Which line of the balance sheet shows the amount of the provision for doubtful debts? Provision for doubtful debts Account 63

Doubtful debt- this is an organization that has not been repaid, or most likely will not be repaid within the period established by the contract (or other documents), as well as without providing appropriate guarantees (pledge, bank guarantee, surety, deposit). An account is used to record such transactions in accounting entries.

This is evidenced, in particular:

• violation by the debtor of the payment deadline;
• information about the debtor's financial difficulties.

Bad debt- a debt to an organization with an expired statute of limitations, as well as a debt that is impossible to collect, recognized as such on the basis of relevant regulatory documents or the liquidation of the organization. Such debt is precisely taken into account in the account.

Very often, an organization has to take measures to combat the consequences of accounts receivable. To ensure that these consequences are not so significant, enterprises can protect themselves by creating a reserve for doubtful debts. Thanks to this, the organization will be able to maintain uniform accounting of the costs of late “receivables”.

It is worth noting that there is no uniform method for forming a reserve for such debts. It is developed by the organization independently and recorded in its accounting policies.

Let's look at the main entries in the accounting account for reflecting doubtful debt using examples.

Postings in accounting

Adjustment of the reserve on account 63 during the year

1. Let’s assume that Company “B” transferred 50,000 rubles on October 15, 2014. in repayment of debt. Then the amount of the created reserve will be reduced:

Thus, the amount of the reserve at the end of the year is 68,000 rubles. Accordingly, in the balance sheet for 2014 it will be necessary to reduce the amount of “receivables” by this amount.

2. Assume that B was liquidated in June 2015. Thus, the debt owed to this debtor will be considered uncollectible and subject to write-off. Due to the fact that the previous debt

“B” was involved in the formation of the reserve, its write-off in the entries will be carried out at the expense of the reserve:

Carrying forward the reserve to the next year

According to clause “Regulations on accounting and financial reporting in the Russian Federation No. 34n” (hereinafter referred to as the Regulations), if the amount of the reserve is not fully spent by the end of the year following the year of its creation, the balance of the reserve will be included in the financial result of the reporting year."Carrying out the transfer of the reserve to the next year."

Regarding the example we considered, this means that if the debt is recognized as doubtful at the end of 2015, the balance of the unused reserve must be attributed to other income (91-1). At the same time, taking into account the requirements of the above Regulations, when forming a reserve at the end of 2015, the amount of debt is subject to re-accounting.

Due to the fact that the requirements of the Regulations are very ambiguous, it would be advisable not to write off the entire amount of the unused reserve and then restore it, but only to adjust the reserve at the end of the year. This procedure will help to exclude additional entries on “account 91”, and also not to overestimate the turnover on it, which is reflected in the reporting.

Account 63 “Provisions for doubtful debts” is intended to summarize information about reserves for doubtful debts created in the organization.

 

Tax legislation establishes the possibility for Russian companies to form reserves for doubtful debts. To organize accounting of these sources of financing, an account was approved in the chart of accounts. 63 entitled “Provisions for doubtful debts”.

Doubtful debt is the debt of counterparties that is not repaid within the terms established by the contract and is not provided with the necessary financial guarantees. The fundamental factor influencing the creation of a fund in a company is the presence of a receivable debt that is questionable for collection.

Attention! Federal Tax Service employees establish the need to periodically conduct an inventory of receivables in order to timely detect insolvent debtors.

In a situation where an audit reveals a counterparty’s debt that is doubtful for collection, the manager must issue an order to create a fund that will become financial ballast in the event of the partner’s financial insolvency.

Account 63 in accounting is passive; accordingly, the increase in the value of the resource is made by crediting this account. The debit of this account is used when the funds of the created fund are used to cover the uncollectible debts of counterparties.

Regulatory framework

The possibility of creating a fund in a company to cover the debts of partners is established by the Tax Code of the Russian Federation, in particular Art. 266, which defines the criteria for classifying receivables as bad debt. In addition to the requirements of tax law, the mechanism for the formation of this financial ballast is regulated by such Accounting Regulations as PBU 9/99 “Income of the Organization”, PBU 10/99 “Expenses of the Organization” and others.

Main subaccounts

The chart of accounts provides for the right of business entities to open subaccounts to the account. 63. Tax law provides for the company’s ability to maintain analytical accounting for each individual source of financing. Thus, the number of open sub-accounts for the account will coincide with the number of doubtful debtors of the organization.

The procedure for forming a reserve

First of all, the legality of the formation of the fund must be supported by the results of an inventory of the state of receivables. All nuances in which the state has established the company’s independence must be reflected in its accounting policies.

Due to the fact that there is no mandatory requirement to create a source of security for debts that are unlikely to be collected in tax accounting, unlike accounting, each company has the right to decide to create such a resource and thereby reduce the amount of income tax.

Attention! The management of the organization must take the most responsible approach to the formation of a fund to cover the debts of debtors, since Federal Tax Service employees carefully check all aspects of the activities of Russian companies that reduce the amount of income tax payable to the budget.

