Doneck, Ukraine
The article is devoted to the investigation of economical and legal content of leasing as an object of accounting, specification of the nature of leasing operations; researching the methodological foundations of accounting of leasing, developing recommendations for improving the method of synthetic and analytical accounting of fixed assets under lease, rental payments, income and expenses.
lease; leasing operation; property; own; fixed assets; accounting.
At the present stage of economic development, complicated by crises, many Ukrainian enterprises are faced with the problem of searching and raising funds for the expansion of production, purchasing of modern equipment, the introduction of new technologies. In situations where it is difficult for companies to meet the demand for available credit resources through the banking system, leasing is one of the most affordable and effective means to upgrade production facilities.
Lack of researching of economical and legal contents of leasing, inadequate of current legislation, regulations (standards) of accounting led to the existence of a large number of theoretical and methodological character that require further studying. This makes the relevance of the investigation.
An important contribution to the studying of theoretical, methodological and organizational aspects of accounting of leasing operations are made by such scientists: Baidyk A., Butynets F.F, Cooper T.A., Bradul O.M., L.M. Bratchuk , Habruk A.V., Golov S.F., Goretska L.L., Grynko A.P., Dem'yanenko M.J., Zahorodniy A.G., Kolesnikov A., S. Laychuk , Mossakovskyy V.B., Mocherny S., L. Pantelyychuk, Prilutsky L.N., Procenko Y.U., Ryndia O., Usenko I.B., Shamhatov P., Yatsenko I.V. and a number of other leading scientists.
Theoretical and practical aspects of accounting of leasing operations are revealed in the works of foreign experts like Bernard I., Kovalev V., Colley J.C., Matthews M.R., Nazarbayev I., Perera M.H.B., Brewers S.E., J. Richard, Joel G. Siegel and others.
Their researching of problems of theoretical and practical impacted on the development of accounting of leasing operations. However, in sufficient attention is paid by Ukrainian scientists to the improvement of methods of accounting of leasing operations taking into account national peculiarities of economics and law.
The aim of the article is to study the theoretical principles and current methods of accounting of leasing operations, identifying areas of their improvement.
The researching of the methods of accounting of leasing operations must be preceded by a valid both in the legal and economic aspects in the definition of the term "leasing".
Summary of theoretical assumptions about the economical origin of leasing, a critical evaluation of existing approaches to assess the economic categories of "recruitment", "renting", "leasing", "hiring" "credit", "installment sale" helped make a separating between these concepts, to allocate "leasing" in the system of property relations as a unique type of tenancy, which is inherent in the distribution of ownership – the separation of the right of use and owner shipment of property rights of disposition. Thus, the lease can be defined as a special form of occupancy and using of property that is not owned by the user.
Leasing as an object of accounting is characterized by a set of records of business transactions that take place within the specified time, so it represents the process. It begins with the provision (taking) the property, continues throughout the period of use, finishes after returning or purchasing of the leased assets and all this period accompanies by periodic payments. Leasing is an economic process that includes a set of leasing operations that begin in connection with occurring (making) fixed assets and intangible assets in a temporary operating.
As a result of scientific research it was found that the lease transactions are commercial operations about granting or acceptance leased property in the temporary operation, payments between lessors and lease holders, returning the assets at the end of their lease term.
The results indicate the presence of ambiguous and conflicting approaches to determining of the types of leasing and giving them certain characteristics.
Methodological bases of discoursing the information in accounting about the leasing of fixed assets and disclosure in the financial statements by P(S) A14 "Leasing"
According to P(S) A14 "Leasing" [1] lease shall be divided into financial and operating according to the extent to which risks and rewards incidental to ownership of the leased asset relating to landlord and tenant. Study the content of the terms "risk" and "benefit" according to legal documents and comparing the risks and rewards arising from operating and finance leases suggests that in most cases they are the same regardless of the type of lease. Thus, risks in the form of losses due to idle leased equipment, losses due to the use of outdated technology, losses of income due to changes in economic conditions are common; the economic benefits in the form of income from using of leased property and income from the sale of leased property are also common as for operating leasing as for financial leasing.
