Why should an accountant learn to distinguish between different types of repairs and how to do it. Change in the initial cost of fixed assets Current and major repairs of fixed assets

It can be carried out through repairs (current, medium and major), as well as modernization and reconstruction.

Repair of fixed assets is recommended to be carried out in accordance with a plan, which is formed by the types of fixed assets subject to repair, in monetary terms, based on the system of scheduled preventive maintenance developed by the organization, taking into account the technical characteristics of fixed assets, their operating conditions and other reasons. The system of scheduled preventive maintenance provides for the maintenance of fixed assets, current and average repairs, as well as major and particularly complex repairs of individual fixed assets. The repair plan and the preventive maintenance system are approved by the head of the organization.

Maintenance work, as well as routine and medium repairs of fixed assets, includes work to systematically and timely protect them from premature wear and maintain them in working condition. Accounting for the costs of major repairs is organized for individual objects or groups of fixed assets.

Costs incurred for the repair of fixed assets are reflected in the corresponding primary documents for accounting for the release (expense) of material assets, the calculation of wages, debts to contractors for work performed on major and other types of repairs, and other expenses.

Costs for completed repairs of fixed assets carried out:

contract method, are reflected in accounting as the debit of the account in which the specified costs are accumulated in correspondence with the settlement accounts;
economically, - by the debit of the accounts for accounting for production costs (circulation) in correspondence with the credit of the accounts for accounting for production costs.

Acceptance of objects upon completion of major repairs is carried out according to the acceptance certificate for repaired, reconstructed and modernized objects (form OS-3). At the same time, control must be exercised over the correct execution of the scope of work.

If the upcoming amount of planned repairs is large, then repairs can be carried out using a pre-formed reserve. At the same time, over a fairly long period, equal amounts are included in the cost price (debit of cost accounts) and a reserve fund is formed (credit of account 96 “Reserve for future expenses”). When making repairs, actual expenses are written off against the reserve (for example, debit account 96 and credit account 10 “Materials”).

Rice. 4.5. General scheme of correspondence of accounts when repairing fixed assets

When inventorying the reserve for repairs of fixed assets (including leased facilities), excess reserved amounts are reversed at the end of the year.

When the completion of repair work on objects with a long production period and a significant volume of said work occurs in the year following the reporting year, the balance of the reserve for the repair of fixed assets is not reversed. Upon completion of repairs, the excess amount of the reserve is applied to the financial results of the reporting period.

Costs for the modernization and reconstruction of fixed assets after their completion, when these costs improve the previously adopted standard performance indicators (useful life, power, quality of use, etc.) of fixed assets, increase the initial cost of the object, are included in the additional capital of the organization . If one object has several parts that have different useful lives, the replacement of each such part during restoration is accounted for as disposal and acquisition of an independent object.

Accounting for repair and restoration of fixed assets

To ensure the uninterrupted operation of fixed assets, it is necessary not only to systematically monitor their condition during operation (lubrication, inspection, etc.), but also to periodically restore them through repairs, modernization and reconstruction.

Based on the volume and nature of the repair work performed, a distinction is made between current and major repairs of fixed assets.

Under current repairs understand the correction or replacement of individual components or parts to maintain the facility in working condition; under major repairs - simultaneous replacement of all worn-out components and parts with disassembly of the objects being repaired.

Modernization And reconstruction have the goal of improving the standard performance indicators of fixed assets (useful life, capacity).

Repairs of fixed assets can be carried out economically, i.e. by the organization itself, or contractor, i.e. by third party organizations.

The restoration of fixed assets is carried out in accordance with the plan based on the system of scheduled preventive maintenance, which is approved by the head of the organization.

The preventative maintenance system provides for the maintenance of fixed assets, current and major repairs. It is developed by the organization based on the technical characteristics of fixed assets, their operating conditions, etc.

Organizations can charge actual expenses associated with carrying out or paying for repairs of fixed assets directly to the cost accounts from the credit of the corresponding material, cash and settlement accounts: 10 “Materials”, 70 “Settlements with personnel for wages”, etc.

Organizations, especially those with a seasonal nature of production, can create a repair fund to accumulate funds for repair work. To account for the repair fund, it is advisable to open a subaccount “Repair Fund” using a passive account. 96 “Reserves for future expenses.” In this case, contributions to the repair fund can be recorded using the following accounting entry:

Dt sch. 25 “General production expenses”, 26 “General business expenses”, etc.

K-t sch. 96 “Reserves for future expenses.”

Organizations, when forming a repair fund, record transactions for accounting for repairs of fixed assets carried out in an economic way, as a rule, in advance on the active synthetic account 23 “Auxiliary production”. The debit of this account reflects the actual costs of capital and current repairs of own fixed assets, and the credit from the repair fund writes off the actual cost of repair work. Debit balance by account 23 shows the costs of unfinished capital or current repairs of fixed assets. In the balance sheet, these costs are reflected under the item “Work in progress”.

Construction and other materials received during the repair of fixed assets are included in the debit of the account. 10 “Materials” and credit account. 23 “Auxiliary productions”.

Write-off of the actual cost of repairs carried out economically using an account. 23, in the accounting department of the organization they reflect the following entry:

Dt sch. 96 “Reserves for future expenses”

K-t sch. 23 “Auxiliary productions”.

When carrying out major repairs of fixed assets by contract, the organization enters into an agreement with the contractor. Acceptance of completed major repairs is documented by an acceptance certificate. Completed capital works are paid to the contractor based on the estimated cost of their actual volume. For the cost of completed capital work, contractors submit invoices to the customer, the acceptance of which is documented by the following accounting entry:

Dt sch. 96 “Reserves for future expenses”, subaccount “Repair Fund” (excluding VAT amount)
Dt sch. 19 (VAT amount)
K-t sch. 60 “Settlements with suppliers and contractors” (total amount).

In the case where the organization does not create a special repair fund, the costs of major repairs carried out by contract can be written off from the account loan. 60 to the debit of expense accounts.

The costs of repairing fixed assets at the end of the reporting year should be written off as expenses of the organization in the amount of actual costs incurred. In this regard, the amount of the reserve that exceeds the actual repair costs incurred is reversed at the end of the year. If there is a shortage of the repair fund by the amount of the deficiency, either an additional entry is made for accruals to the repair fund, or the specified amount is written off as expenses of the organization. Balance on the subaccount “Repair Fund” account. 96 “Reserves for future expenses”, as a rule, should correspond to the costs of unfinished repairs of complex objects.

An organization can initially record the costs of repairing fixed assets as a debit to its account. 97 “Future expenses” (from the credit of material, settlement and other accounts or account 23), and from this account throughout the year, as a rule, evenly write off to expense accounts. This option for accounting for the costs of repairing fixed assets is advisable to use in seasonal production, where the bulk of the costs for repairing fixed assets occur in the first months of the year, when the repair fund has not yet been created.

In cases of completion, additional equipment, reconstruction, or partial liquidation of fixed assets, their initial value in which they were accepted for accounting may change. These operations with fixed assets may be accompanied by both an overestimation of the value of objects and its understatement, depending on management goals.

An increase (decrease) in the initial cost of fixed assets is charged to the organization’s additional capital. At the same time, the organization’s expenses reflected in the account. 08 “Investments in non-current assets”, upon completion of completion, additional equipment, reconstruction of a fixed asset facility or upon completion of work of a capital nature, are written off to the debit of the account. 01 "Fixed assets".

At the same time, by the amount of costs added to the fixed asset accounting account, the amount in the additional capital accounting account increases and the own source remaining at the disposal of the organization decreases (with the exception of depreciation). If one object has several parts that have different useful lives, the replacement of each such part during restoration is accounted for as disposal and acquisition of an independent inventory item.

Accounting for costs of maintenance and restoration of fixed assets

Restoration of fixed assets is carried out through repairs (current, medium and capital), completion, additional equipment, reconstruction and modernization.

At average repair, which is carried out at intervals of more than one year, the unit being repaired is partially disassembled and some parts are restored or replaced.

Overhaul of equipment and vehicles This type of repair is considered to involve complete disassembly of the unit, repair of base and body parts and assemblies, replacement or restoration of worn parts and assemblies with new and more modern ones, assembly, adjustment and testing of the unit.

Major repairs of buildings and structures - repair, which involves replacing worn-out structures or replacing them with more durable and economical ones that improve the operational capabilities of the objects being repaired.

