In this material, which continues the series of publications on the new chart of accounts, an analysis of account 63 "Provisions for doubtful debts" of the new chart of accounts is carried out. This commentary was prepared by Ya.V. Sokolov, Doctor of Economics, Deputy. Chairman of the Interdepartmental Commission on Reform accounting and reporting, a member of the Methodological Council on Accounting under the Ministry of Finance of Russia, the first President of the Institute professional accountants Russia, V.V. Patrov, professor of St. Petersburg state university and N.N. Karzayeva, Ph.D., Deputy. Director of the Audit Service of Balt-Audit-Expert LLC.
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Account 63 "Reserve for doubtful debts" is a prime example of a real reserve. The administration of an enterprise, providing a loan in one form or another to its correspondents, always bears the risk associated with the fact that this or that correspondent will not repay the debt. In other words, in each case there is a possibility that the funds presented on the loan will be lost. Insofar as receivables, in one volume or another, exists for the enterprise at any moment of time, and some part of this volume will obviously be returned, and some will not, then all the skill of an accountant should be aimed at the ability to find this share in advance write it off as losses of the current reporting period. For example, the total amount of receivables is X rubles, but experience suggests that approximately 10% of existing receivables should be written off to the expenses of the reporting period, because only in this case, the real, and not "inflated" receivables will be shown in the accounting and on the balance sheet debt.
The history of accounting knows several ways to solve this problem.
1. Accounts receivable are recorded in full and no provisions are made.
Advantages. Accounts receivable is a right of claim that an organization has, which accounts for this right. Therefore, until its validity period has expired, the accountant should reflect it in full, and not guess what debtors will return and what will not. This approach is completely fair from a legal point of view.
Disadvantages. The balance sheet of the enterprise automatically turns out to be worse than it really is, because the losses already clearly incurred will be shown as a full-fledged asset.
2. Accounts receivable are shown minus the estimated doubtful debts.
Advantages. Economic content balance becomes more real.
Disadvantages. There are great difficulties in determining the amount of doubtful accounts receivable, which creates opportunities to create pseudo-loss.
The accounting theory knows several options for calculating the amount of doubtful receivables:
a) the calculation is done based on its sum as a whole;
b) debt is grouped into almost bad, doubtful and potentially doubtful. Further, the first decreases, say, by 90%, the second by 50%, the third by 20%;
c) the amount of doubtful debt is determined for each separate document confirming the right to claim.
Options a) and b) are characterized by minimal labor intensity, especially option a) and due to mutually canceling deviations, they better remove possible errors and, therefore, are less susceptible to the influence of subjective factors. And, finally, which is especially important, in this case there is no need for analytical accounting of reserves for doubtful debts, since both in essence and mathematically, the reserve should be created for all receivables, and not part of it.
Therefore, account 63 "Reserve for doubtful debts" and should not be called "reserves", namely "reserve", and not the totality of reserves, each of which is calculated and accounted for separately.
Unfortunately, the Russian Ministry of Finance preferred to use option c) creating a reserve for doubtful debts.
Clause 70 of the regulation on accounting and bookkeeping says: "The reserve for doubtful debts is created on the basis of the results of the inventory of the organization's accounts receivable. The amount of the reserve is determined separately for each doubtful debt, depending on financial condition(solvency) of the debtor and assessing the likelihood of repayment of the debt in whole or in part. "
It is perplexing that a reserve can be created only for arrears in payments for products, goods, works and services. Debt on other calculations (for example, on loans issued, etc.) can also be doubtful.
Some experts argue that a reserve for doubtful debts can only be created by organizations that have elected accounting policies for tax purposes, the method of determining the proceeds from shipment. We consider this statement to be inappropriate. First, the formation of bad accounts receivable is in no way related to the method of determining revenue for tax purposes. Secondly, the creation of the reserve is aimed at ensuring the reality of the balance sheet data of all organizations. Thirdly, in clause 70 of the Regulations on the maintenance of accounting and financial reporting, it is not said that organizations that determine the proceeds from payments for tax purposes are not entitled to create a reserve for doubtful debts.
But there is no doubt that the reserve is created for doubtful debts. "Doubtful debt is a receivable from an organization that has not been repaid within the time frame established by the agreement and is not secured by appropriate guarantees" (clause 70 of the Regulations on accounting and financial reporting). According to article 266 of the Tax Code of the Russian Federation, "doubtful debt is any debt to a taxpayer if this debt is not repaid within the terms established by the agreement, and is not secured by a pledge, surety, bank guarantee". Thus, the concept of doubtful debt for tax purposes is broader than for accounting purposes and applies not only to debt under contracts of sale, supply, performance of work, provision of services, but also to other receivables.
