In any economic process, the loss of material values is inevitable - the so-called technological losses. The reasons for such losses can be poor-quality raw materials, breakdown of production equipment or incorrectly calculated standards and others. In tax accounting, technological losses within the established standard are taken into account as part of material costs.
In this section we will consider: the concept of technological losses, economic justification and documentary evidence of technological losses, the procedure for their reflection in the accounting and tax records of the organization.
Technological losseslosses are recognized during the production and (or) transportation of goods (works, services) due to the technological features of the production cycle and (or) the transportation process, as well as to the physicochemical characteristics of the raw materials used.
In accordance with paragraphs. 3 p. 7 Article 254 of the Tax Code of the Russian Federation (hereinafter - the Tax Code) technological losses in the production or transportation of goods (works, services) for the purposes of taxation of profit of organizations are equal to material costs.
Thus, the loss of raw materials and materials incurred by the organization during the production or transportation of finished products can be written off to reduce the tax base for corporate income tax as technological losses.
According to paragraph 1 of Art. 252 of the Tax Code of the Russian Federation for the purposes of taxation of profits of organizations when attributing technological losses to production costs during production or transportation, the fact of their economic feasibility and documentary evidence is important.
To comply with the above requirements, it is necessary to develop, approve and economically substantiate the standards of technological production. To account for technological costs, this requirement is set out in the Letter of the Ministry of Finance of Russia dated November 1, 2005 N 03-03-04 / 1/328.
Typically, the norm of irretrievable waste for a particular type of raw material and materials used in production is determined based on the technological features of the production cycle or the transportation process.
The standards for technological losses are drawn up by internal documents that do not have a unified form. In particular, they may be routings, process estimates, or other similar documents.
In the event that a technological map or other similar document is not drawn up at the enterprise, the confirmation of expenses in the form of technological losses during production or transportation are industry regulations, calculations and studies of the organization’s technological services or other limits governing the process.
Thus, the costs in the form of technological losses are taken into account for the purpose of taxation of profits as part of material costs in the presence of documentary evidence of the fact of such losses within reasonable standards. The tax authorities adhere to a similar conclusion in the Letter of the Federal Tax Service of Russia for Moscow dated February 18, 2008 N 20-12 / 015184, as well as the Ministry of Finance of Russia in their Letter dated March 27, 2006 N 03-03-04 / 1/289.
In accounting, the cost of raw materials written off to production is recognized as material costs as an expense for ordinary activities and is reflected in the debit of account 20 “Main production” in correspondence with the credit of account 10 “Materials”, subaccount 1 “Raw materials”, p. 5, 7, 8 of the Regulation on accounting “Organization expenses” PBU 10/99, approved by Order of the Ministry of Finance of Russia dated May 6, 1999 N 33n, Instructions for the application of the Chart of Accounts for the accounting of financial and economic activities of organizations, approval by the Order of the Ministry of Finance of Russia of October 31, 2000 N 94н.
The generated actual cost of production is debited from account 20 "Main production" in the debit of account 43 "Finished products".
Example. The organization "Printa" carries out printing activities. This month, 10 tons of raw materials were transferred to production at a price of 10 rubles. per kilogram in the amount of 100,000 rubles. Printed products were sold in the same month.
The norm of technological losses associated with the production process of printed products according to the technological map is 4% of the volume allocated to production. The actual value of technological losses amounted to 350 kg.
In accounting policies for tax accounting purposes, the organization has established that technological losses are direct material costs.
Since the actual value of technological losses (350 kg) does not exceed the standard set in the technological map - 400 kg (10,000 kg x 4%), such losses can be taken into account as part of material costs for tax purposes in full, that is, in the amount of 3500 rubles. (10 rub. X 350 kg).
As already noted, when calculating the income tax, technological losses are included in the material costs of taxpayers whose activities are related to the processing of raw materials. Such losses relate to direct material costs.
The debit of account 43 "Finished goods" Credit of account 20 "Main production" - 100,000 rubles. - written off the actual cost of finished products, including technological losses;
The debit of account 90 "Sales", subaccount 2 "Cost of sales", Credit account 43 "Finished goods" - 100 000 rubles. - written off the cost of printed matter.