Repairs are carried out according to a plan developed on the basis of a preventive maintenance system approved by the head of the organization. This system provides for the maintenance of fixed assets: current, medium and major repairs. It is developed based on the technical characteristics of objects, their operating conditions, and other parameters.

The costs of all types of repairs are included in production costs and selling costs, i.e. due to the cost of products, works, services. Repair of non-production fixed assets is carried out at the expense of the organization’s income, targeted financing, and other sources.

Repair of fixed assets can be carried out by economic and contract methods. In both cases, for each object being repaired, a list of defects is drawn up, which indicates the necessary characteristics of fixed assets, work to be performed, repair deadlines, time standards for work, and the estimated cost of repairs by item.

At economic method The organization carries out repairs on its own and repair costs are reflected in the accounting records of this organization. Based on the list of defects and the work order, the accounting department issues documents for obtaining from the warehouse the necessary spare parts and materials, work orders for repairing fixed assets.

Regulatory documents on accounting and reporting offer a choice of one of several ways to attribute expenses for major repairs to the cost of products, works, and services.

First way assumes the presence in the organization of a repair and construction group, the costs of which are collected on account 23 in correspondence with the credit of accounts 10, 70, 69, etc. In the future, these expenses are written off as production costs or sales expenses or are pre-grouped on account 25 “General production expenses” :

Kit 23 “Auxiliary production”.

You can directly attribute repair costs to the cost of products, works, services or sales costs:

Dt 20 “Main production”, 25 “General production expenses”, 44 “Sales expenses”
Kit 10 “Materials”, 70 “Settlements with personnel for wages”, 69 “Calculations for social insurance and security”, etc.

This method is used for small volumes of repairs and even expenses during the reporting period.

Second way involves the formation of a repair fund (reserve), which is created monthly with funds allocated to account 96 “Reserves for future expenses”, subaccount “Reserve for expenses for repairs of fixed assets”. The formation of the reserve is reflected by the entry:

K-96 “Reserves for future expenses”, subaccount “Reserve for expenses for repairs of fixed assets”.

According to Art. 324 of the Tax Code of the Russian Federation, the amount of the reserve for future repair costs is determined based on the total cost of fixed assets and deduction standards. The total cost of fixed assets is determined as the sum of the original cost of all depreciable fixed assets put into operation as of the beginning of the tax period in which the reserve is formed. If fixed assets were put into operation before Chapter 25 of the Tax Code of the Russian Federation came into force, then the replacement cost is taken to calculate the total cost of depreciable fixed assets. Standards for deductions to the reserve for future expenses for the repair of fixed assets are established based on the frequency of repairs of a fixed asset object, the frequency of replacement of elements (in particular, assemblies, parts, structures) of fixed assets and the estimated cost of the specified repair. In taxation, the maximum reserve amount, as a rule, should not exceed the average amount of actual repair costs over the last 3 years. However, to carry out particularly complex and expensive types of capital repairs over more than one tax period, the maximum amount of contributions to the reserve for future expenses may be increased by the amount of contributions to finance these types of repairs in accordance with the schedule for their implementation.

Actual expenses for repairs of fixed assets are written off from the created reserve:

D-96 “Reserves for future expenses”, subaccount “Reserve for expenses for repairs of operating systems”

If the amount of actual costs incurred for the repair of fixed assets in the reporting period exceeds the amount of the created reserve, the remainder of the costs is included in other expenses as of the end of the tax period:

Dt 91 “Other income and expenses”, subaccount “Other expenses”
Kt 10 “Materials”, 70 “Settlements with personnel for wages”, 69 “Calculations for social insurance and security” and other accounts of settlements and costs.

If the repairs are not completed, then at the end of the year the amounts of the unused reserve remain in account 96 and are transferred to the next year.

Upon completion of repair work, an entry is made for the excess accrued reserve amounts:

D-96 “Reserves for future expenses”, subaccount “Reserve for expenses for repairs of fixed assets”
Kt 91 “Other income and expenses”, subaccount “Other income”.

Third way involves assigning actual expenses for the repair of fixed assets to the debit of account 97 “Deferred expenses”, from which expenses are written off evenly during the reporting period to the accounts of production costs or sales expenses. To allocate expenses for the repair of fixed assets as part of deferred expenses, it is advisable to open a corresponding sub-account for account 97.

Actual expenses for repairs of fixed assets in the accounting accounts are reflected by the entry:

Dt 97 “Future expenses”, corresponding subaccount
Kt 10 “Materials”, 70 “Settlements with personnel for wages”, 69 “Calculations for social insurance and security” and other accounts of settlements and costs.

When writing off expenses for repairs of fixed assets, the following entry is recorded in accounting:

Dt 20 “Main production”, 25 “General production expenses”, 44 “Sales expenses”, etc.
Kt 97 “Future expenses”, corresponding subaccount.”

This accounting method is used if the organization repairs fixed assets unevenly and a repair fund (reserve) is not created.

The first and second methods of reflecting expenses for the repair of fixed assets are applicable not only in accounting, but also in tax accounting.

Expenses for capital repairs of OS, carried out by contract, are reflected in the contractor’s accounting records. The work is carried out on the basis of a contract. Upon completion of the repair, the object is accepted on the basis of the acceptance certificate for repaired, reconstructed and modernized objects (form No. OS-3), which is drawn up in two copies. The act is signed by an employee of the structural unit of the organization authorized to accept fixed assets, and by a representative of the organization that performed the work, and is submitted to the organization’s accounting department. Then the act is signed by the chief accountant and approved by the head of the organization. The necessary changes to the characteristics of the object are made in the technical passport of the corresponding fixed asset object. The first copy of the act remains with the customer organization, the second is transferred to the organization that carried out the work to restore the OS.

Completed work is paid to the contractor based on the estimated cost of the work. In this case, on the basis of the contractor’s account, the following entries are drawn up: D-t 20 “Main production” or D-t 96 “Reserves for future expenses” K-t 60 “Settlements with suppliers and contractors” - for the amount of accepted work:

Dt 19 “VAT on acquired values”
Kit 60 “Settlements with suppliers and contractors” - for the amount of VAT;
Dt 60 “Settlements with suppliers and contractors”
K-t 51 “Settlement account” - for the amount of payment for contractors’ invoices.

Accounting for costs associated with modernization and reconstruction (including costs of modernization carried out during repairs carried out at intervals of more than 12 months) of fixed assets is carried out in the manner established for accounting for capital investments.

Acceptance of completed works on completion, additional equipment, reconstruction, modernization of fixed assets is formalized by a corresponding act.

The costs of maintaining an object of fixed assets (technical inspection, maintenance in working order) are included in the costs of servicing the production process and are reflected in the debit of the production cost accounts (selling expenses) in correspondence with the credit of the cost accounting accounts.

Costs associated with moving fixed assets (mobile transport vehicles, excavators, ditch diggers, cranes, construction machinery, etc.) within the organization. are included in production costs (selling costs).

This is how business in Russia works, that in order to properly maintain records and calculate taxes, an accountant constantly has to take on unusual functions and master “related” professions. But if accountants are accustomed to being “a little bit of a lawyer” and “a little bit of a personnel specialist,” then the need to become “a little bit of a builder” turns out to be unexpected. And such a need arises, and it is connected with a very common situation - renovation work in the office. After all, their tax accounting depends on the correct classification of the work performed. And in some cases - the very opportunity to take such expenses into account when taxing. In addition, sometimes correctly qualifying a job is also important for civil law relations. Let's look at these situations in more detail.

Repairs in rented premises

According to the general rule, stated in Article 616 of the Civil Code, when renting property, responsibilities for its repair are distributed as follows: current repairs are the responsibility of the tenant, and major repairs remain with the lessor. Usually, when leasing office real estate, these rules remain unchanged, since the lease terms are most often short, and it is inappropriate to shift major repairs to the tenant (and the Civil Code of the Russian Federation allows this).

In such a situation, the accountant of the organization renting the premises, when carrying out repairs, needs to clearly understand what kind of work relates to the current repair. After all, if an organization “accidentally” carries out major repairs, there may be problems with taking into account expenses for tax purposes, since the tenant had no obligation to carry out such repairs. Consequently, the expenses may be considered unjustified (Article 252 of the Tax Code of the Russian Federation).

The situation is similar for the landlord. Here it is important to understand which of the tenant’s requirements for repairs must be met, because these requirements relate to major repairs, and which requirements are not justified. Accordingly, for the landlord, the tax accounting of repair costs will depend on the correct answer to this question.

