How to take into account work in progress in income tax expenses

Work in progress is the unfinished process of processing raw materials into the final product as of the reporting date, i.e. a situation where materials have already been written off for production, but products have not yet been released. In PBU No. 34 (approved by order of the Ministry of Finance dated July 29, 1998 No. 34n), work in progress (WIP) refers to products/work that have not completed the full production cycle or all stages of the technical process, as well as those already produced, but not yet tested, not accepted by the quality control department or incomplete . Let's talk about how work in progress is recorded in accounting and what account is used.

Accounting for work in progress in accounting

In the context of the military-industrial complex, situations rarely arise when all the costs of the reporting period are written off to the cost of these products; almost always at the end of the month there is some balance of “unfinished” products in production (this could be military products that are not in demand by the government customer in due to the lack of funds to pay for it or the termination of a government contract by decision of the Government of the Russian Federation) with corresponding costs.

According to clause 63 of the “Regulations on accounting and financial reporting in the Russian Federation”, approved by Order of the Ministry of Finance of the Russian Federation dated July 29, 1998 N 34n (hereinafter referred to as Order N 34n):

“Products (work) that have not passed all stages (phases, redistributions) provided for by the technological process, as well as incomplete products that have not passed testing and technical acceptance, are classified as work in progress.”

The presence and size of work in progress (hereinafter referred to as WIP) of weapons and military equipment depends on the nature and duration of the technological process. The balance of work in progress is established by conducting an inventory. For these purposes, a variety of methods can be used: actual weighing, piece counting, volumetric measurement, the use of batch counting data, depending on the type of military products being manufactured.

In accordance with the norms of accounting legislation (clause 64 of Order No. 34n), work in progress can be reflected in the balance sheet:

• according to actual or standard (planned) production cost;
• by direct cost items;
• at the cost of raw materials, materials and semi-finished products.

Note that organizations of the military-industrial complex in accounting evaluate work in progress based on the calculation of two indicators: costs of materials and wages. First, a separate calculation is made for each cost element, and then the data obtained is summarized.

The method of assessing work in progress at actual cost is the most common and reliable. The essence of this method is that, according to inventory data, the number of work in progress at the end of the reporting period is determined. By multiplying the quantity by the estimated average cost per unit of WIP, the actual production cost of the entire refinery at the end of the month is determined.

Valuation at standard (planned cost) is used in conditions of mass and serial production. With this method of assessment, the accounting (planned) price of a unit of work in progress, calculated by economists, is used. The use of accounting prices greatly simplifies the accounting of work in progress, but in this case the process of determining the cost of finished products is more labor-intensive. When using this method, it is necessary to keep records of deviations from the cost of work in progress at accounting prices and the actual cost recorded on account 20 “Main production”.

Assessment of work in progress based on the cost of raw materials, materials and semi-finished products is mainly used in material-intensive industries. This method differs from the previous ones in that WIP includes only direct costs or only raw materials, materials and semi-finished products, and all other costs are written off to the cost of finished products.

Note!

In the conditions of individual (unit) production, work in progress is valued at actual cost. Until the manufactured product has gone through all stages of the technological process, all costs for its production are taken into account as part of work in progress.

The military-industrial complex organization must choose a method for assessing work in progress and consolidate it in its accounting policies.

Let's look at ways to evaluate work in progress using examples.

Example 1

(Evaluation based on actual cost)

Let us assume that the finished product of the Arsenal OJSC organization is product 1. The technological process for the production of product 1 consists of two stages: the foundry produces metal blanks, which are then transferred to the processing shop, where the finished product is manufactured. The organization keeps records using the unfinished method.

According to inventory data at the beginning of the month, the number of metal blanks was:

• in the foundry warehouse - 300 pieces;
• in the processing shop - 350 pieces.

According to accounting data, the cost of the refinery at the beginning of the month was 175,500 rubles.

During the reporting month, Arsenal OJSC produced 700 pieces of metal blanks; 1,000 pieces were used to produce finished products.

Therefore, the balance of work in progress was (300 pieces + 350 pieces + 700 pieces - 1000 pieces) = 350 pieces.

The foundry's costs for the production of blanks amounted to 195,000 rubles. The total costs of the foundry and processing shops for the current month amounted to 320,000 rubles.

The average unit cost of a refinery is:

(175,500 rubles + 195,000 rubles): (300 pieces + 350 pieces + 700 pieces) = 274.44 rubles.

In order to determine the cost of the refinery at the end of the month, the resulting value should be multiplied by the number of procurements at the end of the month.

274.44 rubles x 350 pieces = 96054 rubles.

Then the accountant of Arsenal OJSC will write off the following in the accounting account for finished products:

175,500 rubles + 320,000 rubles - 96,054 rubles = 399,446 rubles.