In practice, technological losses often exceed the standard established by the technological map. In this case, to confirm the indicators of actual expenditures of raw materials, one technological map is not enough. A document must still be drawn up explaining the reasons for deviations from established norms. For example, a decision of a competent commission documented.
An act on excess technological losses is also drawn up, which indicates the reasons for deviations from established standards. An investigation of these causes is being carried out, factors that led to an increase in technological losses in relation to each specific situation are being established.
An approximate nomenclature of the reasons for deviations from the norms of consumption of materials is given in Appendix 4 to the Methodological guidelines for accounting of inventories, approved by Order of the Ministry of Finance of Russia of December 28, 2001 N 119н. Such reasons include, but are not limited to:
Inconsistency of materials, purchased semi-finished products and components to technical specifications;
Losses caused by modifications at the request of the customer or developer;
Replacement of materials, semi-finished products and components, provided for by the technology, with other materials, semi-finished products and components;
Violation of the process;
Use of high-grade materials to replace waste;
Cutting material;
Other reasons.
The Ministry of Finance of Russia in its Letter dated May 17, 2006 N 03-03-04 / 1/462 indicated that excess losses as unreasonable cannot reduce the taxpayer’s taxable profit.
Thus, according to the Ministry of Finance of Russia, technological losses in excess of the established norms cannot be taken into account in the composition of material costs for the purpose of taxing the profits of the organization.
Example. Change the condition of the previous example. Suppose that the actual value of technological losses amounted to 5% of the volume of raw materials allocated to production.
Recall that the standard technological losses are: 400 kg (10,000 kg x 4%).
The actual value of technological losses will be equal to: 500 kg (10 000 kg x 5%).
The amount of excess expenses will be: 1000 rubles. ((500 kg - 400 kg) x 10 rub.).
Since the actual value of technological losses (500 kg) exceeds the standard set in the technological map (400 kg), such losses are taken into account as part of material costs for tax purposes only within the limits of norms. The amount of exceeding the limit in the calculation of income tax is not taken into account.
Consequently, in the tax accounting of the organization Printa LLC as part of material costs for the purpose of taxation of profits, technological losses of 99,000 rubles can be taken into account. (100 000 rub. - 1000 rub.).
In addition, it is necessary to take into account that according to Accounting Regulation “Accounting for Profit Tax Calculations” PBU 18/02, approved by Order of the Ministry of Finance of Russia of November 19, 2002 N 114n, the excess amount of technological losses will be a constant difference, which, in in turn, will lead to the formation of a permanent tax liability.
The permanent tax liability in our example will be: 200 rubles. (1000 rub. X 20%).
The following entries will be made in the accounting records of Printa LLC:
The debit of account 20 "Main production" Credit of account 10 "Materials", subaccount 1 "Raw materials" - 100,000 rubles. (10 000 kg x 10 rubles) - raw materials transferred to production;
The debit of account 43 "Finished goods" Credit of account 20 "Main production" - 99,000 rubles. - written off the actual cost of the finished product, including technological losses within the norms;
The debit of account 90 "Sales", subaccount 2 "Cost of sales", Credit account 43 "Finished goods" - 99,000 rubles. - written off the cost of printed matter;
The debit of account 91 "Other income and expenses", subaccount 2 "Other expenses", Credit account 20 "Main production" - 1000 rubles. - reflected expenses in excess of the rate of technological losses;
The debit of account 99 "Financial result", subaccount "Permanent tax liability", Credit account 68 "Calculations for taxes and fees", subaccount "Calculations for income tax", - 200 rubles. (1000 rub. X 20%) - reflects a permanent tax liability.
