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Encyclopedia of accounting - Grachev RE Section II Part 1

- Contracting of capital construction

Before you give an example of accounting entries for capital construction operations accounted for the developer, pay attention to one point of P (S) BU 2 "Balance", which is interpreted quite uncertain. This is paragraph 15: "In the article" Construction in progress "reflected the value of outstanding capital investments in the construction, development, production, reconstruction, modernization, purchase of fixed assets (including tangible assets, intended to replace the existing, and equipment installation) undertaken now, as well as advance payments for the financing of capital construction "(Emphasis added.).

Thus, it seems that the advances paid to contractors to perform certain steps (or even pre-pay 100 percent workload) are debit of sub-account 151 "Expenses for capital construction" immediately after the transfer of money to the account of the contractor (executor). That is, immediately after the journal entry Dt 371 KT 311 parallel should perform another posting: Dt 151 KT 371. It is not so.

The fact that P (C) BU 2 - is a standard that defines the content and form of the balance and the general requirements for the disclosure of his articles (See No. 1 R (C) BU2 "Balance"..), Instead of the rules of accounting as such . That is to postings this indication is not relevant, and only requires the accountant to correctly fill in the line 020 "Assets under construction". Specifically, this article should consist of the balance on the account 15 "Capital investments" and the balance of the account, which appear capital advances. This can be through 371, if the period of development of the advance does not exceed a year, or the balance of the account 163, if a long-term contract. Of course, on these accounts, in addition to such advances, more needs can be taken into account. So, for this purpose the individual accounts of the third order should be emphasized that there was no difficulty in completing the line 020.

Table 2.7

№ p / p	Contents of operation	Turnover of accounts				sum
		The main business operations		calculation of tax operations
		Dt	KT	Dt	KT
allotted land
1.	It paid to local government authorities (Department of Architecture) for allocating land for development	377	311			300
2.	Levied a tax credit on VAT (wiring simultaneously with the wiring 1)			641	377	50
3.	Payment Amount (net of VAT) for the diversion of land enrolled in the capital construction costs *	151	377			250
Preparation of technical conditions of engineering support
4.	Paid public authorities for the acquisition of technical conditions of engineering support building	377	311			1800
5.	Levied a tax credit on VAT (the wiring harness at the same time 4)			641	377	300
6.	Payment Amount (net of VAT) for the acquisition of technical conditions of engineering support is credited in the capital construction costs **	151	377			1500
Development of design and estimate documentation
7.	Paid in advance of the design organization for the development of design and estimate documentation (in the amount of 40% of the cost of works)	371	311			9600
8.	Accrued tax credit in connection with the issuance of the advance (together with the wiring harness 7)			644	631	1600
9.	Signed the act of acceptance of works on development of design estimates for construction of the object (100% performance)	151	631			20000
10.	Previously charged in connection with the payment of the advance (7 posted) tax credit recognized in the calculation of the budget (together with the wiring harness 9)			641	644	1600
eleven.	Accrued tax credit (in part attributable to the price received but not paid for work (simultaneously with wiring harness 9)			641	631	2400
12.	Calculations with the executor of works on development of design estimates in closed part of a previously issued an advance	631	371			9600
13.	Repaid debt to the project organization for the development of design and estimate documentation (60% of the value of work remaining is not paid after their implementation)	631	311			14400

№ p / p	Contents of operation	Turnover of accounts				sum
		The main business operations		calculation of tax operations
		Dt	KT	Dt	KT
Development of working documentation
14.	Signed certificate of acceptance of work on the development of working documentation	151	631			30000
15.	Levied a tax credit on VAT (wiring simultaneously with the wiring 14)			641	631	6000
16.	It paid for the development of working documentation	631	311			36000
Author's supervision
17.	Paid in advance for the execution of works on field supervision (at 100%)	371	311			9000
18.	Levied a tax credit on VAT (wiring simultaneously with the wiring 17)			644	631	1500
19.	Signed the act of performing work on the author's supervision. The cost of work credited in the capital construction costs	151	631			7500
20.	The tax credit accrued in connection with the pre-paid jobs for supervision services, is recognized in the calculation of the budget (together with the wiring harness 19)			641	644	1500
21.	Payments to contractors for field supervision are closed due to the advance payment (wiring 17) (wiring simultaneously with the wiring 19)	631	371			9000
Building installation work (carried out in four stages)
First step
22.	Advance paid to the contractor on the implementation of the first phase of construction and installation works (20% of cost of works)	371	311			69000
23.	Accrued tax credit for VAT in connection with the payment of the advance (together with the wiring harness 22)			644	631	11500
24.	Signed the act on partial fulfillment of the contractor of the first phase of work ***	151	631			37500
25.	Previously charged VAT (entry 22) in part attributable to the contractor mastered part of the advance, is recognized in the calculation of the budget (together with the wiring harness 24)			641	644	7500
26.	Earlier advance paid to the contractor (wiring 22) in part attributable to the construction, installation and credited to the payment (wiring simultaneously with the wiring 24)	631	371			45000
27.	Signed the act on the implementation of the remaining works by the contractor, relating to the first (paid) stage	151	631			20000