Consequently, if the receivable is not repaid within the period specified in the terms of the agreement, and is not secured by guarantees, then for the amount of such debt, the company has the right to create a reserve for doubtful debts.
Thus, the creation of a reserve of doubtful debts is possible with the obligatory fulfillment of the following procedures and conditions:
- firstly, the contractual deadline for repayment by the buyer, the customer of the obligations has expired;
- secondly, obligations are not secured by guarantees;
- thirdly, an inventory of accounts receivable was carried out;
- fourthly, accounting policies the enterprise provides for the creation of a reserve of doubtful debts;
- fifth, the analysis of the possibility and probability of debt repayment for each individual debtor was carried out.
In the explanations to account 63 "Provisions for doubtful debts" in new edition the words "year" and "year" were replaced by the words "reporting period" and "by period". This is due to the fact that reserves for doubtful debts can be created during the year (earlier - only at the end of the year). According to the norms Tax Code RF the amount of deductions to reserves for doubtful debts are included in non-operating expenses evenly during the reporting (tax) period.
For accounting purposes, the amount of reserves for doubtful debts is determined based on the actual receivables recorded in the accounting accounts and recognized as doubtful.
For tax purposes, the amount of the reserve for doubtful debts is determined based on the results of an inventory of accounts receivable at the end of the previous reporting (tax) period and is calculated for accounts receivable with a maturity of more than 45 days as follows:
- for doubtful debts with a maturity of more than 90 days - in the amount of the full amount of debt identified on the basis of an inventory;
- for doubtful debts with a maturity of 45 to 90 days (inclusive) - in the amount of 50 percent of the amount identified on the basis of an inventory of debt.
In this case, the amount of the created reserve for doubtful debts cannot exceed 10 percent of the proceeds of the reporting (tax) period.
As for the accounting records, then they are very simple. An entry is made for the amount of deductions to the reserve:
Debit 91.2 "Other expenses"
Credit 63 "Provisions for doubtful debts"
Provisions for doubtful debts are used to cover the amounts of written off receivables. Accounts receivable can be written off if expired limitation period. "General term the limitation period is established at three years "(Article 196 of the Civil Code of the Russian Federation). According to Article 200 of the Civil Code of the Russian Federation, the limitation period begins from the day when the party to the contract learned or should have learned about the violation of its right. The limitation period begins at the time when the obligee has the right to demand the performance of the obligation, and if the debtor is granted a grace period for the performance of such a claim, the calculation of the claim limitation period begins at the end of the specified period.In accordance with Article 192 of the Civil Code of the Russian Federation, the limitation period expires on the corresponding month and date last year term (i.e. after three years). "If the last day of the term falls on a non-working day, the next working day following it is considered the end of the term" (Article 193 of the Civil Code of the Russian Federation).
Accounts receivable may be deemed uncollectible if the debtor company has been liquidated. According to article 266 of the Tax Code of the Russian Federation, reserves can be used to cover the written off bad debt, which means "those debts to the taxpayer for which the set time limitation period, as well as those debts for which, in accordance with civil law, the obligation is terminated due to the impossibility of its performance, on the basis of an act government body or liquidation of the organization ".
According to clause 70 of the Regulation on accounting and financial reporting, writing off a debt at a loss due to the debtor's insolvency is not a cancellation of debt. This debt should be reflected in the balance sheet on account 007 "Written off at a loss indebtedness of insolvent debtors" within five years from the date of write-off to monitor the possibility of its recovery in the event of a change in the debtor's property status.
When it becomes necessary to actually write off bad accounts receivable, an entry will be made on the accounting accounts:
Credit 62 "Settlements with buyers and customers"
Thus, it is stated that the administration foresaw that the debt would not be returned, and, according to the principle of prudence (see PBU 1/98), it was already written off in advance for losses of previous reporting periods, and now this fact only reduces the reserve. And when the reserve is created as a whole, then, as a rule, it is always enough for writing off, but when they try to create a reserve for each separately taken amount, then, in addition to the obvious and already noted shortcomings, new problems arise, and then special entries in analytical accounting. If the reserve is not enough with its full accounting, then a record appears:
Debit 63 "Provisions for doubtful debts" - within the limits of the available reserve; Debit 91.2 "Other expenses" Credit 62 "Settlements with buyers and customers"
In this case, some accountants try to first accrue additional reserves, and then write off its amount, but this is an artificial and unfair entry, since it is possible and necessary to take into account the difficulties associated with creating reserves, but these reserves cannot be adjusted for them.
