, to conditions and within the limits determined by the contract, stocks of raw materials, fuel, materials and other current assets, the rights to use land, water bodies and other natural resources, buildings, structures and equipment, other property rights of the lessor associated with the enterprise, the rights to designations that individualize the activities of the enterprise, and other exclusive rights, as well as to assign to him the rights of claim and transfer to him debts related to the enterprise.
Non-current assets include:
1) Intangible assets
Intangible Assets - exclusive rights to Intellectual Property Objects (computer programs, databases, trademarks, etc.) recorded in accounting.
2) Research and development results
Results of research and development - the organization's costs for research, development and technological work that gave a positive result, but are not related to intangible assets.
3) Intangible Exploration Assets
Intangible prospecting assets - used in the process of prospecting, evaluation of mineral deposits and exploration of minerals, exploration costs that do not have a material form.
4) Tangible exploration assets
Tangible prospecting assets - used in the process of prospecting, evaluation of mineral deposits and exploration of minerals, exploration costs that have a material form: a) structures (pipeline system, etc.); b) equipment (specialized drilling rigs, pumping units, reservoirs, etc.); c) vehicles.
5) Fixed assets
The fixed asset is a long-term labor instrument (more than 12 months). Fixed assets include buildings, machinery and equipment, structures and transmission devices, vehicles.
6) Profitable investments in material values
Profitable investments in material assets are fixed assets intended exclusively for provision by an organization for a fee for temporary possession and use or for temporary use in order to generate income.
7) Financial investments
Financial investments - state and municipal securities, securities of other organizations, etc., the maturity (maturity) of which exceeds 12 months.
8) Deferred tax assets
Deferred tax asset is that part of deferred income tax that should lead to a decrease in income tax payable to the budget in the next reporting period or in subsequent reporting periods.
9) Other non-current assets
Read more: Non-current assets
Additionally
inventories
To replenish working capital
Illiquid assets are assets that cannot be quickly and cost-effectively converted into cash.
Liquid assets are assets that can be quickly and cost-effectively converted into cash.
Cash occupy an insignificant share in the structure of current assets. Over the year, their value and share decreased, which indicates a rather low level of absolute liquidity of assets.
In the process of analysis, it was revealed that own sources were not enough to form reserves, and the need for them was fully covered by short-term borrowed funds.
Current assets are...
Basically, tangible current assets were covered by attracting accounts payable and short-term loans, which indicates a high financial risk. Among the attracted sources of financing, debts to suppliers and the budget for taxes and fees prevail.
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Asset classification
The assets of the company include the value of the resources that provide the production process of the enterprise. Assets include:
- Non-current assets (structures, buildings, machinery and equipment, transport, etc.),
- Working capital (cash, debts of debtors, short-term investment of funds, etc.).
Asset accounting is mandatory for most Russian enterprises. All assets are concentrated on the left side of the balance sheet and are divided according to their purpose:
- The first section of the balance sheet is represented by non-current assets (fixed assets and intangible assets), which are accounted for in accordance with the residual value minus depreciation (line 1100 of the balance sheet);
- The second section of the balance sheet is represented by working capital, which are directly involved in the production process (line 1200 of the balance sheet).
The formula for the average annual value of assets on the balance sheet
To calculate the average amount of assets of the enterprise for the year, it is necessary to add the value of assets at the beginning and end of the year. This sum is then divided by 2 or multiplied by 0.5.
The formula for the average annual value of assets on the balance sheet uses accounting data.
In general, the formula for the average annual value of assets on the balance sheet is as follows:
SA cf = (SAnp + SAkp) / 2
Here CA av is the average annual value of assets,
SANP - the value of assets at the beginning of the period,
SAkp - the value of assets at the end of the period (year).
The formula for the average annual value of assets on the balance sheet allows you to calculate both the assets of the enterprise as a whole and separately for current and non-current assets.
Calculation features
The total assets of the enterprise are recorded in line 1600 of the balance sheet, which is compiled by accountants at the end of each year. Using this formula, balance sheet indicators for several years are used, while the indicator for line 1600 is taken from the balance sheet for each year, summed up and subsequently divided by 2.
In the case of settlements on current assets, the formula for the average annual value of assets on the balance sheet will require information from line 1200 of the balance sheet. If it is necessary to calculate non-current assets, then the accountant uses the indicators for line 1100 of the balance sheet.
current assets
You need to use indicators in a similar way by finding the average value of assets and comparing balance sheet data for the corresponding years.
The value of the average annual value of assets on the balance sheet
The average annual value of assets, which is calculated by analysts, is used in the future when calculating coefficients that can characterize the state and efficiency of any enterprise:
- return on assets,
- Asset turnover ratio, etc.
Also, the indicator is used in order to find the reasons that led to changes in the operation of the enterprise, and to make decisions in the field of resource management.
Average annual value of assets can give a more accurate understanding of the size and value of assets, while it levels out circumstances that could distort the real amount of assets.
If the indicators of asset turnover of different enterprises for different years are compared, then it is necessary to check the uniformity of the assessment of the average annual amount of assets.
Examples of problem solving
Composition and structure of current assets
Under the structure of working capital is understood the ratio of individual elements in their entirety.
