Creation of reserves for doubtful debts: formation procedure, accounting. Account 63 “Provisions for doubtful debts”

In commercial practice, you have to act as a lender and a borrower. In the first situation, a situation arises when partners for one reason or another do not repay the debt on time, or, in principle, do not fulfill their monetary obligations. But such financial situations should be reliably reflected in the accounting and financial accounting of the company. A special reserve called dubious is created for this.

Consider the creation of reserves for doubtful debts, accounting methods, accounts that accompany this process, as well as write-off aspects.

Concept and essence

In order to generate real information about the state of receivables in the company, it is necessary to create a reserve for doubtful debts. To begin with, we define the concept of doubtful debt.

The accounts receivable of the company, which most likely will not be fully repaid, is considered doubtful. The following factors indicate this:

• violation by partners of the terms for the payment of funds for debts;
• obtaining data on serious financial difficulties with a debtor partner;
• lack of additional guarantees (pledge, deposit, bank guarantee, property, etc.).

Identification of doubtful debts is carried out by inventory of settlement accounts:

• on loans and borrowings;
• for goods sold;
• on payment for the work performed;
• for advance payments to sellers.

In order to properly reflect this type of company debts in the balance sheet, the company forms a special type of reserve, which should serve as an estimated indicator for accounting. This means that the amount of debt in the balance sheet should be reflected by deducting from it the funds that were allocated to the reserve. In the content of costs or revenues you need to show:

• creation of this reserve;
• its increase;
• cost reduction.

Doubtful debt, according to which organizations make reserves, accounting and tax laws are characterized almost identically. They mean by it the duty of the contractor that exists to the organization. This debt is:

• unpaid within the period specified in the contract, or with a high degree of probability of non-payment in this period;
• not paid within the period specified in the contract, and not secured by guarantees in the form of a pledge.

As a result, accounting rules, unlike tax legislation, allow to systematize as doubtful debts, not only those debts that have already expired, but also debts, the payment of which for any reason causes reasoned fluctuations. This means that the concept of doubtful debts in accounting is interpreted more extensively.

Legislation

State regulation of issues related to the reserve is carried out by the following documents:

• Tax Code of Russia (part 2).
• PBU 4/99.
• PBU 21/2008.

Creation Basics

Features of the formation of reserves for doubtful debts are not formally defined by law. Organizations must, without the help of others, create appropriate provisions and establish them in domestic regulations. Therefore, you need to take into account the accepted features of regulation of the financial reserves of the company. Among them:

• basis for creation: for this type of reserves, indicators of inventory of receivables are required;
• the amount of deductions can be determined individually for each counterparty (analytical accounting of doubtful debts). With all this, the profitability of each counterparty is taken into account (real financial opportunity and the possibility of full or partial debt collection);
• the method of creating a reserve can be chosen by the organization without the help of others, based on the specificity of the business and the nuances of the debt itself.

There are three likely methods for creating a bad debt reserve fund:

• interval: the amount of charges is calculated in each reporting period (month, quarter) by calculating the percentage of the debt amount, which may vary depending on the degree of deferred payment;
• expert: the estimated amount of debt that will not be paid on time, in the context of each debtor, will be equal to the amount of reserve deductions;
• statistical: data are studied for several periods simultaneously for different types of debts.

The organization is obliged to register the established calculation option and its features in its own accounting policy. You must register the appropriate conditions for each type of debt. For example, for the interval method, the calculation period and the percentage of deductions should be indicated; for the expert - aspects of the solvency of the debtor, etc.

A sample order to create a reserve for doubtful debts is prepared in the form of an order from the head. It necessarily reflects the data: whether VAT is taken into account or not, due date, conditions of creation.

Creation goals

The doubtful reserve in both accounts is focused on writing off doubtful debts, which for some reason have become hopeless. The formation of a reserve in both accounting and tax has a direct impact on the financial results of the company. The creation of reserves allows the recognition of losses ahead of time to write off debts, which in the future may turn out to be hopeless.

Note that doubtful debts are recognized as such in situations:

• after three years;
• if the FSSP decides on the impossibility of recovery;
• in case of elimination and liquidation of the counterparty;
• under the influence of events that are not dependent on the will of the parties (as well as events that arise from the issuance of acts of state power), which impede the implementation of obligations to pay amounts.

The procedure for creating a reserve in accounting allows one of the main conditions to be fulfilled: the requirement for the reliability of accounting data and, as a consequence of this, for statements compiled on the basis of these data. At the same time, the reliability of accounting and reporting data is fundamental in the process of conducting financial studies and making financial decisions.