If by the end of the reporting year following the year of creation of the reserve for doubtful debts, this reserve in any part will not be used, then the unspent amounts at the end of the reporting year are reflected in account 91.1 "Other income". This operation will be reflected in the accounting accounts as follows:
Debit 63 "Provisions for doubtful debts"
Credit 91.1 "Other income"
Such a record indicates that the fears regarding the repayment of accounts receivable did not materialize and, therefore, at the time the provision was accrued, a pseudo-loss was created, and in the current reporting period pseudo-profit is involuntarily shown. In fact, there was no loss or profit. Due to the difficulty of determining the amount of the reserve, many accountants simply do not create such reserves. But by doing so, they make the reporting of their organizations less real than it should be, and violate the requirements of PBU 1/98.
Question:
Which line of the balance sheet reflects the amount of the allowance for doubtful debts?
Answer:Having considered the issue, we came to the following conclusion:
V balance sheet the amount of the reserve for doubtful debts separate line do not show. It reduces the accounts receivable, reflected in line 1230 "Accounts receivable", in respect of which the reserve was created.
Direct reflection of the amount of the allowance for doubtful debts is made in the notes to the balance sheet, in particular in Table 5.1.
Rationale for the conclusion:
From January 1, 2011, for accounts receivable related to settlements for delivered goods, work or services that have not been repaid within the terms established by the contract and are not provided with appropriate guarantees, the company is obliged to create a special reserve (clause 70 of the Accounting Regulations and accounting records in Russian Federation, approved by order of the Ministry of Finance of Russia dated July 29, 1998 N 34n (hereinafter - the Regulation on accounting)).
In accordance with the Instructions for the application of the Chart of accounts for accounting of financial and economic activities of organizations, approved by order of the Ministry of Finance of Russia dated October 31, 2000 N 94n (hereinafter referred to as the Instruction), an entry is made for the amount of the created reserve on the debit of account 91, subaccount "Other expenses", and the credit of account 63 "Provisions for doubtful debts". Analytical accounting for account 63 is carried out for each created reserve.
As a reminder, from the reporting for 2011, new forms of accounting statements are in effect, approved by order of the Ministry of Finance of Russia dated 02.07.2010 N 66n (hereinafter - Order N 66n).
According to clause 35 PBU 4/99 “ Financial statements organizations "(hereinafter - PBU 4/99), the balance sheet must include numerical indicators in the net valuation, ie minus the regulatory values that should be disclosed in the notes to the balance sheet and income statement.
Thus, in the balance sheet, the amount of the reserve for doubtful debts is not separately shown. It reduces the receivables for which the provision was made.
Accounts receivable from buyers and customers for the goods (works, services) shipped by them, not repaid at the reporting date, are reflected in line 1230 "Accounts receivable" of the balance sheet.
Thus, on line 1230 "Accounts receivable" of the balance sheet, in particular, the debit balance on account 62 "Settlements with buyers and customers" minus the credit balance on account 63 "Provisions for doubtful debts" (clauses 73, 74 of the Regulation on accounting, p. 35 PBU 4/99).
In other words, in the asset of the balance sheet, the receivables for which reserves for doubtful debts have been created are shown net of the reserve, while the liabilities are not reflected in the amount of the reserve.
Accordingly, the data balance sheet account 62 "Settlements with buyers and customers" and account 63 "Provisions for doubtful debts" will not coincide with the balance sheet.
According to clause 3 of Order N 66n, organizations independently determine the detailing of indicators by articles of reports. Appendices to the balance sheet and profit and loss statement (hereinafter referred to as explanations) are drawn up in tabular and (or) text form, and their content is determined by the organization independently, taking into account Appendix No. 3 “Examples of drawing up explanations to the balance sheet and income statement ( thousand rubles (million rubles) "to this order (clause 4 of Order N 66n).
In particular, explanations about the nature of accounts receivable are contained in Table 5.1 "The presence and movement of accounts receivable" Appendix No. 3 to Order No. 66n. When compiling the balance sheet for the reporting year, a reference to this subsection is given in column 1 "Explanations" of line 1230 "Accounts receivable" of the Balance sheet.
Table 5.1 presents information for the reporting and previous years on the balances of long-term and short-term receivables. In this case, accounts receivable are shown in two quantities - accounted for under the terms of the agreement and the amount of the reserve for doubtful debts that reduces it.
That is, the amount of the reserve for doubtful debts is reflected only in the notes to the balance sheet, in particular in Table 5.1.