Repair or modernization

Another point when an accountant has to operate in construction terms is related to the peculiarities of accounting for modernization (completion, retrofitting, reconstruction). Indeed, in contrast to repairs, the costs of which are taken into account at a time (Article 260 of the Tax Code of the Russian Federation), expenses for such activities are written off through depreciation (clause 2 of Article 257 of the Tax Code of the Russian Federation).

At the same time, the legislator made an attempt to remove possible questions and gave definitions of completion, reconstruction and modernization in the Tax Code (see box).

Definitions from the Tax Code of the Russian Federation

According to Article 257 of the Tax Code of the Russian Federation:
Work on completion, additional equipment, and modernization includes work caused by a change in the technological or service purpose of equipment, a building, structure or other object of depreciable fixed assets, increased loads and (or) other new qualities.
For the purposes of this chapter, reconstruction includes the reconstruction of existing fixed assets associated with the improvement of production and the increase of its technical and economic indicators and carried out under the project for the reconstruction of fixed assets in order to increase production capacity, improve quality and change the range of products.
Technical re-equipment includes a set of measures to improve the technical and economic indicators of fixed assets or their individual parts based on the introduction of advanced equipment and technology, mechanization and automation of production, modernization and replacement of obsolete and physically worn-out equipment with new, more productive ones.

But, it should be admitted with regret that these definitions turned out to be of a rather general nature; Based on them, it is often difficult to attribute specific work to modernization. Considering the cost of repair (modernization) work, the cost of an error here is quite high. And in both directions: if the modernization is incorrectly classified as a repair, the organization will face additional charges, penalties and fines. And in the opposite situation - losses due to overpaid income tax.

So in this case, it would be a good idea for the accountant to refer to the repair criteria and once again make sure that the work performed is (or is not) a modernization.

Documents and definitions

So where can an accountant get information about which specific construction works are considered current repairs, which are major repairs, and which are considered modernization? The list of relevant sources is given in the letter of the Ministry of Finance of Russia dated November 23, 2006 No. 03-03-04/1/794. When resolving the issue of classifying work as construction, the financial department recommends relying on the following documents:

Regulations on carrying out scheduled preventative repairs of industrial buildings and structures MDS 13-14.2000, approved by Decree of the USSR State Construction Committee dated December 29, 1973 No. 279;
Departmental Construction Standards (VSN) No. 58-88 (R) “Regulations on the organization and implementation of reconstruction, repair and maintenance of buildings, municipal and socio-cultural facilities” (approved by Order of the State Committee for Architecture under the USSR State Construction Committee dated November 23, 1988 No. 312) ;
Letter of the USSR Ministry of Finance dated May 29, 1984 No. 80 “On the definition of the concepts of new construction, expansion, reconstruction and technical re-equipment of existing enterprises.”

On our own behalf, we would add that the general document on this topic is the Town Planning Code, and in controversial situations you can seek advice from the relevant ministry - the Ministry of Construction of Russia. Specialists from this department, just like specialists from the Ministry of Finance, are required to respond in writing to requests from organizations.

Cheat sheets

It is clear that studying all the above documents requires a huge amount of time. Therefore, we have prepared special cheat sheets, using which you can quickly understand what kind of work has been done in your case. There are three such cheat sheets. One cheat sheet contains lists of works with their breakdown by type. The other is based on definitions given in various regulations. It contains general concepts that make it possible to understand the type of work “at the top level.” The third cheat sheet, dedicated to modernization, stands apart in this series. It contains signs of modernization and explanations for them.

When working with our cheat sheets, we suggest using the following algorithm.

First, based on the “modernization” cheat sheet, we decide whether our work relates to repair or whether it is a modernization.

Then, having made sure that we are talking about repairs, we must try to find the types of work being performed in the first table and, based on this, determine which repairs - current or major - they relate to.

If the necessary work is not in the first cheat sheet, then we turn to the second and try to apply the deductive method, extending the general definition to our private work.

"Modernization" cheat sheet

The main and fundamental difference between modernization, addition, reconstruction and repair is that it changes the operational performance of the building. For example, the capacity of engineering communications increases, corridors are expanded, and the like. That is, the building receives new properties, and its characteristics are qualitatively improved.

But it must be taken into account that the operational performance of a building may change during major (and even sometimes during current!) repairs. Therefore, it is important to take into account two more indicators: the scale of change and the goal. Thus, during repairs, improved performance is always a side effect associated with the use of modern materials and (or) technologies. This effect is not the purpose of the work being carried out and is optional. And the scale of such improvements is not comparable with the scale of all the work being carried out; they do not play a leading role in the budget and schedule.

During reconstruction and modernization, on the contrary, improving performance is the main goal of the work carried out. They determine not only the choice of materials and technologies for carrying out work, but also the very need for this work. Accordingly, if the estimate and schedule for reconstruction and modernization contain some work related to repairs, then they are only secondary, caused by the need and type of modernization.

Thus, modernization (reconstruction, addition) can be distinguished from repair by the documents that are drawn up in connection with the work: technical specifications, justification, estimates, schedules, contracts. During modernization, the red thread in all these documents will be quality indicators. And during repairs - quantitative.

Cheat sheet by type of work

Maintenance*	Major renovation**
sealing and filling joints, seams, cracks	resumption of plastering of all premises
restoration in some places of the lining of the foundation walls from the basements and plinths	replacement of existing and installation of new technological equipment in buildings
re-laying of individual sections of brick walls up to 2 sq.m.	renovation of built-in premises in buildings
elimination of local deformations by re-lining and strengthening walls	insulation and noise protection of buildings
insulation of freezing sections of walls in individual rooms	repair of plaster in the amount of more than 10% of the total plastered surface
restoration of individual walls, lintels, cornices	production of design and estimate documentation
partial replacement or strengthening of individual elements of wooden floors	changing the roof structure
strengthening the elements of the wooden rafter system, including changing individual rafter legs, racks, struts, sections of purlins, sheathing.	equipment of attic spaces for exploitation
elimination of dampness, airflow	transfer of the existing power supply network to increased voltage
cleaning ventilation ducts and exhaust devices	installation of automatic fire protection and smoke removal systems
repair of ventilation ducts and exhaust devices	partial re-laying (up to 10%), as well as strengthening of stone foundations and basement walls, not associated with the superstructure of the building or additional loads from newly installed equipment
antiseptic protection of wooden structures	repair of existing drains around the building
fire protection of wooden structures	sealing cracks in brick or stone walls, clearing furrows, and bandaging seams with old masonry
strengthening and replacing drainpipes	repair, replacement and replacement of worn partitions with more advanced designs of all types of partitions
strengthening and replacement of small coverings of architectural elements along the facade	partial or complete replacement of rafters
cleaning the roof from snow and ice	partial (over 10% of the total roof area) or complete replacement or replacement of all types of roofing
replacement, restoration of individual elements, partial replacement of window, door stained glass or showcase fillings (wooden, metal, etc.)	partial (more than 10% of the total floor area in the building) or complete replacement of all types of floors and their bases
replacement of individual sections of pipelines, shut-off and control valves	repair or replacement of interfloor ceilings
changing sections of heating devices, shut-off and control valves	replacement and strengthening of all types of stairs and their individual elements
replacement of individual sections of flooring.	continuous anti-corrosion painting of metal structures
restoration of destroyed sections of sidewalks, driveways, paths and platforms	repair and renewal of cladding with an area of more than 10% of the cladding surface
punching (sealing) holes, sockets, grooves.	continuous painting with stable compounds.
replacement of individual sections of blind areas around the perimeter of buildings	partial or complete replacement of air ducts
restoration of the building layout.	change of fans, heaters, filters
replacement of individual appliances (cisterns, toilets, washbasins, sinks, urinals, drinking fountains, water taps)	partial or complete replacement of ventilation ducts
change of individual sections of electrical wiring (up to 10%).	replacement of worn-out sections of the electrical network (more than 10%)
all types of plastering and painting works in all premises	changing safety shields

* The most common types of work are given. For a complete list of works, see Appendix 7 of VSN No. 58-88(r) and Appendix 3 to Regulation No. 279 (approved by Resolution of the USSR State Construction Committee dated December 29, 1973 No. 279).
** The most common types of work are given. For a complete list of works, see Appendix 9 of the VSN No. 58-88(r), as well as Appendix 8 to Regulation No. 279 (approved by Resolution of the USSR State Construction Committee dated December 29, 1973 No. 279).

