Fixed assets accounting

Accounting for fixed assets is an important component of the activities of every enterprise. Its basic rules are regulated by the National Accounting Standard 7 “Fixed Assets” and other acts, primarily the Methodological Recommendations approved by the Order of the Ministry of Finance No. 561. The main goal of accounting for fixed assets (hereinafter referred to as “FA”) is to form an effective system for tracking their movement, condition and use for the preparation of financial statements and subsequent adoption of important decisions in asset management.

Fixed assets of an enterprise: concepts and types

Fixed assets are those tangible assets that an enterprise holds for the purpose of using them during one year of the operating cycle or longer. They are used for the production or supply of goods, the provision of services, and the performance of administrative functions. Their classification is given in the same Methodological Recommendations mentioned above, and provides for their division into: land plots, buildings and structures, machinery and equipment, vehicles, tools, devices, furniture, other fixed assets.

Maintaining accounting for fixed assets of an enterprise

Registration of primary documentation

Primary documents are the basis for accounting. Today, there are typical forms of primary documents, which provide for the mandatory registration of the following documentation:

1. for the receipt and transfer of fixed assets – an act of acceptance and transfer, an act of commissioning (form OZ-1);
2. for the implementation of repairs, reconstruction and modernization – an act of acceptance and delivery of repaired objects, an act of transfer for repair, reconstruction and modernization (form OZ-2);
3. for write-off – a write-off act (form OZ-3), groups of vehicles (form OZ-4).

It is also very important to keep documentation to determine the valuation of the asset. Inventory cards and a revaluation certificate (if available) may be useful. As a result of using these documents, one of the following types of value will be applied:

• original (actual cost);
• balance sheet (minus the accumulated depreciation);
• fair (the amount at which the asset can be sold);
• liquidation (the amount that the company expects to receive from the sale of the object).

For more detailed information, we also recommend consulting a professional accountant from our law firm.

Fixed Asset Accounting

Fixed assets are reflected in Section I of the Statement of Financial Position, and the costs of their acquisition are considered as capital investments. For proper accounting of the movement of fixed assets, class 1 accounts “Non-current assets” are used:

• account 10 “Fixed assets” with sub-accounts 101-109 to designate various types of objects;
• account 11 “Other non-current tangible assets” with sub-accounts 111-117 (for assets that do not meet the criteria for recognition as fixed assets);
• account 15 “Capital investments” (reflects the costs of acquisition, creation, improvement).

For convenience, enterprises can use the standard forms of the Procedure, approved by Order of the Ministry of Finance No. 818, to register transactions with fixed assets. We also recommend contacting us for accounting support for business, which also includes maintaining the necessary financial and tax reports.

Typical accounting entries for accounting for fixed assets of an enterprise

We offer the following steps for transparent reflection of fixed assets of an enterprise in accounting (for convenience, D is Debit, and K is Credit):

• purchase of equipment: D-151, K-631;
• transfer of equipment for installation: D-152, K-151;
• purchase of tools, furniture, etc.: D-152, K-631;
• costs for construction of an object: D-152, K-201;
• receipt of fixed assets from a participant as a contribution to the authorized capital: D-10, K-46;
• inclusion in the composition of items that were mistakenly included in the MSP: D- 106, K-746 and others.

Why should you contact the accountants of “Prikhodko and Partners”?

Turning to our accountants will be useful for many reasons:

• firstly, keeping accounting requires significant time and special knowledge. By transferring these functions to “Prikhodko & Partners”, you free up your resources to focus on your core business;
• secondly, accountants have deep knowledge in the field of financial reporting, follow the latest changes in legislation and apply best practices. This will help not only to effectively manage assets, but also to avoid unwanted sanctions;
• thirdly, accountants of our law firm can offer an individual approach to each client, taking into account the specifics of the business and its needs in general.

Contact the accountants of “Prikhodko and Partners” and receive consultations and high-quality support in accounting for the company’s fixed assets. To find out the cost of our accountant’s services, fill out the form below.