Formation order

A reserve can be created only after an audit of the company's receivables. Based on the results of the inventory, information is submitted to the head of the company for review. If he decides to create a fund, an order is issued and an accounting certificate is drawn up reflecting the history of the relationship with the counterparty, as well as the reasons for the debt.

Transfer to next year

Art. 266 of the Tax Code of the Russian Federation determines that reserve amounts that are not fully used during the tax period can be carried forward to the next year. Moreover, if a new source is created in the organization, then its amount should be adjusted to the amount of the source already existing in the company for covering doubtful debts of debtors.

It is reasonable to do this if there is no likelihood of the counterparty repaying the debt in the near future. If the partner nevertheless receives a signal about an improvement in financial condition and the imminent repayment of the debt, the amount of the reserve should be restored and included in other income.

Basic accounting entries for using account 63

1. Based on the results of the inventory, the company has formed a fund to cover debts with a low probability of collection:

   Dt 91 - 2 Kr 63

2. The counterparty's debt, which was previously unlikely to be collected, became uncollectible and was written off from the available fund:
3. The claim submitted to the counterparty for violations in the fulfillment of contractual obligations was written off using the funds of the created source of debt coverage:

   Dt 63 Kr 76 - 2

4. The unspent amount of the reserve is classified as other income of the organization:

   In order to ensure that the financial condition of any company does not turn out to be deplorable in the event of non-fulfillment of obligations by counterparties, companies must create a certain reserve cash reserve that will cover losses in the event that the debt is not repaid. The creation of such a reserve indicates that enterprises are ready to admit the possibility of losses due to doubtful debts owed to them.

   In this article, we will look at how a reserve fund is created in case of losses due to doubtful debts, how accounting for such transactions is kept, what typical accounting records exist, and we will also consider one of the cases in practice.

   Formation of a reserve for doubtful debts

   The current legislation does not have adopted documents regulating the procedure for creating a reserve for doubtful debts. Therefore, the management of the organization independently decides how the designated reserve will be formed.

   However, before talking about such operations, you should understand what is meant by a doubtful receivable obligation. The designated term should be understood as an obligation that with a high degree of probability will not be repaid or is not secured by the presence of an appropriate guarantee.

   Such amounts are usually identified during the inventory process of existing mutual settlements with partners.

   The procedure for forming the designated reserve should be fixed in the accounting policies of the organization's management. The amount of contributions to this fund should be determined by the solvency of the debtor, the probability of his repaying the debt.

   Accounting

   So, to maintain accounting records of such transactions, account 63 is used, the task of which is to summarize information about created inventories for doubtful accounts receivable.

   The account is passive, therefore the funds transferred to the reserve are reflected in its credit part, which is offset by the debit of account 91. If doubtful debts are not claimed and they are written off, then position 63 is debited in correspondence with the accounts where settlements with the corresponding debtors are taken into account. In a situation where unused so-called reserve funds for the profit of the fiscal period following the period of its formation, the following entry is made:

   Analytics for 63 positions is carried out for each created reserve.

   Typical accounting entries

   So, typical entries when creating designated reserve funds look like this:

   Kt 63 – formation of a reserve fund for other expenses;

   Kt 62 – recognizing the amount of debt as bad and writing it off from the fund;

   Kt 91.1 – accounting for the unused amount of the fund;

   Kt 76.2 – write-off of fund funds due to debt repayment.

   Case Study

   Let’s imagine that in June 2017, an agreement was signed between two organizations for the supply of souvenir products made from amber. The cost of the batch was 125,270 rubles. In this case, payment must be made within 20 days after shipment of the goods.

   In fact, the following operations were carried out for the delivery and payment of the designated consignment of goods:

   • 06.2017, shipment of the consignment of goods in full;
   • until June 25, 2017 the buyer has not made payment;
   • 07.2017 the buyer only partially paid the cost of the shipment, transferring 68,130 rubles;
   • By the end of 2017, the remaining debt had not been repaid.

   Due to the fact that the buyer violated the terms of the agreement, the seller was forced to recognize the buyer's obligation as doubtful, for which reason a fund was formed.

   These operations are recorded using the following standard records:

   Kt 63 – reflection of the reserve amount, 125,270 rubles;

   Kt 68 – accounting for deferred tax assets, 25,054 rubles;

   Kt 62 – repayment of part of the debt, 68,130 rubles;

   Account 63 “Provisions for doubtful debts” is intended to summarize information about reserves for doubtful debts.

   
   

   For the amount of reserves created, entries are made in the debit of the “Other income and expenses” account and the credit of account 63 “Reserves for doubtful debts”. When writing off unclaimed debts that were previously recognized by the organization as doubtful, entries are made in the debit of account 63 “Provisions for doubtful debts” in correspondence with the corresponding accounts for accounts receivable. The addition of unused amounts of reserves for doubtful debts to the profit of the reporting period following the period of their creation is reflected in the debit of account 63 “Provisions for doubtful debts” and the credit accounts 91"Other income and expenses."

   
   

   Analytical accounting for account 63 “Provisions for doubtful debts” is maintained for each created reserve.

   Account 63 "Provisions for doubtful debts"
   corresponds with accounts

   
   

   Application of the chart of accounts: account 63

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