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Regulations
Accounting for account 63 is regulated by the Chart of Accounts and Instructions for its use (order of the Ministry of Finance dated October 31, 2000 No. 94n), Methodical instructions inventory of property and financial commitments(order of the Ministry of Finance of the Russian Federation of 13.06.1995 No. 49), PBU 4/99 "Financial statements of the organization", PBU 21/2008 "Changes estimated values", The law" On accounting "dated 06.12.2011 No. 402-FZ and other regulatory documents.
Any organization may face an unscrupulous counterparty: for example, the buyer may not pay on time for the goods delivered to him, and the prospective supplier may receive an advance payment under the contract, but by the specified time not fulfill the subject of the contract - not provide the goods, do not perform work or do not provide services.
Such a debt is recognized in accounting as a doubtful debt, - a debt not guaranteed by any property security, which, most likely, will not be paid in the future.
The conditions for recognizing doubtful debts are established in the Accounting Policy.
ATTENTION! The formation of such a reserve is the responsibility (not the right!) Of the company.
Characteristics of account 63 (active or passive, the balance sheet is reflected in a line ... etc.)
After carrying out a regular (monthly / quarterly / annual) inventory before the formation of reports, accounts receivable are revealed in the accounting of the affected organization (according to Dt 60, 62, 76, 58.3), which any company (small business is no exception!) Is obliged to recognize doubtful and create a reserve by Kt 63 in correspondence with Dt 91.2. The creation of these reserves is other expenses of the organization.
Is the 63 active or passive? Of course, the account is passive, the recognition of the reserve is accounted for in the credit of the account, and its decrease in the debit.
The amounts of the credit balance (unused reserve) are involved in calculating the amount of receivables when compiling the balance sheet and in the results of the report on financial results... Account 63 in the balance sheet is reflected in line 1230 "Accounts receivable" of the balance sheet with a minus sign (from total amount accounts receivable, the amount of doubtful debts is deducted) and as part of line 2350 "Other expenses" of the statement of financial results.
Information on reserves should be disclosed in the notes to the financial statements.
There are no subaccounts to an account in the Chart of Accounts. Analytics for account 63 is a separate accounting of the amounts for each doubtful debt.
Rules for writing off bad debts in accounting
Doubtful debt over time can be classified as bad debt. In this case, the debt is written off at the expense of the created reserve.
The criteria for recognizing the counterparty's debt as hopeless are established in paragraph 2 of Art. 266 of the Tax Code of the Russian Federation. Bad debts that cannot be collected are debts for which:
- The statutory limitation period (3 years) has expired.
- The obligation was terminated due to the impossibility to fulfill it on the basis of:
- state agency act;
- liquidation of the enterprise;
- rulings bailiff(the location of the debtor, his property / valuables has not been found, or property that can be collected is absent from the debtor).
If the amount of the created reserve was not enough to write off the bad debt, the required amount is written off at the expense of other expenses from Dt 91.2.
The written off amount of bad debt is necessarily reflected on the off-balance sheet account 007 for a period of 5 years, so that you can track the change in the financial condition of the bad counterparty and the possibility of recovering this write-off.
ATTENTION! There are significant differences in the legal requirements for accounting for provisions for doubtful debts in accounting and tax accounting.
In accounting:
- the exact term of the debt in days is not taken into account;
- the solvency of the debtor is assessed;
- the amount of the reserve is not limited;
- when PBU No. 18/02 is applied, SHEs (deferred tax assets) are formed.
Postings to account 63 with an example of accounting with SHE accrual
The most typical entries on account 63 - Reserve for doubtful debts:
An example of accounting with the accrual of SHE
Conditions:
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06/03/2017 the seller shipped a batch of goods in accordance with the supply agreement in the amount of 158,000 rubles. Buyer's payment must be received within 25 days after shipment. 07/03/2017 received a partial payment in the amount of 65,000 rubles. Until the end of the year, the remaining debt had not been paid off.
Calculations:
158,000 × 20% = 31,600 - SHE when creating a reserve
65,000 × 20% = 13,000 - SHE for restoration with partial payment
***
After an inventory of accounts receivable, in case of doubts about its repayment by the debtor, the company must create a reserve for doubtful debts. This reserve is taken into account on the account of the same name 63 as other expenses.
If a doubtful debt is recognized as a bad debt, its amount is written off at the expense of this reserve for Dt 63 and Kt 60, 62, 76 or 58.3. If the amount of the provision for writing off is not enough, the remaining part is written off from Dt 91.2. The entire amount written off is written off to the balance on account 007 and the possibility of a change in the financial condition of a hopeless debtor is monitored for 5 years.
The balance of the reserve for doubtful debts is deducted from the amount of accounts receivable at the end of the year and the resulting value is shown on line 1230 in the balance sheet. The credit balance of account 63 is included in line 2350 in the income statement. The notes to accounting should disclose information about reserves for doubtful debts.