General formation rules

When creating the amounts of reserves in the accounting and financial statement there are both differences and similarities in the main aspects and principles. These principles are common to the provisioning process. In both types of accounting, the basic rules for the formation of the following:

• are formed according to the results of identifying debt amounts during the inventory;
• suggest an independent determination of the frequency of inventory of debt. However, the tax rules indicate the cyclicality that corresponds to the reporting or tax period;
• formed with the division of debts by analytics;
• the reserve may be subject to the same operations: change in value, restoration (write-off) of the amount of reserves that were not used, write-off in connection with the reserve for debts that were deemed uncollectible;
• during the development, amendment and write-off, the correspondence of the amounts to the data of the financial result is taken into account: for other results in a financial statement, for non-operating ones - in a financial statement.

Inventory

The basis for the creation of such reserve amounts is an inventory of the financial obligations of the company, which is carried out with a specified frequency. This procedure is the normal practice of companies in the preparation of annual reports and the formation of reserve contributions.It is carried out by a specially created commission on the norms of legislation. The end result is the preparation of the required documentation, for example, an act in the form of INV-17. A certificate is attached to the act, in which the transcripts for all positions are indicated. The act is signed by members of the commission who participated in the procedure.

Accounting and tax accounting

Features of the creation of reserves for doubtful debts in accounting and tax authorities differ significantly, due to the fact that these types of accounting have different goals. Compare the rules specific to both types of accounting in relation to the reserve:

1. Mandatory creation. The allowance for doubtful debts in accounting is compiled in accordance with para. 1 p. 7 accounting rules. When using the accrual method in tax accounting, the accountant decides whether to create this reserve for tax accounting or not (this right is reflected in Article 266 (3) of the Tax Code).
2. The nature of the deductions. The allowance for doubtful debts in accounting is defined as “other expenses”, and for tax officials, they should be included in non-operating expenses.
3. Interpretation of doubtful debt. For accounting, in order to compensate for the reserve, any amount of debt that was not repaid on time can be used, and for tax accounting, such delays can only be delays in payment for goods.
4. Determination of the amount of deductions. In accounting, the amount of deductions and its definition is assigned to the accountant (taking into account the specificity of the debt), and for tax officials this amount is clearly determined by the Tax Code.
5. The total amount of the fund. In accounting, it is not limited, and in tax accounting it is determined in an amount not exceeding 1/10 of the proceeds.

Conditions for the formation

Orders, instructions and letters of the Ministry of Finance of Russia determine a number of criteria necessary to ensure the creation of reserves for doubtful debts:

1. The fund can be organized as a result of settlements with citizens and organizations: buyers of purchased products, services or paid work. Advance payments are not included in the total value of the reserves.
2. After creating a reserve, managers or accounting organizations should constantly monitor the dynamics of debt, since its condition may change, and the reserve fund reflects the real situation (analytical approach).
3. In accounting, debt can be considered doomed in accordance with the principles of Art. 266 of the Tax Code of the Russian Federation (as in the case of tax calculations).
4. If the question arises about which accounting for reserve assets is applicable (accounting or tax), then the following should be considered:

• if the discrepancies are related to the difference in the time correlation of the terms of debts, then this difference is the basis for the formation of deferred tax assets;
• if the amount of deductions from the reserve fund for accounting exceeds the 10 percent threshold determined by tax accounting, the company will work with constant financial differences.

Reflection in accounting

Since deductions to this reserve are the dynamics of the calculated value, their reflection in the balance sheet is associated with a certain cyclical nature. They are included in the costs of the period in which changes in the change in the active part of the reserve amounts occurred. Therefore, information about the state of the reserve should be included in each accounting report.

We carry out bookkeeping. The recognition of reserves should be made in debit 91 “Other income and expenses” and in loan 63:

• We spend hopeless amounts of debt. If the debt, which was previously indicated as doubtful, is considered hopeless, then its reserve will be set off from the debit of account 63, which is offset from the 62nd or 76th. If the amount of bad debts exceeds the amount of the reserve, they must be written off in debit 91. If the debt with the expired period is written off, it must be kept on account 007 for the balance for five years if the debtor's solvency and repayment options are returned.
• We pay in installments.If the payment from the debtor was partially received, this has a favorable effect on the dynamics of the reserve funds, which should be reflected as a debit payment of account 63 of the account “Reserve for doubtful debts” in correspondence with account 91.
• We hold an unused reserve. In a situation where the reserve cannot be used until the end of the reporting year, which follows the period in which it was created, this value in the balance sheet should be included in the financial results for the year according to Dt No. 63, Kt 91 "Other income and costs".
• We carry out, as tax duties. If only mandatory reserve accounting is kept and no taxation is made, permanent tax differences should be recognized as tax obligations, reflecting them in debit 99 and credit 68.
• Reflection in the balance sheet. To reflect doubtful debts, line 1230 is provided in the balance sheet. It reflects the amount of debts minus the provision reserved for them. The creation or additional reserve restrictions are performed according to line 2350 of the financial statements (“Other expenses”). Separately, the balance in account 63 “Provisions for doubtful debts” is not reflected in the balance sheet, the total cost of receivables simply decreases accordingly.