Definitions cheat sheet

Type of repair/regulatory regulations		Regulation 279	Town Planning Code
Capital	Restoring the life of a building, replacing, if necessary, structural elements and engineering equipment systems, as well as improving operational performance	Replacing worn-out structures and parts of buildings and structures or replacing them with stronger and more economical ones that improve the operational capabilities of the objects being repaired, with the exception of the complete replacement or replacement of the main structures, the service life of which is the longest (stone and concrete foundations, all types of walls and their frames, pipes of underground networks, bridge supports, etc.) - clause 3.11	Replacement and (or) restoration of building structures of capital construction projects or their elements (with the exception of load-bearing structures), systems and networks of engineering support, as well as replacement of individual elements of load-bearing building structures with similar or other indicators that improve them and (or) restoration of the specified elements (clause 14.2 art. 1)
Current	Restoring the serviceability (operability) of structures and systems of engineering equipment of a building, as well as maintaining its operational performance	Systematic and timely protection of parts of buildings and structures and engineering equipment from premature wear by carrying out preventive measures and eliminating minor damage and malfunctions - clause 3.4	Ensuring the proper technical condition of buildings and structures. In particular, maintaining parameters of stability, reliability of buildings, structures, serviceability of building structures, systems and networks of engineering support, their elements in accordance with the requirements of technical regulations, design documentation (Part 8 of Article 55.24)

In January 2009, the organization acquired office space under an equity participation agreement and in the same month put it into operation as a fixed asset. In September 2009, a contract was concluded for the construction and finishing work of this premises. In September, an act for these works was signed. The list of works includes the construction of partition walls made of aerated concrete, finishing of walls, ceilings, and so on. Can an organization include finishing costs in the initial cost of an office in accounting and tax accounting? What is the accounting and taxation procedure in this situation? How is the work performed documented?

Tax accounting

In the situation under consideration, there are two possible options for accounting for the costs of construction and finishing work. At the same time, for profit tax purposes, it is necessary to correctly qualify the work performed (repair, reconstruction, modernization, etc.) for their subsequent inclusion in expenses.

Costs for major repairs are considered as other expenses and are recognized for tax purposes in the reporting (tax) period in which they were incurred, regardless of their payment in the amount of actual costs (Articles 260 and 272 of the Tax Code of the Russian Federation). For tax purposes, Chapter 25 of the Tax Code of the Russian Federation does not divide repairs into capital and current.

According to paragraph 3 of Article 260 of the Tax Code of the Russian Federation, in order to ensure uniform inclusion of expenses for repairs of fixed assets over two or more tax periods, taxpayers have the right to create reserves for upcoming repairs of fixed assets in accordance with the procedure established by Article 324 of the Tax Code of the Russian Federation.

If the organization has not formed a reserve for upcoming expenses for the repair of fixed assets, the date of the expenses will be the day of signing the acceptance certificate for the work performed (letter of the Department of Tax Administration of Russia for Moscow dated January 16, 2003 No. 26-12/3640).

Please note that all expenses taken into account when determining the tax base for corporate income tax must meet the criteria established by paragraph 1 of Article 252. Expenses must be economically justified, documented and made as part of an activity aimed at generating income.

To document the completed construction and finishing work, it is necessary to have an appropriate contract, estimate and technical documentation, and administrative documents of the organization. To document the acceptance of objects upon completion of reconstruction or major repairs, an act of acceptance and delivery of repaired, reconstructed, modernized fixed assets is used (form No. OS-3, approved by Resolution of the State Statistics Committee of Russia dated January 21, 2003 No. 7).

Accounting

According to paragraphs 7, 8 of PBU 6/01 “Accounting for Fixed Assets”, costs associated with the acquisition of a property and bringing this object into a condition suitable for use are included in the initial cost of this object. Thus, all expenses associated with the purchased property before putting it into operation form its initial cost.

From paragraph 52 of the Guidelines for accounting of fixed assets (approved by order of the Ministry of Finance of Russia dated October 13, 2003 No. 91n, hereinafter referred to as the Guidelines), it follows that the organization will have an obligation to transfer a fixed asset (building (building premises)) to account 01 " Fixed assets" after the completion of capital investments to bring the building into a condition suitable for use, that is, after the building (premises) is put into operation.

Note that in accounting, neither the concept of reconstruction nor the concept of repair of a fixed asset object is defined.

Accounting when classifying work as reconstruction

In accounting, fixed assets are taken into account at their original cost (clause 7 of PBU 6/01). A change in the initial cost of fixed assets, in which they are accepted for accounting, is allowed in cases of completion, additional equipment, reconstruction, modernization, partial liquidation and revaluation of fixed assets (clause 14 of PBU 6/01).

Paragraph 8 of PBU 6/01 establishes that the initial cost of fixed assets is the amount of the organization's actual costs for their acquisition, construction and production, with the exception of value added tax and other refundable taxes. At the same time, the actual costs of acquisition, construction and production of fixed assets also include amounts paid for bringing them into a state suitable for use (i.e., in this case, the costs of construction and finishing work).

Considering that construction and finishing work is necessary to use the premises for the intended purposes, these works are classified as capital investments. The costs of finishing work before signing the certificate of completion are reflected in the organization’s accounting records as a debit to account 08 “Investments in non-current assets”. After completion of the work, all costs are included in the initial cost of the fixed asset. The value of the fixed asset increases.

The following entries need to be made in accounting:

Debit 08 Credit 60 (76)
- costs of construction and finishing works are reflected;
Debit 19 Credit 60 (76)

- VAT on construction and finishing works is accepted for deduction;
Debit 01 Credit 08
- the initial cost of the fixed asset was increased by the amount of costs for finishing work.

Accounting when classifying work as major repairs

Paragraph 66 of the Guidelines establishes that the restoration of fixed assets can be carried out through repair, modernization and reconstruction.

Costs incurred during the repair of fixed assets are reflected in accounting on the basis of the corresponding primary accounting documents for accounting for transactions of release (expense) of material assets, calculation of wages, debts to suppliers for repair work performed and other expenses by debiting the corresponding cost accounting accounts for production (sales expenses) in correspondence with the credit of accounts for accounting for costs incurred (clause 67 of the Methodological Instructions).

In order to evenly include upcoming expenses for the repair of fixed assets into production costs (sales expenses) of the reporting period, the organization can create a reserve for expenses for the repair of fixed assets (including leased ones) (clause 69 of the Guidelines).

Accounting records (overhaul):

Debit 20 (26, 44) Credit 60 (76)
- construction and finishing works are reflected;
Debit 19 Credit 60 (76)
- VAT on construction and finishing works is taken into account;
Debit 68 subaccount "VAT calculations" Credit 19
- accepted for deduction of VAT on construction and finishing works.

S. Nikolaev, V. Gornostaev,
experts from the Legal Consulting Service GARANT
Article published in the magazine
"Bulletin of an accountant of the Moscow region"
№12 December 2009

Planning costs for the restoration of fixed assets

Classification of repair costs

Submitting requests for repairs

Reflection of expenses for repairs, modernization, additional equipment in the accounting of budgetary organizations

Each institution has fixed assets on its balance sheet as part of non-financial assets. During operation, fixed assets wear out and repairs are carried out to maintain them in working condition.

Work on the restoration of fixed assets can be classified according to the nature of the type of work as:

Maintenance;
major repairs;
modernization;
reconstruction;
retrofitting

Note!

The reflection of operations in accounting and tax accounting depends on the type of work: costs for current, medium and major repairs of fixed assets are taken into account as part of the current expenses of the institution, and costs for modernization and reconstruction are attributed to the increase in the initial cost of fixed assets.

Depending on whether repairs or modernizations were carried out, income tax is calculated (provided that the work was carried out using funds received from business activities) and the intended use of budget funds, since modernization and repair expenses are reflected according to different KOSGU codes. If a fixed asset was acquired through entrepreneurial activity, the costs of repairing these objects reduce the income tax base as part of other expenses (clause 1 of Article 260 of the Tax Code of the Russian Federation (hereinafter referred to as the Tax Code of the Russian Federation)).

The institution has the right to dispose of the net profit received from business activities at its own discretion after paying income tax to the budget. Therefore, you must first pay income tax, and the remaining profit can be used to repair fixed assets.