In addition the Civil Code of Ukraine [2] the ownership of these risks and benefits is defined clearly: under normal conditions of risk as an integral part of property rights belong to the lessor, and the benefits from the using of the leased property – to leaseholder. Accordingly, taking the position that the economic risks and benefits allocation of financial and operating leases as of its individual species is not justified.
In accordance with the current methodology of accounting of fixed assets obtained under finance leasing it is equipped to lead to account 10 "Fixed Assets". On subaccount 152 "The acquisition (production) assets" account 15 "Capital investment" accounts for costs associated with the revenue to lease the facility in operation [5].
One of the main tasks of accounting of financial leasing is the classification and distribution of financial expenses by tenant. Solution of this problem depends on structure of the minimum lease payments, which require special settlements in the manner prescribed by P(S) A14 "Leasing". They consist of a value of lease that we discussed above, and financial costs, defined as the difference between the sum of the minimum lease payments and the value of financial leasing assets. Distribution of financial expenses between reporting periods during the lease term by using the rental rate of interest on the remaining obligations at beginning of the reporting period. Thus, the tenant separates value of the lease and the amount of financial expenses in the rent.
Lessee reflects the financial costs in accounting at debit of subaccount 952 "Other financial expenses" and credit subaccount 684 "Settlement of accrued interest." At sub 684 Interest is recorded not only for the use of the property received in rent, but also the using of money or goods (works, services) received in credit, and other transactions. In our opinion, the accounting for financial liabilities costs necessary to provide separately on analytical account "Payments of finance lease". It will provide detailed information on the lease liabilities, as reflected by the generalized sub 684.
Formation about ten ant liabilities reflected in the account 53 "Long-term lease liabilities" sub 531 "Long-term liabilities from financial leasing." Information about current creditor debts from leasing operations is recorded at reducing its long-term commitment. Such separation of duties is aessential in the preparation of information for making decision for management and reporting. This allows estimating the degree of assurance and controlling the amount of working capital.
To account for the depreciation of fixed assets assigned account 13 "Depreciation (amortization) of fixed assets" on credit of which information about accumulated depreciation summarizes [3].
In accordance with Section6P(S)A 14 "Leasing" tenant’s expenses for improvement of finance lease facility (modernization, modification, finishing, equipping, reconstruction, etc.) that increases the future economic benefits that are expected from its initially use are shown at tenant’s as capital investments that are included in value of financial lease.
Property, received in an operating lease, the lessee accounts on off-balance sheet 01 "Leased fixed assets" for lessor in venture number and the value indicated in the contract. As the title to the property is not transferred to the lessee, respectively, he does not make capital investments. His accounting is limited with reflection of calculations rent.
The lessor when transferring the object leasing in finance leases deducted it from the balance sheet and income received from making of this type of investment capital. Thus, lessor by deciding to transfer property to rent, according to P (S) 27 "Non-current assets held for sale and discontinued operations" transfers them from the fixed assets in reserves, namely the sub-286 «Non-current assets held for sale». The transfer of property to rent is displayed on the credit and debit sub 286 sub 943 "Cost of production reserves." The amount of long-term receivables from finance leases recognized as operating revenue that is shown on the credit sub account 712 "Revenue from the sale of other current assets." The Applicable Regulations for use the Plan accounts described method used to account for operations selling fixed assets [3, 4].
The study, which was conducted, showed that the identification of process of own fixed assets and providing them to finance leases is unfounded. These operations have common features only in relation to time of Disposal of Company’s balance sheet. With the implementation of non-current asset owner changes, while finance leases-its alienation doesn’t occur.
Then the object in the finance lease in the lessor’s accounting is shown as receivables in the amount of the tenant of the minimum lease payments and unguaranteed residual value. Accounts receivable in the accounts of the lessor is shown on account 18 "Long-term receivables" and accounts 37 «Settlements with various debtors» [3].
Returning an object of finance lease to the lessor is recognized in accounting as a reverse sale for regular price that is not less than the original cost, reduced by the amount of depreciation. We consider unreasonable that the lessor who owns the property, making a rental property for accounting data, sells it, and when return –acquire the tenant again. This causes distortions in the taxation of leasing transactions.