However, the judicial practice regarding the inclusion of excess technological losses in the composition of material costs for the purpose of taxation of profits takes a different point of view. For example:
Decree of the Federal Antimonopoly Service of the Moscow District of December 26, 2007 N KA-A40 / 13358-07, according to which technological losses in production are equated for the purposes of taxation of profit to material costs and their write-off to costs is not associated with Ch. 25 of the Tax Code with any standards. For such expenses are the general requirements established in paragraph 1 of Art. 252 of the Tax Code, that is, they must be economically justified and documented;
Decision of the Federal Antimonopoly Service of the West Siberian District of October 8, 2007 N Ф04-6922 / 2007 (38872-А03-15). Given paragraphs. 3 p. 7 Article 254 of the Tax Code of the Russian Federation, as well as the fact that all disputed amounts were incurred by the taxpayer in order to carry out his main activities in order to generate income, the appellate court concluded that these expenses are related to production and sale and comply with the requirements of paragraph 1 of Article 252 of the Tax Code of the Russian Federation;
Resolution of the FAS of the North Caucasus District of September 27, 2006 No. F08-4818 / 2006-2043A, in which the court established that the excess water consumption of the enterprise is economically justified, since it is associated with excess water loss during water supply.
Based on the foregoing, we can draw the following conclusion: according to arbitration courts, excessive technological losses can be taken into account as part of material costs in order to tax the profits of the organization, provided that they satisfy the requirements of paragraph 1 of Article 252 of the Tax Code of the Russian Federation, that is, they must be economically sound and documented. However, it should be borne in mind that the economic feasibility of excessive technological losses will need to be proved to the taxpayer in court.
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Any company involved in the construction and construction of facilities buys large volumes of building materials. It is clear that they will not be endlessly stored in the warehouse. There is a need to write off materials in production. When conducting an operation, you must adhere to the established order.
What laws set limits for writing off building materials?
The accounting laws do not have a firm rule by which materials must be written off in production. However, in paragraph 92 of the order of the Ministry of Finance dated 12.28.2001 No. 119n it is said that materials must be released from the warehouse in accordance with the norms of the production program. This rule assumes that cancellation cannot be uncontrolled. Volumes during the operation must comply with the approved standards. There is also article 252 of the Tax Code of the Russian Federation, according to which all expenses of an enterprise must be supported by documents. Spending should also be reasonable from an economic point of view.
The company approves consumption rates on its own based on the following documents:
- SNiP 82-01-95. It contains general rules.
- RDS 82-201-96. Here you can find answers to specific questions, as well as examples of calculations.
When approving standards, specific papers may also be used:
- GESN. The document indicates the norms for specific types of construction.
- MDS. Here you can find recommendations for the use of HES.
The basic amounts for decommissioning will depend on the construction site. For example, the concrete involved in the construction of a residential or industrial building will vary. Standards regarding this aspect are given by GOST and SanPiN. Expert opinions may also apply.
The limits approved by the company need to be fixed in the estimates, various internal papers. Documents are prepared by the department responsible for the process. After the papers are developed, the director of the company must approve them. Write-offs must be made in accordance with established standards. It is possible to exceed the approved limit, however, this situation should alert the manager. In particular, he will need to establish the reasons for exceeding the norms. For example, it can be defective materials or technological losses.
IMPORTANT! Writing off materials in excess of approved standards can only be done with the permission of the head. On the primary documentation (invoice, act), a mark is placed on the release of building materials in excess of the limit, the reasons for such an operation. If a charge is made without observing these rules, it will be unlawful. Such actions can lead to a distortion of the cost, the introduction of incorrect data in tax reporting and accounting.
Rationing procedure
Rationing includes the following steps:
- Analysis of the circumstances of the construction work. It includes the selection of building materials, the establishment of a unit of work, planning the construction process.
- Setting limits for each material per unit of work. Varieties of standards are specified in RDS 82-201-96.
- Limit control. If the limits are constantly being violated, it makes sense to adjust them. Norms must correspond to objective reality.
NOTE! When rationing, a concept such as normal is often used. There are normals for standard forms of work that can be used in setting limits.
Methods for establishing elementary norms
The limit per unit of building material is calculated based on consumption rates per unit of workflow. In the calculations, the following formula is used:
N = n i1 K i1 + n i2 K i2 + ... + n ii K ii
It uses the following notation:
- N - limit write-off per unit of building material.