Now, using the conditions of an example, we will consider the method of estimating a refinery at standard (planned) cost.

Example 2

Let's assume that the accounting price of a metal billet is 270 rubles.

The movement of work in progress for the reporting month in natural units was:

balance at the beginning of the month - 650 pieces (300 pieces + 350 pieces);

blanks produced per month - 700 pieces;

used for the manufacture of product 1 - 1000 pieces;

the balance of work in progress at the end of the month is 350 pieces.

Total production costs amounted to 320,000 rubles, including:

• foundry - 195,000 rubles;
• processing workshop - 125,000 rubles.

The actual cost of manufacturing metal blanks is 195,000 rubles, which is higher than their cost as work in progress at accounting (planned) prices (700 pieces x 270 rubles = 189,000 rubles).

The deviation is 6,000 rubles. Moreover, the specified deviation applies to both the balance of the refinery and the finished products, therefore, this amount of deviations must be distributed. Moreover, distribution can be done in two ways:

Option 1. Deviations are distributed in proportion to the quantitative indicator of the refinery balance and finished products.

The amount of deviations between the actual cost and the standard (planned) cost related to work in progress will be:

350 pieces: (1000 pieces + 350 pieces) x 6000 rubles = 1555.56 rubles.

The amount of deviations between the actual cost and the standard (planned) cost relating to finished products will be:

1000 pieces: (1000 pieces + 350 pieces) x 6000 rubles = 4444.44 rubles.

Option 2. Deviations are distributed by recalculating the accounting (planned) prices of work in progress.

This calculation is carried out in three stages.

1st stage. The total cost of producing metal blanks is determined, taking into account deviations:

270 rubles x 650 pieces + 270 rubles x 700 pieces + 6,000 rubles = 370,500 rubles.

2nd stage. The cost of a refinery unit (metal billet) is calculated:

370,500 rubles: (650 pieces + 700 pieces) = 274.44 rubles.

3rd stage. The cost of the refinery at the end of the month is determined taking into account deviations:

350 pieces x 274.44 rubles = 96,054 rubles.

As can be seen from the resulting calculation, the actual cost of the refinery at the end of the month fully corresponds to the calculated data of the previous example. Next month, the accounting price of a refinery unit will already be 274.44 rubles.

The total cost of manufacturing finished products 1 will be 370,500 rubles - 96,054 rubles + 125,000 rubles = 399,446 rubles. This amount is debited to the finished product accounts.

PBU18/02: accounting for work in progress

WITH 1

January 2002, Chapter 25
of the Tax Code of the Russian Federation
(hereinafter referred to as the Tax Code of the Russian Federation) adopted for taxation purposes a procedure for recognizing income and expenses that differs from the accounting rules.
for Income Tax Calculations” PBU
was , subject to payment to the budget, but also the amounts of income tax, overpaid and (or) collected, which can affect the amount of income tax in subsequent reporting periods in accordance with the legislation of the Russian Federation. In other words, starting from the financial statements for 2003, the organizations mentioned below are required to disclose in their financial statements the reasons for the discrepancy in profits (income tax) accepted for accounting and taxation purposes. It should be understood that the introduction of PBU 18/02 is primarily due to the desire of the Ministry of Finance to ensure that the financial statements reflect the indicator of net profit, free from income tax. Net profit reflected in the balance sheet of an enterprise is that part of the profit on which taxes have already been paid (accrued).

PBU 18/02 establishes the rules for the formation in accounting of information on income tax calculations. The provision should be applied to enterprises of all forms of ownership, except for credit, insurance and budgetary institutions. It should be noted that the requirements of PBU 18/02 may not be applied by small businesses (clause 2 of PBU 18/02).

Accounting for tax differences on work in progress

Keeping records of tax differences on work in progress (hereinafter referred to as WIP) presents, as a rule, the greatest difficulties and is fraught with the greatest distortions in determining the amount of net profit of an enterprise. This is due to differences in methods for estimating work in progress. In tax accounting, the procedure for assessing work in progress is established by Art. 319 of the Tax Code of the Russian Federation, which, taking into account the specifics of the enterprise’s activities, is disclosed in the accounting policy (since January 1, 2005, this is a mandatory norm). Accounting is carried out in accordance with the method adopted and enshrined in the accounting policy for calculating the cost of products (works, services), which does not contradict the requirements of paragraphs 63, 64 of the Regulations on accounting and financial reporting in the Russian Federation

(approved by Order of the Ministry of Finance of the Russian Federation dated July 29, 1998 No. 34n).