The investigation of current methods of accounting of leasing operations showed that total borrowing of methodological bases of accounting leases are set for thin the P(S) A14 "Leasing" with foreign practice as led to a situation where most of the operations on the discount calculation of net investment in the lease, unguaranteed residual value in domestic practice does not apply. The isolation of rules P(S) A14 from the real economic situation in Ukraine requires to improve the methods of accounting of leasing operations.
The study showed expediency of dissemination of the methodological principles of accounting leased facilities only on off-balance sheet for all types of leasing operations that defines the feature of the principle of prevalence of economic substance over legal form.
Considering that today leasing is special and common type of economic activity, therefore based on the principle of materiality sub-system for the accumulation and systematization of information on basic objects registered in the lessor’s accounting is proposed: 185 "Non-current assets leased" 136 "Depreciation (amortization) fixed assets under lease, "378" Payments for fixed assets under lease, "713" Income from leasing fixed assets "9491" costs from the lease". To account leases for the tenant to existing accounts prompted for sub-686 "Settlement of leased non-current assets".
For efficient accounting of leased non-current assets in the Landlord and objects taken out, the tenant asked to account 185 "Non-current assets leased" and 01 "Leased fixed assets' use of sub similar account 10" Fixed Assets " 11 "Other non-current assets", 12 "Intangible Assets" and 15 "Capital expenditure". For analytical accounting depreciation of property leased proposed to account 136 "Depreciation (depreciation) of fixed assets leased" to enter sub 1361 "Depreciation of non-current tangible assets leased" and 1362 "Amortization of intangible assets in the lease."
Based on the proposed method of improving accounting leases expedient to amend the company's balance sheet. According to the requirements of IFRS on the balance sheet should be separately displayed items with similar characteristics and share items with different characteristics. Thus, the objects in the lease should be reflected in the balance sheet separate article. It is under these conditions information in the balance sheet corresponds sign of relevance that characterizes its ability to influence the decisions that taking refers to its base.
The proposed approach is reflected leases provide:
- The principle of the prevalence of economic substance over legal form displayed in leasehold in accounting (because it brings economic benefits), but off-balance sheet (because the company is not entitled to legal ownership);
- reflecting in the balance sheet only the values that are in the legal ownership that will most accurately assess the financial condition of the company, particularly its liquidity and solvency;
- reflecting in the accounting system of objects that are not only legal but also economic ownership. Form it manifests itself through the appropriation of income from use of the leased property.
The analysis of the theoretical concepts of property as a base to build accounting of lease transactions, comparison of international and Ukrainian experience in accounting operations examined the methodological principles of accounting and legal reflection leases the forms of their manifestation, ensuring observance of the principle of prevalence of economic substance over legal form of simultaneous display of the balance sheet only property that is owned by the company.
Adoption of the proposals set out theoretical and methodical nature will promote qualitative characteristics of accounting information on a single display assets and liabilities of the various applications in the enterprise and, consequently, will help making the management decision more effective.
1. Regulations (Standard) of accounting 14 "Leasing ", approved by the Ministry of Finance of Ukraine dated on 28.07.2000, № 181 (revised from 09.12.2011 N 1591).
2. Civil Code of Ukraine dated on 16.01.2003 № 435 - IV, as amended (version number 1618-IV of 18.03.2004).
3. Instructions on the use of the Chart of Accounts assets, capital, liabilities and business operations of enterprises and organizations, approved by the Ministry of Finance of Ukraine dated on 30.11.1999 № 291, as amended (as amended on 09.12.2011 g.)
4. Regulations (Standard) of accounting 27 "Fixed assetsheld for sale and discontinued operations", approved by the Ministry of Finance of Ukraine on 05.03.2008, № 498.
5. Omelchenko E. Yu. Uchet osnovnyih sredstv i ego vliyanie na finansovuyu i nalogovuyu pribyil / E. Yu. Omelchenko // Zhurnal ekonomicheskih issledovaniy. 2016. T. 2. #. 11. C. 5-5. NITs INFRA-M.