№ p / n	Contents of operation	Turnover of accounts				sum
		The main business operations		calculation of tax operations
		Dt	KT	Dt	KT
28.	Balance previously accrued VAT (entry 23), attributable to the cost of the contractor performed the second part of the first phase of work is recognized in the calculation of the budget (together with the wiring harness 27)			641	644	4000
29.	Payments to the contractor in part attributable to the completed work (the first stage) are closed due to the prepayment balance (wiring simultaneously with the wiring 27)	631	371			24000
Second phase
thirty.	Advance paid to the contractor on the implementation of the second phase of construction and installation works (in the amount of 40% of the cost of the work (but only paid 60%)	371	311			138000
31.	Accrued tax credit for VAT in connection with the payment of the advance (together with the wiring harness 30)			644	631	23000
32.	Signed a deed of 100 percent implementation of the second phase of works contractor	151	631			115000
33.	Previously charged in connection with the advance payment of the second phase of the work (31 posted) a tax credit under the VAT is recognized in the calculation of the budget (together with the wiring harness 32)			641	644	23000
34.	Payments to the contractor in part attributable to the completed work (second stage), are closed due to the advance payment (wiring simultaneously with the wiring 32)	631	371			138000
The third and fourth stages
35.	Advance paid to the contractor on the implementation of the third phase of construction and installation works (in the amount of 30% of the cost of construction and installation work)	371	311			103500
36.	Accrued tax credit for VAT in connection with the payment of the advance (together with the wiring harness 35)			644	631	17250
37.	Signed the act of partial implementation of the third phase of work ****	151	631			51750
38.	Previously charged VAT (entry 36) in part attributable to the contractor mastered part of the advance, is recognized in the calculation of the budget (together with the wiring harness 37)			641	644	10350
39.	Earlier advance paid to the contractor (wiring 35) in part attributable to the construction and installation work on the third phase, credited to the payment * * * * * (wiring simultaneously with the wiring 37)	631	371			62100
40.	Signed the act on the implementation of the remaining works of the third (paid) and fourth (final, not yet paid) stages	151	631			63250)

№ p / p	Contents of operation	Turnover of accounts				sum
		The main business operations		calculation of tax operations
		Dt	KT	Dt	KT
41.	Balance previously accrued VAT (entry 36), attributable to the value of the remaining carried out by the contractor and paid by the customer (entry 35) works, is recognized in the calculation of the budget (together with the wiring harness 40)			641	644	6900
42.	Accrued tax credit for VAT in connection with the performance of the final (unpaid) stage CMP (wiring simultaneously with the wiring 40)			641	631	5750
43.	The residue was previously paid to the contractor an advance (wiring 35 and wiring 39) is credited as payment for work performed (simultaneously with the wiring harness 40)	631	371			41400
44.	It paid to the contractor for the implementation of the fourth (final) stage of the construction activities	631	311			34500
45.	Rented by the contractor and accepted by the customer the finished object was commissioned and accepted for registration in the property and equipment at historical (actual) cost	103	151			346750
* Wiring 3 can be performed simultaneously with the wires 1 and 2, because the fact of obtaining such authorization is not supported by a separate primary document (eg an act of acceptance and transfer, and so on. N.). The very same document (in this case - the permission to allocating land) is, first and foremost, a legal and not accounting documents. To enroll in the payment of a sufficiently obtained spending accounts payable or receipt (if payment is made in cash). * The wiring 6 can be performed simultaneously with the wiring 4, because the fact of the technical conditions of engineering software is not supported by the primary document (eg an act of acceptance and transfer, and so on. n.). the document itself (in this case - the technical specifications) shall be issued for use in engineering work and is not the primary accounting documents. To enroll in the payment of a sufficiently obtained spending accounts payable or receipt (if payment is made in cash). * That is, the advance payment for the first phase of the contractor only partially mastered. See. Previous, similar, note. *** That is the balance of prepayments on this point will be 41400 USD.

. Taking into account the requirements of paragraph 8, P (S) BU 7, we have defined the data in Table 2.7, and the initial cost of building the facility received, consisting of the following elements:

- Payment for land allocation ............................................ ............................................ 250 UAH;

- Payment for the acquisition of technical conditions of engineering support ....................................... 1500 UAH;

- The cost of design and estimate documentation ........................................... .............. 20,000 USD;

- The cost of the development of working documentation ............................................. ............................. 30,000 USD;

- The cost of work on the author's supervision ............................................ ........................................ 7500 UAH;

- The cost of construction and installation work ............................................ .................................. 287 500 UAH.

Total Cost ............................................... .................................................. 346 750 UAH.

All these elements make up the amount on the debit of sub-account 151 revolutions "Expenses for capital construction." In this sub-account credit passes the same amount. However, the sub-account credit turnover 151 - it is no longer cost elements, and ready to use the object, the value of this object.