For your information

During repairs, reconstruction and modernization, work that is similar in nature can be performed; it is not always easy to distribute them by type, and inspection bodies find many mistakes made by accountants when reflecting these operations.

It is necessary to determine the types of work in order to plan the expenditure budget, correctly attribute costs to items (sub-items of KOSGU), and use budgetary and extra-budgetary funds for their intended purpose.

Repair- this is a set of works to eliminate malfunctions, restore the operability of non-financial asset objects, maintain technical, economic and operational indicators (useful life, power, quality of use) at the originally intended level, i.e. this is the restoration of the functions of fixed assets for their further use . Repair involves preventive measures, elimination of damage and malfunctions, replacement of worn structures and parts.

Note!

Although during the repair process individual parts of the fixed asset can be replaced with more modern and durable ones, such an event is not associated with a change in the important technical and economic indicators of the fixed asset.

Depending on the volume and nature of the work performed, repairs can be current or major. They differ in complexity, volume, deadline and frequency.

Maintenance is carried out several times a year, capital - no more than once a year or less often. During routine repairs, individual parts are replaced; during major repairs, the object is dismantled and faulty components are replaced. During routine repairs, minor faults discovered during the daily use of the fixed asset are eliminated, while the object practically does not go out of service. Current repairs are work to systematically and timely protect OS objects from premature wear and tear by carrying out preventive measures.

During major repairs restore lost original characteristics, eliminate malfunctions, replacing worn parts and components.

For your information

There are no differences in the budget classification and the procedure for maintaining budget accounting between current and major repairs, so there is no need to differentiate such expenses.

Modernization- this is a set of works to improve an object of fixed assets, to increase the technical level and economic characteristics of the object by replacing its structural elements and systems with more advanced ones (for example, installing a larger amount of RAM on a computer).

For your information

Modernization involves replacing components, and the replaced part must be in good working order before replacement. If during the work a faulty unit is replaced, then such work is not a modernization, but a repair.

Reconstruction- this is a change in the parameters of capital construction projects, their parts (height, number of floors, area, production capacity indicators, volume) and the quality of engineering and technical support.

The concept of reconstruction is applicable only to capital construction projects (buildings, structures). It involves changing the parameters of an object. Reconstruction also includes improving the quality of engineering and technical support.

Retrofitting- addition of fixed assets with new parts, parts and other mechanisms that were previously absent, which will form a single whole with this equipment, give it new additional functions or change performance indicators. Their separate use will be impossible.

Completion- this is the construction of new parts to a fixed asset (usually real estate). In this case, new parts must be inseparable from the main asset itself without causing damage.

Repair planning

To determine which category of expenses to include (repair, reconstruction, modernization or additional equipment), first of all you need to find out what type of work needs to be done to restore fixed assets:

if work is carried out to restore operability, maintain technical characteristics, or external changes that do not affect the change of the fixed asset object to its original functions, then this is a repair;
if work is carried out to improve the basic characteristics and add new functions of a serviceable object, then this type of work should be classified as reconstruction, modernization or retrofitting.

In this case, you need to determine the purpose of the operation:

If replacement of units or parts is necessary, this is modernization (reconstruction);

If components and parts are added to the object - additional equipment (completion).

As a rule, in organizations, by order, those responsible for the operation of property are appointed (for example, the head of the laboratory is responsible for laboratory equipment, a metrologist is responsible for measuring instruments, etc.). Their responsibilities include, among other things, drawing up requests for repairs or modernization for the upcoming financial year.

The organization develops the application form independently.

Applications are approved by the head of the institution.

Based on applications, the economic department plans amounts by type of repair in the estimate of income and expenses. Each planned type of expense must be justified. This will make it possible to draw up a work plan, conclude agreements with suppliers for carrying out repair work, systematize the institution’s activities related to the maintenance and servicing of property, guarantee the continuity of the production process, and ensure the efficiency of the institution’s core activities.

Fragments of applications for the structural unit (laboratory for monitoring physical and chemical factors) are presented in the table.

Fragments of applications for repairs of fixed assets

Object name	Application number	Cause	Planned events	Planned result
		The image on the monitor is unclear and cannot be corrected by adjustments.	Diagnostics and repair, if necessary, by means of a third party
Automated workstation (computer included)		Installing a hard drive into the system unit	System unit repair, hard drive replacement	Restoring the system unit
Automated workstation (computer included)		System resources - the amount of RAM - are insufficient to use the Bank-Client program	Upgrading with additional RAM	Possibility to use the Bank-Client program
Autoclave AG-1000 horizontal		Automated control system for autoclave	Autoclave modernization	Ability to use sterilization mode, indexing (time, pressure, temperature)
Copy machine		The machine hums but does not pick up paper from the tray	Replacing a worn roller with a new one	Restoring functionality
Car VAZ-2107 (Lada)		Knocking sound when shifting to subsequent gears	Do-it-yourself repairs	Restoring functionality
Laboratory building		The roof is leaking	Partial roof replacement	Restoring performance characteristics

We conclude contracts for the performance of work on the restoration of fixed assets

When concluding contracts with suppliers and contractors for repair work, it is necessary to determine what type of work to restore fixed assets is provided for in this contract in order to correctly assign costs to KOSGU items.

If actions or events are planned that will increase the cost of fixed assets (reconstruction, modernization, etc.), you should use code 310 KOSGU “Increase in the cost of fixed assets”, but if you are talking about repairing a faulty fixed asset - code 225 KOSGU “Works, property maintenance services."

Within the framework of one contract, various types of work may be provided, therefore, in the “Subject of the contract” section, the costs of the corresponding types of work should be indicated separately. The contractor must prepare various reporting documents for the work performed.

We reflect expenses for current, medium and major repairs in accounting

Expenses for current, medium and major repairs of fixed assets are taken into account as part of the current expenses of the institution under subarticle 225 of KOSGU “Works, services for property maintenance.” Let us note that the costs of purchasing spare parts (construction materials) are reflected not under subarticle 225, but under subarticle 340 of the KOSGU “Increase in the cost of inventories”; the write-off of consumed materials is reflected under subarticle 272 of the KOSGU “Consumption of inventories”.

Note!

This rule does not apply if the cost of the materials used is included in the overall repair estimate and is taken into account by the contractor when drawing up the acceptance certificate for the work performed.

Costs for property repairs are reflected in account 0.109.61.225 “Costs of work, services for maintaining property in the cost of finished products, work, services.”

If the costs of repairs are uneven throughout the year, they must first be reflected in account 0.401.50.000 “Deferred expenses” with subsequent even write-off (clause 302 of the Instructions for the use of the Unified Chart of Accounts for public authorities, local governments, government bodies state extra-budgetary funds, state academies of sciences, state (municipal) institutions, approved by Order of the Ministry of Finance of Russia dated December 1, 2010 No. 157n (as amended on August 6, 2015; hereinafter referred to as Instruction No. 157n)).

The spare parts remaining after the repair must be capitalized; this will be reflected in the accounting records by the following entries:

Debit of account 0.105.00.000 “Inventories” (according to the corresponding analytical accounts) Credit of account 0.401.10.180 “Other income”.

Costs that increase the cost of spare parts (such as the cost of delivering them to the institution or bringing them into a condition suitable for use) are first accumulated in account 0.106.00.000 “Investments in non-financial assets” (according to the corresponding analytical accounts).

After the cost of spare parts is finalized, it is written off to account 0.105.00.000 (according to the corresponding analytical accounts).

Situation 1

The institution entered into an agreement to repair a copy machine using funds from business activities. During the repair, the worn paper pickup roller was replaced with a new roller.

The costs of the transaction should be reflected in the following accounting entry:

Debit account 2.109.61.225 Credit account 2.302.25.730.

Replacing a worn roller did not affect the improvement of the technical level and technical characteristics of the copier, so equipment repairs are taken into account as part of the institution’s operating expenses.

Modernization of fixed assets

During operation, fixed assets wear out morally and physically. Modernization is one way to restore them.

If during modernization the initial indicators of the functions of a fixed asset are improved or increased (useful life, power or other technical characteristics), then the costs for them increase the initial cost after completion of all work.

The completion of restoration work is formalized by an act of acceptance and delivery of modernized facilities, which indicates data on changes in the technical characteristics and cost of the fixed asset. Based on the act, costs are written off to increase the value of fixed assets in the debit of account 0.101.00.000 “Fixed assets” (according to the corresponding analytical accounts).