- n i is the spending limit for the workflow.
- K i - coefficient that establishes the unit of the working process in the total volume of building material. It is found by the following formula: elementary unit of an object / enlarged unit of building materials.
All the nuances of the calculations are set out in paragraph 5 of RDS 82-201-96.
When approving elementary norms per unit of work, the following methods are used:
- Production. A similar work is being monitored at the construction site. The ratio of the volume of executed operations with the materials used up is measured. The production technique is usually used in building materials for which difficult to eliminate losses are possible.
- Laboratory. It is assumed that measurements will be performed under circumstances specially formed. The technique is usually used when it is necessary to calculate the influence on the work of a certain factor.
- Settlement and Analytical. The essence of the methodology is the implementation of theoretical calculations based on existing statistical data.
IMPORTANT! When taking measurements, you need to carry out several approaches. Their minimum number is 5.
Approval of limits for writing off materials
The following persons can approve the norms:
- Head of VET.
- Chief engineer of the construction site.
- Director of the enterprise.
Norms are entered in separate columns of the act for the disposal of building materials. Opposite them is indicated information about actually decommissioned objects. Based on the act, an order for the disposal of materials may be issued.
Accounting entries for the write-off of building materials
The use of accounting entries depends on the needs of the building materials:
- DT20 KT10 - supply of raw materials to production.
- DT23 KT10 - retirement of building material in the repair shop.
- DT91-2 KT10 - vacation facilities for the liquidation of fixed assets.
- DT94 KT10 - writing off the missing building materials.
The last posting is used only when a shortage is detected.
Write-off Documentation
All operations carried out must be confirmed by primary documentation. Writing off building materials is also accompanied by paperwork. The head of the enterprise has the right to independently determine the list of primary documentation drawn up upon disposal. However, in any case, the document must contain all the details. The list of necessary details is contained in article 9 of Law No. 402 “On Accounting”.
Consider the documents that are usually executed when writing off building materials, as well as their typical forms:
- Requirement invoice. It is relevant if the company has no restrictions on obtaining building materials. Compiled by. The document can be used in accounting for the movement of values within the enterprise.
- Limit Card. Used when there are limits. Drawn by.
- Waybill for vacation of building materials to the side. It is used if the material is sent to a separate division of the enterprise. Compiled by.
The list of details used can be finalized in accordance with the needs of a particular enterprise. The invoice is issued in duplicate. The materially responsible person is engaged in this. One copy of the document is used when writing off building materials, the second - when posting.
- When is material released for production?
- Order and accounting in everything
- Which way is better to choose?
- About the estimate and expenses
With the write-off of building materials are faced mainly in the construction and repair sector. It is believed that it is difficult to understand the norms for writing off building materials. In fact, everything is quite simple, if you know the consumption rates of certain materials used in construction and repair. Knowing this, it will be much easier to understand the act, where their expense is reflected.
When is material released for production?
As soon as the material has arrived at the consumer, it is taken into account. Only after accounting can it be directed to production. What is a vacation of building materials? This is the moment when they are transferred to the construction site where construction is underway or it is planned to carry out construction, repair or finishing work. There is a strict general rule that guides all production standards. It refers to the cancellation of materials and does not imply a double interpretation. It says the following: all building materials are subject to mandatory cancellation.
Any organization has the right to develop and approve its write-off norms, however, they should be based on the norms developed by the Gosstroy of Russia. There are special standard collections in which the production norms of consumption are indicated. They are the guide to the action of personnel of firms, companies, enterprises, institutions for writing off materials. How to calculate the limit of their spending? For this, the norms of their consumption in construction are taken, indicated in these collections.
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Order and accounting in everything
In order to write off materials, certain documents are needed. Firstly, a logbook of work performed in the form of KS-6a. You need to know: this reporting form is maintained for each construction object separately. Secondly, when performing write-offs, they are guided by the documents adopted by the organization, institution, enterprise, firm, company, etc. Thirdly, it is impossible to write off the material correctly without objective and local estimates on objects under construction. In addition to the listed documents, there must be: a material report in the form of M-19 for the financially responsible person and a monthly report on the consumption of basic materials in construction in comparison with the consumption determined by production standards in the form of M-29.