Knowledge and analysis of the structure of working capital in the enterprise are very important, since it to a certain extent characterizes the financial condition at one time or another of the enterprise. For example, an excessive increase in the share of receivables, finished products in stock, work in progress indicates a deterioration in the financial condition of the enterprise. Accounts receivable characterizes the diversion of funds from the turnover of this enterprise and their use by Debtors, debtors in their turnover. An increase in the share of work in progress, finished products in stock indicates the diversion of working capital from circulation, a decrease in sales volume, and therefore profit. All this indicates that the enterprise needs to manage working capital in order to optimize their structure and increase their turnover.
Since new material values (new value) are created in the production process, the structure of working capital (and, consequently, the efficiency of their use) will be the more favorable, the larger their share serves the production sector, i.e. the greater the share in the total amount of working capital is occupied by working capital.
The structure of working capital at the enterprise is unstable and changes in dynamics under the influence of many reasons.
1. Specifics of the enterprise. In enterprises with long
the production cycle (for example, in shipbuilding) has a large share of work in progress; mining enterprises have a large share of deferred expenses. At those enterprises in which the production process is fleeting, as a rule, there is a large proportion of inventories;
2. Quality of finished products. If the enterprise produces low-quality products that are not in demand among buyers, then the share of finished products in warehouses increases sharply;
3. The level of concentration, specialization, cooperation, and combination of production;
4. Acceleration of scientific and technological progress. This factor affects the structure of working capital in many ways and practically on the ratio of all elements.
Tip 1: The difference between current and non-current assets
If an enterprise introduces fuel-saving equipment and technology, non-waste production, then this immediately affects the reduction in the share of inventories in the structure of working capital.
An important indicator of the structure of working capital is the ratio between the funds invested in the sphere of production and in the sphere of circulation. From the correct distribution of the total amount of working capital between the sphere of production and the sphere of circulation, their normal functioning, the speed of turnover and the completeness of their inherent functions: production and payment and settlement (Figure 1) largely depend.
Figure 1 - The structure of current assets of the enterprise
Thus, according to the economic content, current assets can be classified into:
— circulating production assets;
- circulation funds.
The division of working capital into working capital and circulation funds is due to the presence of two spheres of individual circulation of funds: the sphere of production and the sphere of circulation. Reflecting the peculiarities of their sphere of application, revolving funds and circulation funds are interconnected and interdependent.
Therefore, the increase in the efficiency of the use of working capital is achieved by better use of both working capital and circulation funds. The composition of working capital is understood as a set of elements that form working capital assets and circulation funds.
Elements of working capital are: raw materials, basic materials and purchased semi-finished products; auxiliary materials; fuel and fuel; container and container materials; repair parts; tools, household inventory and other wearing items; work in progress and semi-finished products of own production; Future expenses; finished products; goods shipped; cash; debtors; others.
By place and role in the process of reproduction, working capital is divided into the following four groups:
- funds invested in inventories;
- funds invested in work in progress and deferred expenses;
- funds invested in finished products;
— cash and funds in settlements.
According to the degree of planning, working capital is divided into standardized and non-standardized. Non-standardized goods include goods shipped, cash and funds in settlements. All other elements of working capital are subject to rationing.
According to the sources of formation, working capital is divided into own (and equated to them) and borrowed.
The presence of own and borrowed funds in the turnover of the enterprise is explained by the peculiarities of the organization of the production process. A constant minimum amount of funds to finance the needs of production is provided by own funds. Temporary need for funds arising under the influence of reasons dependent and independent of the enterprise is covered by a loan and other borrowed sources.
The main directions of increasing the efficiency of the use of working capital
The increase in the share of current assets in the property of the enterprise positively characterizes its structure and indicates the rationality of investing assets.
In the composition of working capital, the largest share of more than 50% is occupied by inventories, and over the year it increased by 2%. This is due to the specifics of production, which requires the creation of large stocks, as well as a fairly long production cycle. Among the stocks, the share of raw materials and materials is high, which increased over the year despite a decrease in their amount by 5272 thousand rubles.
The value of finished products increased over the year by 4272 thousand rubles, and the share by 1%. This indicates the stability of sales and demand for products and their high quality.
Accounts receivable increased significantly both in terms of amount and specific weight. All receivables of the analyzed enterprise were short-term and basically - these are debts of buyers. On the negative side, at the beginning of the year, overdue accounts receivable amounted to 57.5% of the total, but at the end of the year it decreased and amounted to 9.2% of the total. This indicates that buyers do not comply with financial and settlement discipline.
Cash occupy an insignificant share in the structure of current assets.
The difference between current assets and non-current assets
Over the year, their value and share decreased, which indicates a rather low level of absolute liquidity of assets.
In general, working capital decreased by 26448 thousand rubles, which negatively characterizes the state of financial resources. During the year, the structure of working capital deteriorated, and is not rational enough from the point of view of the financial position of the enterprise, since the largest share is occupied by low liquid assets - stocks and receivables, which are overdue.
An important area of analysis is the study of own and borrowed sources of financing of current assets.
