Accounting financial accounting. Accounting for impairment and disposal of financial investments (the most important)

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Accounting financial accounting. Accounting for impairment and disposal of financial investments (the most important)

Lecture notes, cheat sheets

Directory / Lecture notes, cheat sheets

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44. ACCOUNTING FOR IMPAIRMENT AND DISPOSAL OF FINANCIAL INVESTMENTS

Impairment of financial investments - a steady significant decline in the value of financial investments, for which their current market value is not determined, below the amount of economic benefits that the organization expects to receive from these financial investments in the normal course of its activities.

A steady decline in the cost of financial investments is characterized by the simultaneous presence of the following conditions:

▪ at the reporting date and at the previous reporting date, the accounting value is significantly higher than their estimated value;

▪ during the reporting year, the estimated value of financial investments changed significantly only in the direction of its decrease;

▪ at the reporting date there is no evidence that a significant increase in the estimated value of these financial investments is possible in the future.

In the event that an impairment test confirms a sustained significant decline in the value of financial investments, the entity establishes an allowance for depreciation of financial investments by the amount of the difference between the book value and the estimated value of such financial investments.

A reserve is formed for the revealed difference by posting: D-t 91 "Other income and expenses"; Kt 59 "Provision for depreciation of investments in securities".

Disposal of financial investments is recognized in the accounting of the organization on the date of the one-time termination of the conditions for accepting them for accounting. The disposal of financial investments takes place in cases of redemption, sale, gratuitous transfer, transfer in the form of a contribution to the authorized (share) capital of other organizations, transfer on account of a contribution under a simple partnership agreement, etc.

Upon disposal of an asset accepted for accounting as a financial investment, for which the current market value is not determined, its value is determined based on the assessment, determined by one of the following methods, fixed in the accounting policy:

1) at the initial cost of each accounting unit of financial investments;

2) the average initial cost is used to determine the value of retiring securities as the quotient of dividing the initial value of the type of securities by their number, which are formed respectively from the initial value and the amount of the balance at the beginning of the month and received securities during the given month;

3) at the initial cost of the first in time acquisition of financial investments (FIFO method). Securities that are the first to be retired must be valued at the original cost of the first securities by the time of purchase, taking into account the original cost of securities listed at the beginning of the month.

Write-off from the balance sheet of financial investment objects may be associated with their sale, expiration, change in the form of the organization's asset.

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