For a long time, a report on the M-29 form was mandatory in Russia, but today the situation has changed. Gosstroy allowed each construction organization to independently develop its own document. In it, in addition to the name of the document itself, the construction organization and the date of preparation, the content of the work and its value, measured in physical or monetary terms, must be indicated. Immediately need to clarify: the material can be written off in different ways. For example, the cost of each unit is determined, and then each of them is written off. The average cost of the material can be determined. The write-off specialist is entitled to apply the FIFO or LIFO method.
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Which way is better to choose?
To evaluate each material and then write it off is a rather long and painstaking process. The average cost estimate can be weighted or moving. How is the FIFO method different from LIFO? When applying the first, each material is written off in the sequence in which it was acquired.
When applying the second, the first item is written off from the last purchased batch. That is, the write-off algorithm is built in the reverse order.
If the material is intended for open storage, there is a special formula for estimating its stocks. Almost any material is suitable for this category for storage of which a special warehouse is not used:
- crushed stone;
- blocks
- gravel;
- sand, etc.
Writing off hard-to-recover losses is a separate item. Based on the name, it is clear that we are talking about losses in construction, repair, finishing work, which cannot be avoided. The consumption rates of one or another material can be found without problems on the Internet, it is much more difficult to collect all this data into a single whole, especially when the construction company is small and its manager has to do part of the work intended for the staff himself.
However, knowing the write-off rate is not enough.
Production standards are an important indicator, but it will not help to fully calculate everything. To write off, you still need estimated standards.
Production standards are based on real factors affecting the specifics of production.
Estimated standards are calculated taking into account the fact that the work is carried out under normal conditions, when there are no conditions that complicate the production process (tightness, gas contamination, uncomfortable temperature conditions).
In order to make the calculations easier and they reflect the real picture of cases, correction factors are applied to the estimated norms. Immediately it is necessary to clarify: such coefficients are a universal tool, widely used in many calculations, the basis of which are consumption rates.
Estimated standards, as well as write-off standards, exist simultaneously on several levels: federal, departmental, local, and at the level of the user's own regulatory framework, where all its production standards should be reflected. They must be taken into account when deciding the issue of write-off.
In the production of construction work requires a large amount of building materials. The cost of construction strongly depends on the volume of used materials and on their price. In the construction of even small objects important competent accounting, on which depends the tax base of enterprises. An important role is played by the write-off of materials - accounting released for production, transferred for use for anyone's needs, realized or eliminated as a result of disasters and other emergency situations. At the same time, the write-off of materials in construction has specific differences, since the accounting of such inventory items (goods and materials) begins already in the preparation of design and estimate documentation, which lays down the norms and (or) standards for their consumption.
Control over the write-off of materials in the enterprise
The calculation of the amount of materials that should be used in the construction of an object is carried out on the basis of the relevant Production and Technical Division's Production and Technical Department (SNP).
The order of the head of the company approves the list of employees responsible for the write-off of inventories. Usually, chiefs of production sites who are responsible for verifying the data contained in the reports — the VET engineer and the accountant — are assigned to be responsible for completing the primary documentation for write-off. In addition, the same order should establish the responsibility of managers - the chief engineer and the head of the production and technical department - for approving the processed documentation.
In addition to the usual audit, accounting also performs the following functions:
To prevent the write-off of materials in excess of the norm, as well as the unreasonable write-off of inventories for losses;
to prevent the write-off of materials of higher quality than actually consumed.
Methods for evaluating materials when they are written off
An important issue in the write-off of materials is the assessment of their value. In accordance with the requirements of the Law on Accounting, materials must be accounted for at their actual cost.
The actual cost is the sum of the costs incurred in delivering the material to the enterprise, and including:
Purchase price;
the costs associated with the transportation, storage and delivery of material from the seller to the warehouse of the buyer;
payment of consulting and other similar services;
customs duty;
payment of intermediaries.