Examples

EXAMPLE 1. After a quarterly inventory, the company has established doubtful accounts receivable in the amount of 12 thousand rubles, according to calculations for goods sold. In the case of this debt, a reserve of 100% was organized. Postings to create a reserve for doubtful debts will be as follows: debit 91-2, loan 63-12 tons. - A reserve has been established for bad debts.

After some time, the debtor repaid part of these conditions in the amount of 7 thousand rubles. Postings to create a reserve for doubtful debts: debit 63, credit 91-1 - 7000 rubles. - reserve for repaid accounts receivable restored.

EXAMPLE 2. Previously, the organization had doubtful debt in the amount of 10 tons. A reserve of 7000 rubles was organized, then it was supplemented to 100% of the debt. After the expiration of the statute of limitations, this debt was recognized as hopeless and written off at a loss. Posting for provision for doubtful debts:

• Dt 91-2, Ct 63 - 7000 rub. - A reserve was established for bad debts.
• Dt 91-2, Ct 63 - 3000 rubles. - additionally accrued reserve for bad debts.
• Dt 63, Kt 76 - 10,000 rubles. - bad debts are written off at the expense of the reserve.

Tax accounting

Consider the creation of a reserve for doubtful debts in tax accounting.

Tax authorities do not require reflecting doubtful debts and their provision. But, if accounting deems it necessary, then this right is guaranteed and regulated by Art. 266 of the Tax Code of the Russian Federation.

Definition of doubtful and bad debts does not differ from accounting tasks. The procedure for creating a reserve for doubtful debts in NU and BU differs:

• if the debt period exceeds 3 months, then the amount of the reserve will be completely equal to the amount of debt;
• if the maturity is overdue by 45-90 days, only half of the amount can be entered into the reserve;
• it is forbidden to make changes to the reserve up to 45-day debt.

For any doubtful debt, an analytical record should be kept in order to immediately show a reaction in case the debtor's condition improves.

In tax accounting, the allowance for doubtful debts is justified only to cover losses on write-off bad amounts.

Allowance for doubtful debts and income tax are closely related. This moment is recorded in Article 266 of the Tax Code of the Russian Federation. The debt reserve reduces the base for income taxation.

Bridging accounting gaps

The rules for creating reserves for doubtful debts in the accounting and financial statements are so different that there is no complete identity between the moments when the debt is considered doubtful and the size of the formed reserves. An attempt to combine these factors by establishing the same principles for both types of accounting may lead to a violation of provisions that require the creation of reserves in accounting

1s application

The organization has two options for creating a reserve: a reserve is created only in accounting or in the accounting and accounting records. To create a reserve for doubtful debts in 1s, you need to enter options in the form of "Accounting Policy".

It all depends on the method of calculating reserves in the tax version of accounting:

• when the reserve is calculated monthly (quarterly), then in accounting it will be determined automatically at the same time;
• when the calculation is not provided, then it can be calculated once a year.

In 1C, the calculation will be performed by default in the same order as for tax accounting, except for the 10% revenue limit. This is another argument in favor of the fact that it is more convenient for the organization to calculate the reserve according to the rules of accounting.

When information is entered on buyers and contracts that are not provided with guarantees, it is necessary to put down the expiration date of the contract, since it is the program that will be guided by it in the calculations.

If there is a guarantee under the contract, then you need to put down the longest possible period in the line "Contract term", then the program will not include these amounts in the calculation of reserves.

Conclusion

Very often in practice, companies are faced with problems of non-payment by counterparties, especially in situations when it comes to installment payments under contracts. Unpaid amounts can be received by the company after a certain period of time or go into the category of uncollectible, when it will no longer be possible to claim them. The latter situation may adversely affect the financial situation of the company, as there is a sharp risk of cash shortages. To avoid such a situation, companies are obliged to form a special reserve for such doubtful amounts.

The procedure for creating a reserve for doubtful debts in the accounting and financial statements differs significantly on many issues. This leads not only to the difference in the time of recognition of the debt, but also to the difference in the amount of the formed reserve. Differences are recorded as temporary and subject to the rules of PBU 18/02.

Information on the amount of reserves is required by users in order to know the amount of such debts in the receivables. If the payment term for the contracts has expired, then the organization is obliged to create a reserve for them, especially in the absence of guarantees. Individual entrepreneurs may or may not create such reserves at their discretion.

The procedure for calculating the amounts can be determined by the company independently and recorded in the documentation in the accounting policy.