2 ways to modernize fixed assets:

1) economic (with the institution’s own resources);

2) contracting (with the involvement of third-party organizations, entrepreneurs, citizens).

Documenting

All business transactions must be confirmed by primary documents (Part 1, Article 9 of the Federal Law of December 6, 2011 No. 402-FZ “On Accounting”, clause 7 of the Instructions for the Unified Chart of Accounts No. 157n), therefore an order should be issued signed by the manager institutions on modernization of fixed assets.

The order must indicate the reasons, timing of modernization and those responsible for its implementation.

After the modernization, an act of acceptance and delivery of modernized fixed assets is drawn up (according to form No. OS-3 (0306002)). If the modernization was carried out economically - in one copy, by contract - in two: for yourself and for the contractor.

The act reflects:

cost of the OS object before modernization;
amount of costs;
the cost of the fixed asset after the work has been completed.

Based on the act, accumulated costs are written off on account 0.106.00.00 “Investments in non-financial assets” and entries are made in the inventory card. The executed deed is signed by:

members of the commission for the receipt and disposal of non-financial assets created in the organization;
employees responsible for the modernization of fixed assets, or representatives of the contractor;
employees responsible for the safety of fixed assets after modernization.

The signed act is approved by the head of the institution, after which the act is transferred to the accounting department.

Note!

If the contractor carried out the modernization of a building, structure or premises, these works are classified as construction and installation works, therefore, in addition to the act, an acceptance certificate in form No. KS-2 and a certificate of the cost of work performed and expenses in form No. KS-3 (approved by the Resolution) should be signed Goskomstat of Russia dated November 11, 1999 No. 100).

When concluding an agreement on the restoration of a fixed asset, technical documentation and construction estimates must be drawn up for all work (Article 743 of the Civil Code of the Russian Federation).

We reflect expenses in accounting

Costs for completion, additional equipment, reconstruction and modernization of fixed assets are preliminarily reflected and accumulated in the debit of account 0.106.00.000 “Investments in non-financial assets” (according to the corresponding analytical accounts). This account reflects all costs for this work:

cost of materials used;
depreciation of machinery and equipment used to carry out the work;
wages of those involved in completion, reconstruction or modernization and social contributions from it;
expenses for paying for third-party services, etc.

After completion of all work and delivery of the completed (retrofitted, reconstructed or modernized) fixed asset, these costs are written off to increase its value in the Debit of account 0.101.00.000 “Fixed assets” (according to the corresponding analytical accounts).

Let's consider the procedure for reflecting in accounting the costs of modernizing a fixed asset.

Situation 2

In August-September 2016, the Federal Budgetary Institution of Health "Center for Hygiene and Epidemiology" carried out the modernization of the laboratory equipment "GP Sterilizer" by contract using funds received from business activities.

The cost of the work performed by the contractor is RUB 70,800, including VAT - RUB 10,800.

The acceptance certificate for the completed work was signed in October.

The institution pays income tax quarterly. Accounting and tax accounting data are the same.

The initial cost of the equipment at which it was accepted for accounting is 504,000 rubles. Listed as particularly valuable movable property. When accepted for accounting, the useful life was set at 7 years (84 months). Depreciation is calculated using the straight-line method.

For accounting purposes:

annual depreciation rate - 14.28572% (1/7 × 100);
annual depreciation amount - 72,000 rubles. (RUB 504,000 × 14.28572%);
monthly depreciation amount is 6,000 rubles/month. (RUB 72,000 / 12 months).

Since the modernization lasted less than 12 months, during the period of its implementation the accountant did not stop accruing depreciation on laboratory equipment.

The modernization did not lead to an increase in the useful life of the equipment, therefore, for accounting and tax purposes, the useful life of the modernized equipment was not revised.

During the period of modernization of the equipment of the GP Sterilizer, the following accounting operations should be performed:

in August-September:

Debit account 2.109.61.271 Credit account 2.104.24.410 - 6000 rub. — depreciation was accrued on the equipment being modernized;

in October:

Debit account 2.106.21.310 Credit account 2.302.31.730 - 60,000 rub. (RUB 70,800 -RUB 10,800) - the cost of the contractor’s work to modernize the fixed asset is taken into account;

Debit account 2.210.10.560 Credit account 2.302.31.730 - 10,800 rub. — VAT is taken into account on the cost of the contractor’s work;

Debit account 2.303.04.830 Credit account 2.210.10.660 - 10,800 rub. — VAT is accepted for deduction;

Debit account 2.302.31.830 Credit account 2.201.11.610 - 70,800 rub. — payment has been made for the contractor’s work;

Account credit 18 (KOSGU code 310) - RUB 70,800. — the outflow of funds from the institution’s account is reflected;

Debit account 2.109.61.271 Credit account 2.104.24.410 - 6,000 rub. — depreciation was accrued on the equipment being modernized;

Debit account 2.101.24.310 Credit account 2.106.21.310 - 60,000 rub. — the initial cost of the equipment was increased by the amount of the cost of work on its modernization.

The initial cost of the equipment, taking into account the costs of modernization, will be 564,000 rubles. (RUB 504,000 + RUB 60,000).

For accounting purposes:

annual depreciation amount - 80,571.46 rubles. (RUB 564,000 × 14.28572%);
monthly depreciation amount - 6714.29 rubles/month. (RUB 80,571.46 / 12 months).

From October, depreciation charges will be reflected by posting:

Debit account 2.109.61.271 Credit account 2.104.24.410 - 6714.29 rub. — depreciation has been accrued for the equipment being modernized.

The costs of modernization must be reflected in the primary documents for accounting for fixed assets and in the inventory card for accounting for fixed assets.

Question on topic

Repair or modernization?

The organization purchased new monitors to replace old inoperative ones. How to take into account such costs - as modernization or repairs?

Purchased parts of computer equipment (including monitors) cannot be separate objects of fixed assets, since they perform their functions only as part of an associated set. Computers are accounted for as single inventory items (letters of the Ministry of Finance of Russia dated 02.06.2010 No. 03-03-06/2110, 06.11.2009 No. 03-03-06/4/95). This procedure applies to both tax and accounting.

Spare parts necessary for the repair and replacement of worn parts in equipment and machines are classified as inventories, which means that the costs of their acquisition are included in Article 340 of KOSGU “Increase in the cost of inventories.”

It follows from this that the operation of replacing an inoperative monitor should be regarded as a repair of computer equipment, the costs of which do not increase the initial cost. Consequently, the cost of spare parts that are used in the repair process is charged to the institution’s expense accounts 0.106.61.000, or 0.106.71.000, or 0.109.81.000, or 0.109.91.000 under code 272 KOSGU “Consumption of inventories.”

If repair work is carried out by a third-party organization, the costs of paying for its services should also be taken into account on expense accounts under code 225 KOSGU “Works, services for property maintenance”

The same rules apply to other parts of computer equipment: network cards, DVD drive, motherboard, etc.

______________________

The procedure for accounting for operations to replace old, but serviceable parts of a fixed asset with new and more modern ones is not defined by law. As a rule, if such a replacement leads to an increase in the technical characteristics of the object, then the work is considered as an upgrade and the cost of used parts, the costs of their installation are included in the initial cost of the computer (for example, replacing an old monitor with a new one with a larger screen area, increasing RAM or hard memory ).

If, as a result of the work, the technical characteristics of the fixed asset do not improve, the costs of the work are considered as repairs, reflected in the cost accounts of accounting.

Situation 3

FBUZ replaced the old monitor with a new one with a larger screen area and improved technical characteristics. The work was carried out using funds from business activities.

The cost of a new monitor is RUB 31,860. (including VAT 4860 rub.).

Delivery costs by transport company - 1180 rubles. (including VAT 180 rub.).

The initial cost of the old monitor is 10,000 rubles, depreciation is charged 8,000 rubles.

The market price of the old monitor on the date of modernization work is 3,500 rubles.