When writing off materials put into production or when they are otherwise retired, the actual cost is estimated separately for each type of material (or group) during the whole reporting year using one of the proposed methods:
Estimation of the cost of each unit of outgoing materials. Thus, particularly valuable goods and materials or non-replaceable materials are evaluated.
Estimation of the average cost. It is determined by dividing the total cost of the group of materials written off by the number of units.
FIFO (First In, First Out - came last - left first). The essence of the method lies in the fact that first the materials that were last added to the same account were removed from the register.
By the LIFO method - the inverse of the FIFO method, where the materials that were registered first were written off first.
Documentary support for writing off materials
The document flow for the write-off of construction materials primarily depends on the contractual discipline of the supplier of these materials, the availability of the estimated consumption rates of goods and materials for all types of construction and installation work and optimal labor productivity in the areas.
The construction of the document in the organization should pursue the following objectives:
Reliability of data on purchased and consumed materials;
control over the preservation of inventory data;
monitoring compliance with the norms of consumption of materials for construction and installation work;
qualitative analysis of the effective use of materials.
Write-off in the construction of materials for production needs is based on the following documents:
The norms of the costs of materials for a particular production, which are approved by the head of the organization;
estimated calculations for construction objects;
journals on the accounting of work performance (according to form No. КС-6а);
report on the actual consumption of materials compared with the standard (performed monthly).
The compilation of monthly reports on the write-off of materials is best performed using the standard form No. M-29 together with the Instruction, which the heads of production sites use to compile a monthly report on the expenditure of materials in relation to the costs determined by established production standards. The only caveat: the form of M-29 need to be finalized for a particular enterprise of the construction field.
Form No. M-29 should be compiled for each individual construction project throughout the year, and it should consist of two sections:
"Regulatory need for materials and the volume of work performed" (fill the responsible staff of the technical department);
“Comparison of the actual consumption of basic materials with the consumption determined by the production standards” (fill in the heads of sections or foremen in accordance with the data of the register of work performed).
The optimal order of how to write off materials in construction is determined as follows:
1. Issue to the materially responsible person - the work manager (head of production) the material report with the remnants of inventories in his personal warehouse (the amount of materials and their cost) - monthly at the beginning of the reporting month.
2. Registration of the report M-29 by the materially responsible person at the end of the reporting period, or keeping it within this period with the remainder of the amount of materials.
3. Delivery of the report to the production and technical department for inspection (in accordance with the terms of the head of the organization).
4. Verification by a specialist and approval by the head of the Technical and Technical Department of the M-29 report and the attached material report, transfer for approval to the chief engineer.
5. Transfer of a package of documents (reports, expenditure and receipt documents) after approval by the chief engineer to the accounting department.
6. Determination of the cost of receipt of materials, their consumption and balance (according to the documents provided).
7. Entering reporting data in the consolidated statement of the movement of inventories in the enterprise and the execution of write-offs.
The consequences of overruns TMC
When checking the report M-29 technical department may identify inconsistencies. In this case, the head of the production site must write an explanatory note in which he indicates the reasons for the excess write-off. The explanatory note must comply with the form attached to the report M-29. In addition, an act of writing off materials in construction, drawn up by the commission, must be drawn up.
If there has been an overrun of materials due to theft or damage, then the management of the enterprise should apply to the competent authorities to obtain the appropriate certificates to effect a legal write-off. If the overspending of materials is considered reasonable and confirmed by calculations, the manager may allow to accept the cost of overly used materials for write-off. If savings were made during the reporting period, the head of the production site should also draw up an explanatory note.
Since all the write-off of materials is provided for in the estimate documentation, which is not subject to change during construction, the entire cost overrun falls on the shoulders of the organization-developer, since it cannot increase the cost of the entire construction. And then the order of writing off materials in construction assumes that the head of the company is obliged to take all measures to search for the perpetrators and recover damages from them. Well, and in that case, when, for example, materials are stolen by unidentified persons or as a result of a fire, the accounting department writes off inventories, attributing expenses to non-sales.