Account 63 of accounting is a passive account "Provisions for doubtful debts". According to PBU, any company or organization, including those related to small businesses, is obliged to create reserves for doubtful debts and refer these amounts to the financial result. Account 63 is intended for such purposes in accounting.
Any unsecured debt to a company that is highly likely not to be repaid in the future is recognized as doubtful debt in the BU.
The criteria for classifying receivables as doubtful are determined by the company independently. As a rule, these are:
- expiration of the payment period;
- information on the debtor's insolvency;
- information on the impossibility of the debtor to manufacture products in the event of an advance payment;
- Availability enforcement proceedings and bankruptcy proceedings.
Unlike tax accounting in accounting, any debt is recognized as doubtful, recorded in the debit of accounts: 60, 62, 76, 58-3.
Postings to account 63 are created based on the inventory of accounts receivable and a value judgment about the possibility of debt repayment:
The doubtful debt reserve can be created monthly or quarterly for part or all of the debt with VAT. In any case, this procedure must be consolidated in the accounting policy. For example, you can focus on the timing of creating a reserve for doubtful debts in tax accounting, but it is important to remember that the procedure for creating reserves in OU and BU is very different.
Accounting for reserves for doubtful debts
Features of accounting and creation of a reserve for doubtful debts in OU and BU are given in the table below:
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| BOO | WELL | |
| Duty | Yes | No |
| Type of debt | Any debt, not secured by a pledge and a guarantee, accounted for by the debit of accounts: 60, 62, 76, 58-3 | Accounts receivable that a company has incurred in connection with the sale of goods, the provision of services or the performance of work, not secured by a pledge and guarantee |
| Debt term, after which a reserve is created | It does not matter if the debtor's solvency is assessed | 45 to 90 days - 50% debt From 90 days - 100% debt |
| Restrictions | The amount of the reserve is not limited | - The largest of the values: 10% of the proceeds of the current or previous year. — The reserve is not created if the debt of the organization and its debtor is of a counterpart nature. That is, when not only the debtor owes the firm, but the firm itself owes the debtor |
After the end of the inventory and the identification of doubtful debts, entries are made to the debit of account 91.2 "Other expenses" and the credit of account 63 "Provisions for doubtful debts". In the future, the unpaid debt can be written off at the expense of this reserve Dt 63 Kt from 60, 62, 76, 58-3 accounts, depending on the type of debt.
Unused reserves are included in the balance sheet and income statement. Adding unused amounts of reserves to the profit of the reporting period is accounted for by entry Дт 63 "Provisions for doubtful debts" and Кт 91 "Other income".
In the balance sheet, accounts receivable are always shown net of the allowance for doubtful debts.
Typical postings for account 63
| Dt | CT | Wiring content | A document base |
| 91.2 | 63 | Formed (additionally accrued) the amount of the reserve for doubtful debts | Accounting reference-calculation based on the results of the inventory of accounts receivable |
| 63 | 62 | Writing off doubtful accounts of buyers at the expense of the reserve | Accounting certificate, order of the head |
| 63 | 76 | Write-off of doubtful debts of various debtors at the expense of the reserve | |
| 63 | 58.3 | Write-off of doubtful debts of the borrower on the issued loan at the expense of the reserve | |
| 63 | 91.1 | The amount of the reserve was restored as a result of debt repayment | Accounting certificate, bank statement |
Examples of transactions and postings on account 63
We will reflect the data of the company's receivables in 2017 as of the end of each quarter for two counterparties Romashka LLC and Vasilek LLC:
November 17, 2017 LLC "Vasilek" repaid the debt. We will reflect the entries for the accrual and restoration of the provision for doubtful debts for each reporting date in the table:
| Dt | CT | Transaction amount, rub. | Description of wiring |
| As of June 30, 2017 | |||
| 91.2 | 63 | 5 000 000 | A provision has been created for a part of the doubtful debt of Romashka LLC |
| As of September 30, 2017 | |||
| 91.2 | 63 | 5 000 000 | Additional accrued provision for doubtful debt of Romashka LLC |
| 91.2 | 63 | 7 000 000 | A provision has been created for the doubtful debt of LLC "Vasilyok" |
| As of November 17, 2017 | |||
| 51 | 62 | 7 000 000 | The accounts receivable of LLC "Vasilek" are repaid |
| As of December 31, 2017 | |||
| 63 | 62 | 10 000 000 | The debt of Romashka LLC was written off at the expense of the reserve |
| 63 | 91.1 | 7 000 000 | The reserve for the doubtful debt of Vasilek LLC has been restored in connection with the payment of the debt |