For the formation of working capital, OAO NK Rosneft-Dagneft attracted: own working capital, short-term credits and loans, accounts payable.
The analyzed enterprise has its own sources for the formation of working capital, and their value for the year increased by 16,076 thousand rubles, it is positively estimated that this happened mainly due to an increase in the company's own capital.
In general, the provision of OAO NK Rosneft-Dagneft with its own sources for current activities is quite high, which positively characterizes the financial stability of the enterprise.
In the process of analysis, it was revealed that own sources were not enough to form reserves, and the need for them was fully covered by short-term borrowed funds. Basically, tangible current assets were covered by attracting accounts payable and short-term loans, which indicates a high financial risk. Among the attracted sources of financing, debts to suppliers and the budget for taxes and fees prevail.
To assess the effectiveness of the use of working capital, their turnover is analyzed. The acceleration of the turnover of funds means a decrease in the need for material and financial resources, helps to reduce production costs, and ultimately allows you to increase the return on funds and profitability of production.
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The concept of non-current assets (VOA) implies such property of the company, which repeatedly participates in economic activities and is used for more than 12 months. How are such resources reflected in accounting and reporting? What is included in non-current business assets? We will understand the legislative nuances of the classification of SAIs.
The composition of non-current assets of the enterprise
Each organization has certain current and non-current assets. The main difference between these resources is that SAIs are used for a long period of time (over 12 months), participate in activities many times and transfer their own value to the final result not at a time, but in parts. Such assets are usually expensive, therefore, they are often acquired by the organization itself or with the attraction of long-term loans. Investing in SAIs, or in other words, fixed assets, is necessary, first of all, for capital-intensive manufacturing enterprises.
What is a company's non-current assets
SAIs include several main groups. The classification of these resources is contained in the balance sheet f. 1. Regulatory requirements for the formation of accounting indicators in the balance sheet - in RAS 4/99. Namely, in sect. IV of the said Regulation defines the content of Form 1.
Non-current assets include the following components:
- Intangible assets (IA)– SAIs of organizations that do not have a material, that is, material, form. These are, for example, such assets as software, databases, trademarks, marks, licenses, patents, various rights, goodwill, know-how, etc.
- Fixed assets (OS)– used for more than 12 months. equipment, tools, machines, vehicles, buildings, structures, buildings and other assets.
- Profitable investments in the MC (material values)- this is an investment in assets with the aim of transferring them for further use on the side or for the purpose of increasing, creating, acquiring one's own SAIs. For example, these are items of leasing, rental, costs for construction and installation works (construction and installation works), construction in progress, etc.
- Investments- these are long-term investments in various securities, authorized capitals of third-party structures, lending to other organizations, etc.
Note! We figured out that non-current assets consist of 4 main groups. But in addition, there are several other groups, one of which is considered to be other SAIs. What is included in other non-current assets and on which line such resources are reflected in the balance sheet - more on that below.
Accounting and formation of non-current assets
It is not enough to know what resources are non-current assets: to correctly reflect work operations, you should properly organize and keep records of such objects. In this case, it is required to rely on the norms of Order No. 94n dated October 31, 00, which describes the procedure for using accounting accounts at Russian enterprises. In particular, what accounts are used in accounting for SAIs?
To reflect intangible assets, the account is intended. 04 with the same name. The basic rules for accounting for intangible assets are contained in PBU 14/2007. It is determined here that the acceptance of such assets for accounting is based on the actual costs of acquiring, manufacturing an object, including associated costs (clauses 6, 7). It is mandatory to approve the period of use of the asset, and 3 methods are available for depreciation of objects with an approved STI (paragraph 28).
If fixed assets are included in non-current assets, their accounting is organized on the account. 01 in accordance with the requirements of PBU 6/01. The conditions for accepting an object as a fixed asset are listed in paragraph 4, the amount of the initial cost is calculated from all the actual costs of acquiring an asset (paragraph 8), and depreciation can be charged in one of 4 ways (paragraphs 18-25).
Note! Investments in the MC are reflected in the account. 03, and financial investments - on account. 58. The main regulatory document for financial investments is PBU 19/02.
What about other non-current assets?
As can be seen from the report, other non-current assets in the balance sheet is line 1190. What belongs to this group of SAIs? Here, those types of objects that cannot be reflected in other lines of section I are indicated. In particular, these are the sub-account of the OS "Young Plantings", equipment for installation, investments in VOA, procurement and purchase of inventories, deviations in the price of inventories, advances for the construction of OS, RBP (Future expenses).
In order to correctly take into account other non-current assets, accounts 07, 01, 15, 08, 16, 60, 97 are used according to the regulatory provisions of Order No. 94n. At the same time, other non-current assets in the balance sheet, line 1190, are calculated by adding the closing balances of the specified accounts.
Conclusion - in this article, we found out that non-current assets include intangible assets, fixed assets, financial investments of a long-term nature, as well as profitable investments in values. In addition, the balance sheet provides that non-current assets also include the results of various research (development), exploration assets (tangible and / or intangible), IT (deferred tax assets). When forming indicators, it is necessary to be guided by the requirements of PBU 4/99 and Order of the Ministry of Finance No. 66n dated 02.07.10.