Reserve capital is ... Accounting for authorized, additional and reserve capital of an enterprise
Entrepreneurial activity is conducted at your own risk. In order to reduce its negative consequences, it is recommended to create a fund, from which funds should be allocated for unforeseen expenses and covering losses. You will learn about the essence, methods of accounting and details of this process from our article.
Reserve capital is funds accumulated by society from retained earnings and other sources of income for specific purposes. It performs the following functions:
- guarantee: money is used to repay obligations if the organization has no other means;
- restrictions: the company should not make decisions to pay profits in the form of dividends, if the value of the assets is less than the amount of capital, first of all the funds should be directed to cover losses.
Differentiation of funds is widespread in the West. Organizations create reserves in volumes significantly exceeding statutory standards. As a result, they not only increase their attractiveness in the eyes of investors, but also can stabilize economic activity.
According to the Federal Law "On Joint-Stock Companies", enterprises must create a fund in the amount of at least 5% of the authorized capital (CC). The specific amount is determined at the shareholders' meeting. The maximum size in the legislation is not registered. This article of the balance sheet also takes into account special funds for the payment of dividends to holders of preferred shares and other insurance savings. LLCs are not required to create reserve capital. This decision is up to management. In the event of a positive outcome, the amount of deductions is recorded in the statutory documents.
There are also legal restrictions on the size of the Criminal Code. The lower limit of this article of the liabilities balance sheet for the company is 1,000 times the minimum wage, and the company is 100 times as of the date of the state registration of the organization. The latter provision is also valid for LLC.
Accounting for reserve capital
Joint stock companies form such entries:
- ДТ 84 КТ 82 - a reserve was formed at the expense of non-distributed profit in accordance with the decision of the shareholders;
- DT 82 КТ 84 - funds are directed to cover losses;
- DT 82 KT 66, 67 - capital used to repay debts on bonds;
- ДТ 82 КТ 84 - repurchase of own shares by the company.
AO and other enterprises can also create a fund at the expense of participants' funds and direct funds to the purposes stipulated by the charter. Then in accounting such entries are created:
- DT 51, 52 KT 82 - replenishment of capital at the expense of participants;
- DT 76 KT 82 - a unitary enterprise has formed a reserve fund;
- DT 76 KT 82 - a subsidiary has recorded debts on due funds to be used to form the fund;
- DT 80 КТ 82 - part of the assets of the Criminal Code is aimed at creating a reserve;
- DT 82 CT 84 - the redistribution of the fund;
- DT 82 КТ 75 - the fund's funds are directed to increase the capital;
- DT 82 КТ 75 - dividends are paid due to the reserve capital.
Based on the minutes of the shareholders' meeting, an accounting statement is formed. It serves as the primary document for the above transactions. Records are made at the beginning of the year.This is how the accounting of reserve capital takes place.
1. Formation of reserve capital
UK OJSC is 300 thousand rubles. At the shareholders' meeting, it was decided to form a reserve capital. Its volume is specified in the constituent documents (10 percent of the Criminal Code). 9% of the profits go to the fund: 200 x 0.09 = 18 thousand rubles. In the record on the accounts of the management, this should be reflected in the following sequence:
ДТ 84.1, КТ 82. 1 - a reserve has been created in accordance with legislative requirements:
200 x 0.05 = 10 thousand rubles. (5% of the profits);
DT 84.1, CT. 82.2 - a fund is formed on the basis of the statutory documents:
200 x 0.04 = 8 thousand rubles.
As a result, the line 1360 of the balance will reflect the amount of 18 thousand rubles.
2. Use of funds
The organization issued short-term bonds in the amount of 400 thousand rubles with a revenue of 10%. In the absence of other sources of income, reserve capital will be used to pay off debt. This decision of the shareholders must be documented by an appropriate protocol. The following entries are made in CU:
ДТ 51 (50) КТ 66 - 400 thousand rubles were received for short-term bonds;
ДТ 82 КТ 66 - funds from the fund are directed to the payment of income - 40 thousand rubles;
DT 66 KT51 (50) - redemption of bonds - 440 thousand rubles.
3. Repurchase of securities
OJSC purchased 200 pieces. own shares at the price of 3 thousand rubles. \ pcs.This operation is made out of such records:
ДТ 81 КТ 50 (51) - shares were bought back - 600 thousand rubles. (3 thousand rubles x 200 pieces);
DT82 КТ 81 - funds of the fund are used - 600 thousand rubles.
If the amount of the resulting debt is greater than the amount of accumulated capital, the difference should be financed from other sources, for example, profits from previous years. That part of the funds that is sent from the fund is to be restored in subsequent years. The reserve capital of the organization must be written off if the charter has been changed. In this case, the excessively accumulated amounts are added to the profits of previous years, and then used to cover unforeseen expenses, expanding the scope of activities, etc. Records are made on the accounts after the new charter is registered.
This is another article of liabilities balance. It is formed as a result of the revaluation of the OS or the issuance of shares. Accounting for additional capital is carried out on account. 83. By CT scan is displayed:
- increase in the value of assets;
- a positive difference between the price and the nominal value of the shares (with the formation of the company or the increase in equity);
- increase of target financing;
- exchange differences on contributions to the capital of the company, which were made in foreign currency.
Capital reduction occurs if:
- The cost of IA as a result of revaluation is lower than the balance sheet. The records contain DT 87-1 in correspondence with the property account. In parallel, a decrease in depreciation should be reflected.
- Funds are sent to increase the Criminal Code - CT 75 (80).
- The amount of capital is distributed among the founders - CT 75.
- Written off losses for the reporting year - KT 84.
Analytical accounting of additional capital is as follows:
OS wear increased
Reduced cost of intangible assets
Received income from the issue
Increased Criminal Code
Reserve and additional capital may be allocated to:
- increase of the Criminal Code (K80);
- repayment of loss for the reporting year (K84);
- distribution of dividends between shareholders.
Nuances of using accumulated funds under the legislation of Ukraine
Reserve capital is a kind of insurance for the enterprise. Accumulated funds can be used for the purposes stipulated by the statute and legislation. There are some differences in this issue compared to Russia. The fund is created to ensure that the balance sheet contains the required number of assets that companies could use to cover losses if necessary.Will it be securities, OS or money in bank accounts - a minor question. If funds are not used for their intended purpose, they can be directed to the acquisition of resources for the implementation of economic activities. This is one of the differences.
The legislation does not provide for the storage of accumulated funds in a separate bank account. In the balance sheet, the formation of a fund is displayed on CT 43, and the movement of funds is DT 43. Additional capital (42) and retained earnings (44) can be sources of funding. In the correspondence on DT can be used: share capital (40), funds received from the participants (67).
Reserve capital is a part of the accumulated net profit of an enterprise that can be used for the purposes stipulated by law. It is mandatory to form a fund only for the joint-stock company (in the minimum amount of 5% of the amount of own funds). In enterprises of other forms of ownership the decision of the issue remains with the founders. Authorized, additional, reserve capital are displayed in the first section of the liabilities side of the balance sheet and can be used to cover losses.