At the end of the reporting period, the cost of the building was put into operation together with the value of other fixed assets is shown on line 101 of the Balance Sheet.

However, the VAT return for the same reporting period, the cost of purchased (constructed) of fixed assets should be shown on line 10.1.

At this time the cost elements that are not accrued tax credit, in example no. Consequently, and in filling lines of VAT returns should be no problems. Line 10.1 shall have the following characteristics:

№ p / p	II. tax credit	Max. A	Max. B
№ p / p	II. tax credit	purchase volumes excluding VAT	Approved tax credit
10.	Acquired from the value added tax on the customs territory of Ukraine goods (works, services), the cost of which is included in the gross cost of production (treatment) and fixed assets and intangible assets subject to amortization:	X	X
10.1	To carry out transactions subject to taxation	346750	69350

Thus, assuming that no other (than shown in the example) operations, the company has not carried out during the reporting period, the indicator line 17 declaration will be the amount of VAT to reduce the 69350 USD.

The amount of the tax credit referred to in the declaration (69350 USD) - this is the result of debit of sub-account 641 for the period:

- Wiring 2 ...................................... 50 UAH;

- Wiring 5 ..................................... 300 UAH;

- Wiring .................................. 10 UAH 1600;

- Wiring 2400 ................................. 11 UAH;

- Wiring 6000 ................................. 15 UAH;

- Wiring ................................. 20 1500 UAH;

- Wiring 7500 ................................. 25 UAH;

- Wiring 4000 ................................. 28 UAH;

- Posting 33 ............................... 23,000 USD;

- Posting 38 ............................... 10,350 USD;

- Wiring ................................ 41 6900 UAH;

- Wiring 5750 ................................. 42 UAH.

Total revolutions: .............................. 69350 USD.

Note that despite the fact that this example is saturated with different design situations, in general it is too perfect to be repeated exactly in the business of life. After this set of circumstances, when both the beginning and end of the execution of the contract accounted for one reporting period, one can imagine only wish. Construction contracts at best last a few months, or even years, and the VAT return most businesses delivers a monthly basis. It seems it's time to show how this is done when the action between the start date of the contract and the date of completion have been several filing the VAT return dates. Example Table 2.7, considering the diversity of design situations, for this could not be better. Therefore, a brief look at the principle of forming a string index 10.1 after each posting, changing the size of accrued tax credit. And at the same time pay attention to the important role played by sub-account 644 "Tax credit" in this formation. We reduce the accounting data in the table. However, this does not mean that such a table should be prepared in practice - there is no need. After all, these data are taken from the speed and balance on the accounts of accounting, and not seen an example of them so well.

Table 2.8

Number of transactions after the registration which ended the reporting period	Indicator line 10.1 Declaration	Accounting data			Control indicator c. 3 + c. 4 -gr.5
	Indicator line 10.1 Declaration	Turnovers in the debit of sub-account 641	The balance of subaccount 644 at end of period	The balance of subaccount 644 at beginning of period	Control indicator c. 3 + c. 4 -gr.5
Wiring 2	50	50	-	-	50
Provision 5	300	300	-	-	300
Post 8	1600	-	1600	-	1600
Harness 10	-	1600	-	1600	-

Number of transactions after the registration which ended the reporting period	Indicator line 10.1 Declaration	Accounting data			Control indicator c. 3 + c. 4 -gr.5
	Indicator line 10.1 Declaration	Turnovers in the debit of sub-account 641	The balance of subaccount 644 at end of period	The balance of subaccount 644 at beginning of period	Control indicator c. 3 + c. 4 -gr.5
Harness 11	2400	2400	-	-	2400
Harness 15	6000	6000	-	-	6000
Harness 18	1500	-	1500	-	1500
Harness 20	-	1500	-	500	-
Harness 23	11500	-	11500	-	11500
Harness 25	-	7500	4000	11500	-
Harness 28	4000	4000	-	-	4000
Harness 31	23000	-	23000	-	23000
Harness 33	-	23000	-	23000	-
Harness 36	17250	-	17250	-	17250
Harness 38	-	10350	-	17250 *	-
Harness 41	-	6900	-	6900 **	-
Harness 42	-	5750	-	-	5750
* Number 17250 10350 more than the number, it means that the entire tax credit (recognized in the accounting period under review) has been taken into account in the tax declaration of the previous period, t. E. After posting 36. * 17250 - 10350 = 6900 - a balance of subaccount 644 at the beginning of the reporting period (the end of the previous one).

The following table shows the principle of filling in VAT returns in terms of the tax credit accrued in connection with the acquisition of fixed assets. In this case, we proceeded from the condition that accounts for one entry to accrue the tax credit for each tax period. Of course, this artificial condition, because in practice such circumstances are as rare as the execution of construction contracts from start to finish in one tax period. The table shows only the principle was the formation of such an index declaration as a tax credit (VAT reduction). This principle is clear, and it can be guided in any situation, regardless of at what stage (half phase or a part thereof) occurred filing date of reporting.

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