Let's reflect the costs of modernization:

Debit account 2.106.24.340 Credit account 2.302.34.730 - 27,000 rub. — expenses for the purchase of the monitor and accounts payable to the supplier are reflected;

Debit account 2.210.10.560 Credit account 2.302.34.730 - 4680 rub. — “input” VAT is taken into account on the cost of the new monitor;

Debit account 2.302.34.830 Credit account 2.201.11.610 - 31,860 rub. — payment for the purchased new monitor was made from the institution’s personal account in the treasury;

Debit account 2.106.24.340 Credit account 2.302.22.730 - 1000 rub. — the costs of delivering the monitor and accounts payable to the transport company are reflected;

Debit account 2.210.10.560 Credit account 2.302.22.730 - 180 rub. — “input VAT” on transport services is taken into account;

Debit account 2.302.22.830 Credit account 2.201.11.610 - 1180 rub. — expenses for delivery of the monitor have been paid;

Debit account 2.105.26.340 Credit account 2.106.24.340 - 28,000 rub. (27,000 + 1000) — the initial cost of the monitor is taken into account as part of inventory;

Debit account 2.303.04.830 Credit account 2.210.10.660 - 4860 rub. (4680 + 180) - accepted for deduction of VAT on the cost of the monitor and the cost of transport services;

Debit account 2.104.24.410 Credit account 2.101.24.410 - 8000 rub. — depreciation of the old monitor was written off;

Debit account 2.401.10.172 Credit account 2.101.24.410 - 2000 (10,000 - 8000) rub. — the residual value of the old monitor is written off;

Debit account 2.105.36.340 Credit account 2.401.10.180 - 3500 rub. — the old monitor was capitalized at the market price;

Debit account 2.106.21.310 Credit account 2.105.26.440 - 28,000 rub. — the cost of a new monitor was written off to increase the cost of the computer and increase investments in fixed assets;

Debit account 2.101.24.310 Credit account 2.106.21.310 - 28,000 rub. — the costs of upgrading the computer are included in the initial cost.

conclusions

The institution must have an internal regulatory document (for example, Regulations), which will determine what is considered a major overhaul and what is considered a current one.

The types of work to restore fixed assets for the correct allocation of costs to the relevant items of KOSGU should be determined at the initial stage of planning the expenditure budget.

The types of repair work must be differentiated; any type of work must be justified and documented.

Costs should be reflected correctly in accounting: expenses for current, medium and major repairs of fixed assets are taken into account as part of the current expenses of the institution; costs for additional equipment, reconstruction, and modernization are capital, therefore, expenses for them are written off to increase the initial cost of fixed assets.

S. S. Velizhanskaya,
deputy chief accountant of the FFBUZ "Center for Hygiene and Epidemiology in the Sverdlovsk Region in the Oktyabrsky and Kirovsky districts of the city of Yekaterinburg"

Paragraph 2 of Article 257 of the Tax Code determines that the initial cost of fixed assets can be changed only in cases strictly defined by the specified norm. Namely in cases:

completions;
retrofitting;
reconstruction;
modernization;
technical re-equipment;
partial liquidation;
and for other reasons.

Let us define what each of the definitions used means. Paragraph 2 of Article 257 of the Tax Code notes that work on completion, additional equipment, and modernization includes work caused by changes in technological or service equipment, a building, structure or other object of depreciable fixed assets, increased loads or other new qualities.

For the purposes of Chapter 25 of the Tax Code, the reconstruction of fixed assets means the reconstruction of existing fixed assets associated with improving production and increasing its technical and economic indicators. At the same time, the reconstruction of fixed assets should be carried out according to the project and in order to increase production capacity, improve quality and change the product range.

Technical re-equipment includes a set of measures to improve the technical and economic indicators of fixed assets or their individual parts based on the introduction of advanced equipment and technology, mechanization and automation of production, modernization and replacement of obsolete and physically worn-out equipment with new, more productive ones.

From the definitions we conclude that the main purpose of carrying out this work (modernization or reconstruction) is to improve or increase the initially adopted standard indicators of the functioning of fixed assets or to change the purpose of use of the object.

However, in practice there are often situations when, for example, reconstruction seems quite difficult to distinguish from major repairs. What should an accountant do in such a situation? And what documents need to be used to determine that reconstruction or repair has been carried out. Let's look at this in more detail.

Important point

The initial cost of fixed assets changes in cases of completion, additional equipment, reconstruction, modernization, technical re-equipment, partial liquidation of relevant facilities and on other similar grounds

What's all the fuss about?

It would seem, why such a distinction? And what difference does it make whether reconstruction or major repairs are carried out? The answer is simple, like everything ingenious - in accounting. In tax accounting, repair costs are taken into account as a lump sum in the amount of actual costs. Provided that the organization does not have a reserve for the repair of fixed assets (clause 2, clause 1, article 253 of the Tax Code of the Russian Federation, clause 1, article 260 of the Tax Code of the Russian Federation, clause 5, article 272 of the Tax Code of the Russian Federation).

As for reconstruction, the accounting is somewhat different. Such expenses increase the initial cost of fixed assets, which in the future can only be written off through depreciation charges (Articles 256-259 of the Tax Code of the Russian Federation). Naturally, such a write-off is extremely unprofitable for business entities, since accounting for costs in income tax expenses extends over many years.

It is also necessary to remember that the calculation of depreciation of fixed assets after reconstruction in accounting and tax accounting differs and the application of PBU 18/02 “Accounting for income tax expenses” (approved by Order of the Ministry of Finance of the Russian Federation of November 19, 2002 No. 114n) is inevitable.

From what has been said, it is clear that the accountant needs to clearly distinguish between when repairs were carried out and when reconstruction was carried out. Note that in the first case, only the shortcomings and errors formed during the work are eliminated in the object, and during reconstruction the properties of the object are improved. Of course, it is beneficial for the company to write off costs at a time and treat them as repairs. However, it is absolutely certain that the tax authorities will not agree with this. And in every convenient case they will assume that reconstruction was carried out and charge income tax with all the ensuing consequences.

Other definitions of reconstruction

Not only does it seem quite difficult to distinguish between the types of construction and installation work being carried out, it is also necessary to use legislation that has been in force since the times of the Soviet Union and branches of law other than tax law.

Let us note that the Tax Code provides too general a definition and in practice it seems quite difficult to classify exactly what types of construction and installation work were performed.

Typically, accountants use Appendix 1 to Departmental Construction Standards VSN 58-88 (r) “Regulations on the organization and conduct of reconstruction, repair and maintenance of buildings, public utility and social-cultural facilities” (approved by the Order of the State Committee for Architecture of the Russian Federation under the USSR State Construction Committee dated November 23 1988, hereinafter referred to as Appendix 1 to the BSN).

Appendix 1 to the BSN notes that the reconstruction of a building is a complex of construction work and organizational and technical measures associated with changes in the main technical and economic indicators. For example, the number and area of apartments, construction volume and total area of the building, capacity and throughput or its purpose in order to improve living conditions, quality of service, increase the volume of services.

Definitions of reconstruction can also be found in letter of the Ministry of Finance of the USSR dated May 29, 1984 No. 80, Methodology for determining the cost of construction products on the territory of the Russian Federation MDS 81-35.2004 (approved by Resolution of the State Committee for Construction of Russia dated March 5, 2004 15/1), letter of the State Planning Committee USSR No. NB-36-D, letter of the USSR State Construction Committee No. 23-D, USSR Stroybank No. 144, USSR Central Administration No. 6-14 dated May 8, 1984 “On the definition of the concepts of new construction, expansion, reconstruction and technical re-equipment of operations

The Law of July 18, 2011 No. 215-FZ “On Amendments to the Town Planning Code and Certain Legislative Acts of the Russian Federation” (with the exception of certain provisions) (hereinafter referred to as Law No. 215-FZ) brought a lot of clarity. These amendments introduced and supplemented the legislative acts of the Russian Federation. First of all, the innovations affected the Town Planning Code. The legislator has significantly supplemented the existing definition of reconstruction.

Thus, from July 22, 2011, you can use a new, more expanded interpretation of the definition of “reconstruction”, as well as the types of work that can be classified as it. The “new” edition contains definitions of reconstruction for capital construction projects, linear objects (communication or power lines, pipelines, roads, etc.). In addition to changing the parameters of an object, such as height, number of storeys, volume area, reconstruction also includes such types of work as: superstructure, reconstruction or expansion of an object, replacement or restoration of its load-bearing building structures, with the exception of individual elements of these structures with similar ones or other improving indicators.

There is no definition of “repair” in either tax or accounting legislation. Therefore, let us turn again to construction regulations. In the letter of the State Statistics Committee of Russia dated April 9, 2001 No. MS-1-23/1480 there is the following definition: the cost of repairs (current, medium and capital) means the cost of work to maintain fixed assets (their individual parts and structures) in working condition during their useful life, which does not lead to an improvement in the initial standard performance indicators.

