1. Accounting for purchase and sale or other disposal securities
Securities should be accounted for on the date when the legal title of such securities passes as defined by the Federal Law on Securities Market.
The criteria for accounting for securities is the purpose of investment in that:
- Securities purchased for investment purposes should be accounted for at purchase value (including related expenses) and reflected as long-term investments on account # 06.
- Revenues from sale of such securities should be booked to account # 48 "Sale and disposal of other assets".
- Securities purchased for the purpose of subsequent sale should be accounted for at the purchase value (including related expenses) as short-term investments and booked to account # 58.
- Revenue from sale of these securities should be reflected on account # 46 "Sale of goods, works, services".
Professional participants are allowed to revalue investments in securities on the date of the transaction and on the last day of the accounting period, if securities are quoted on a regular basis.
2. Bookkeeping and accounting for expenses to be included in the cost of production
Expenses incurred in association with the establishment of the company should be accounted for as intangible assets on account # 04 and depreciated in accordance with the accounting policy or, if not determined, over 10 years.
Expenses relating to professional participants' and investment funds' activities should be booked to account # 26 "Business expenses".
Expenses for services connected with securities purchased with the purpose of receiving investment income should be reflected on account # 80 "Profit and Loss".
Commissions payable in connection with disposal of the securities purchased with the purpose of investment, should be booked to account # 48 "Sale and disposal of other assets".
3. Accounting for interest (income) on bonds
When bonds are purchased at a cost including a portion of interest which can be determined, these are accounted for separately on account # 06 "Long-term investment" or # 58 "Short-term investment" (depending on the purpose of purchase of securities), subaccounts "Bonds" (in the amount of cost of the bond net of interest) and "Funds received and expenses incurred on bonds interest" (in the amount of the accrued interest on the date of purchase). Receipt of interest on bonds (including the case when bonds are sold) should be booked as a credit of one of the above accounts (which ever is appropriate), subaccount "Funds received and expenses incurred on bonds interest".
Accrual of interest on bonds, when no interest was paid on such bonds, should be reflected on debit of account # 76 "Settlements with other debtors and creditors", subaccount "Bond interest" and credit of account # 80 "Profit and Loss".
4. Peculiarities of creating reserves for devaluation of investments in securities
Quoted securities of other organisations owned by professional participants of the securities market at the end of the reporting period should be reflected at the market price if the latter is lower than the balance sheet cost. The adjustment to the balance sheet value of such securities should be made in the account for reserve set aside for devaluation of investments in securities, which is deducted from the net profit.
Reserves for devaluation of investments in securities cannot be created for securities which are subject to revaluation.
5. Accounting for various operations of investment funds
The Regulation also provides general rules for accounting of contributions in the charter capital of an investment fund, disposal of its assets, increase and decrease of the charter capital and some other operations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Alla Shaulina on tel: +7 503 232 5511 fax: +7 503 232 5522 or e-mail directly: Alla_Shaulina@ru.coopers.com