In paragraph 3.1 of the Regulations on carrying out planned preventative repairs of industrial buildings and structures MDS 13-14.2000 (approved by the resolution of the USSR State Construction Committee dated December 29, 1973 No. 279) there is another definition of “repair”, defining it as a set of technical measures aimed at maintaining or restoration of the original operational qualities of both the building or structure as a whole and their individual structures. Repairs are usually divided into current and major. Law No. 215 - Federal Law made its “mite” in the definition of “repair”. So a major overhaul is the replacement or restoration of:

building structures of capital construction projects or replacement of their elements (except load-bearing ones);
engineering support systems and their networks;
individual elements of load-bearing building structures for similar or other improving indicators.

Fundamental differences

The main difference between repair and reconstruction is that the purpose of the former is preventive measures, the elimination of minor damage and malfunctions in order to protect and premature wear of fixed assets. As a result of any repair, the purpose of the fixed asset object, its technical and economic indicators, technological or service purpose do not change, product quality does not improve, and production space does not increase.

The purpose of the reconstruction is to improve the initially adopted standard indicators of the functioning of the fixed asset object, to increase the capacity and useful life.

Thus, when distinguishing between the reconstruction and repair of fixed assets, the change in technical and economic indicators, technological or service purpose, and the acquisition of new qualities play a decisive role. This conclusion is confirmed by letters from the Ministry of Finance of Russia dated April 22, 2010 No. 03-03-06/1/289, dated March 24, 2010 No. 03-03-06/4/29.

Important point

The cost of the work performed cannot be a determining factor for distinguishing between repair and reconstruction. Letter of the Ministry of Finance of Russia dated March 24, 2010 No. 03-03-06/4/29.

Arbitrage practice

The judges, taking into account these definitions, in their decisions come to the conclusion that repair work includes work that does not change the technological or service purpose of fixed assets, does not improve production and does not increase its technical and economic indicators. For example, this position is adhered to in the resolution of the Federal Antimonopoly Service of the Moscow District dated June 8, 2011 No. KA-A40/5373-11. In their decision, the arbitrators indicate that when qualifying the work performed for the purpose of classifying expenses as repair or modernization, it is necessary to proceed from the purpose and focus of such work, taking into account that repair (costs that do not increase the inventory value of the facility) include such types of work , after which the object’s performance does not improve (increase). The purpose of repair is to eliminate existing faults, the presence of which makes the operation of the fixed asset dangerous (impossible). A similar position is expressed in decisions of the FAS North-Western District dated August 30, 2010 No. A56-35754/2009, FAS North Caucasus District dated June 24, 2011 No. A53-18544/2010, FAS Moscow District dated May 11, 2011 No. KA-A41/3691-11.

Replacement of individual failed elements of a fixed asset, not associated with a change in the technological or service purpose of the equipment, or a change in its technical and economic indicators, is not modernization and is considered as a repair of a fixed asset (letter of the Ministry of Finance of the Russian Federation dated August 3, 2010 No. 03-03 -06/1/518). A similar point of view is expressed in the Resolution of the Federal Antimonopoly Service of the Volga Region dated May 17, 2011 No. A65-20282/2010).

Supreme Court Opinion

An interesting position is taken by the judges in the Resolution of the Presidium of the Supreme Arbitration Court of the Russian Federation dated February 1, 2011 No. 11495/10. In the said ruling, the arbitrators note that the same work can be qualified as both a major overhaul and a reconstruction. The tax authority qualified the work of cutting out part of the production string intended to lift oil from the bottom to the wellhead and drilling a sidetrack from this place as reconstruction, since as a result of the measures taken, oil production increased. However, the company took them into account in the taxable base as major repairs. The judges in their decision indicated that an increase in oil production in itself is not a sufficient criterion for qualifying the work mentioned as a major overhaul or reconstruction. And it is necessary to classify the type of work performed as repair or reconstruction based on the condition of the well. Thus, drilling sidetracks in idle wells refers to reconstruction. But work carried out in technically faulty wells or due to the extreme water cut of the formations resulting from the breakthrough of formation waters must be recognized as a major overhaul.

Accounting

A change in the initial cost of fixed assets, in which they are accepted for accounting, is allowed in cases of completion, additional equipment, reconstruction, modernization, partial liquidation (clause 14 of PBU “Accounting for fixed assets 6/01”, approved by Order of the Ministry of Finance of Russia dated March 30, 2001 No. 26n, hereinafter referred to as PBU 6/01).

Upon completion of work on the completion, additional equipment, reconstruction, modernization of a fixed asset item, the costs recorded in the account for investments in non-current assets either increase the initial cost of this fixed asset item and are written off as a debit to the fixed asset account, or are recorded separately in the fixed asset account , and in this case, a separate inventory card is opened for the amount of expenses incurred (clause 42 of the “Methodological guidelines for accounting of fixed assets”, approved by Order of the Ministry of Finance of Russia dated October 13, 2003 No. 91n, hereinafter referred to as the Guidelines).

The costs of such work are recorded on account “08” “Investments in non-current assets”. Upon completion of the work performed, they must be written off from the credit of account “08” “Investments in non-current assets” to the debit of account “01” “Fixed assets” (clause 42 of the Methodological Instructions, Instructions for using the chart of accounts). In connection with the modernization, reconstruction, completion or additional equipment, the useful life of the facility may be changed (clause 20 of PBU 6/01).

Depreciation for the reconstructed facility will be accrued from the first day of the month following the month of completion of all reconstruction work (clause 21 of PBU 6/01, clause 4 of Article 259 of the Tax Code of the Russian Federation).

note

When carrying out repairs, you need to draw up a defect report.

Documenting

Expenses for repairs, reconstruction and other expenses must be documented. This requirement is contained in paragraph 1 of Article 252 of the Tax Code. The Tax Code does not contain a list of documents that can be used to confirm expenses for repairs, additions, modernization and other similar expenses. Also, do not forget that supporting documents must comply with the requirements of Article 9 of Law No. 129-FZ. Consequently, any primary documents on the completion of these works can serve as documents confirming these expenses. Let's consider this point in more detail.

If the organization carried out work on completion, retrofitting, modernization and reconstruction, then the costs of such work must be documented with the appropriate documents. Namely:

the change in the initial cost must be recorded in the inventory card according to form No. OS-6 or form No. OS-6a (approved by Resolution of the State Statistics Committee of Russia dated January 21, 2003 No. 7);
work acceptance certificate (if the work was carried out by a third party);
act of acceptance of work performed (form No. KS-2) and a certificate of the cost of work performed and expenses (form KS-3) (approved by Resolution of the State Statistics Committee of Russia dated November 11, 1999 No. 100);
costings;
order from the manager to carry out work.

When carrying out repairs, the documents that must be completed are:

defective statement. Paragraph 69 of the Guidelines notes that it must be compiled if a reserve is created for the repair of fixed assets. However, in order to avoid disagreements with tax inspectors, we recommend drawing up the specified document when carrying out repairs, since it indicates that the fixed asset has defects that need to be removed. There is no unified form of the defective statement, so the company needs to develop it independently with mandatory reflection in the annex to the accounting policy. As a rule, in order to draw up “your own” defective list, the basis is the act of identified equipment defects in form No. OS-16 (approved by Resolution of the State Statistics Committee of Russia dated January 21, 2003 No. 7);
order from the manager to carry out repairs. It usually indicates by whom the repairs will be carried out (in-house or contracted), the composition of the commission for organizing the repairs, the timing of its implementation and other necessary information;
act of acceptance and delivery of repaired, reconstructed, modernized fixed assets in form No. OS-3 (approved by Resolution of the State Statistics Committee of Russia dated January 21, 2003 No. 7);

When carrying out repairs in an economic way, you need to issue an invoice for the temporary movement of fixed assets in form No. OS-2.

inventory card in form No. OS-6 or form No. OS-6a (approved by Resolution of the State Statistics Committee of Russia dated January 21, 2003 No. 7);
costings.

As you can see, the list of documents is the same both for reconstruction, modernization, completion, additional equipment, and for repairs. When filling out these documents, the accountant, first of all, needs to ensure that, for example, the concept of “reconstruction” is not replaced by the word “repair”. Because tax authorities very often try to replace repair work with reconstruction.

Yu.L. Ternovka, expert