When organizing the accounting of tax differences, it is necessary to understand that when forming the costs of the main production (for tax purposes - direct expenses), tax differences in depreciation, material and other expenses should already be reflected in the accounting. That is, we are talking specifically about the difference in the assessment of work in progress, which arises as a result of differences in the methods for assessing this asset, adopted in accounting and tax accounting.

Differences in the assessment of work in progress when performing work (rendering services)

If the subject of the enterprise’s activity is the performance of work or the provision of services, when developing accounting policies for accounting and taxation purposes, it is necessary to ensure comparability in the accounting of assets - objects of work in progress in accounting and tax accounting. That is, if for accounting purposes the order-by-order method of calculating costs is adopted, then it is recommended to keep records of direct costs in the context of completed orders. Only this method will give an accurate result when assessing tax differences. It should be noted that tax legislation does not contain the term “custom accounting”, including Art. 319 of the Tax Code of the Russian Federation, that is, the use of the “boiler” method is allowed. However, the mentioned article introduces a requirement (clause 1) that the expenses incurred correspond to the manufactured products (work performed, services provided).

When organizing accounting, it is necessary to understand that work in progress is a special type of asset, the specificity of which is expressed in the fact that its assessment is carried out monthly, since every month as a result of the production activities of the enterprise, a new asset is created - work in progress, with the simultaneous presence of work in progress balances for work performed in past periods. From the above it follows that temporary differences on the balance of work in progress should be accrued with the simultaneous repayment of temporary differences,

accrued in the previous period.

To demonstrate what has been said, a very extensive example should be considered.

Example

Let's consider an enterprise whose subject of activity is the performance of work (provision of services). During three reporting periods, the enterprise incurred the following expenses (for accounting purposes) for the production and implementation of work under five contracts (see Table 1, p. 7). Taking into account the specifics of recognizing expenses for tax purposes, these same expenses were recognized in tax accounting in the order given in table. 2, p. 7.

As can be seen from the tables above, the amount of expenses for the entire production cycle (three reporting periods) is the same. Next, we will consider the procedure for maintaining accounting and tax records for reporting periods. Note that accounting is organized in a customized manner for the purposes of both accounting and tax accounting. The assessment of work in progress is made in proportion to the time worked on completed orders (contracts).

So, in the first reporting period, expenses in accounting and tax accounting were reflected as follows (see Table 3, p. 7).

Table 1

table 2

Table 3

The balance of work in progress and the amount of direct expenses attributable to the costs of production and sales of the reporting period were calculated:

Table 4

Calculation of work in progress, 1st reporting period

Table 5

The following are reflected in the accounting for the implementation of work and the costs of their production:

Table 6

As a result, the balance sheet at the end of the first reporting period will be as follows:

Table 7

Turnover balance sheet

Calculation of the tax base for tax purposes:

Table 8

Thus, in the reporting period, the enterprise reflected in its accounting the current income tax (according to the tax return), as well as the amounts of deferred tax liabilities that arose as a result of the difference in the valuation of the relevant assets. The amounts of deferred tax liabilities are reflected in accounting separately, by type of asset in the valuation of which differences arose, which will make it possible to correctly reflect their repayment in subsequent reporting periods. Next, we will consider accounting for differences in work in progress in the second reporting period.

Table 9

Journal of business transactions, 2nd reporting period

The balance of work in progress and the amount of direct expenses attributable to the costs of production and sales of the reporting period were calculated:

Table 10

Calculation of work in progress, 2nd reporting period

Table 11

The following are reflected in the accounting for the implementation of work and the costs of their production:

Table 12

As a result, the balance sheet at the end of the second reporting period will be as follows:

Table 13

Turnover balance sheet

Let us emphasize once again that the balance of the work in progress of the first reporting period was repaid in the second period and the difference (DNO) was accrued for the difference in the assessment of the work in progress of the second reporting period. Calculation of the tax base for tax purposes:

Table 14

As we see, in the second reporting period, the amount of income tax accrued for payment coincides with the amount of tax according to the declaration. Next, we will consider the operations of the third reporting period.

Table 15

Journal of business
transactions, 3rd reporting period

The balance of work in progress and the amount of direct expenses attributable to the costs of production and sales of the reporting period were calculated:

Table 16

Calculation of work in progress, 3rd period

Table 17

The following are reflected in the accounting for the implementation of work and the costs of their production:

Table 18

As a result, the balance sheet at the end of the first reporting period will be as follows:

Table 19

Turnover balance sheet

As can be seen from the balance sheet, all temporary differences (including work in progress) have been repaid. The amount of work in progress at the end of the third reporting period in both accounting and tax accounting is zero.

Calculation of the tax base for tax purposes:

Table 20

The total amount of accounting and tax expenses for the three reporting periods coincides, which confirms the correctness of the accounting methodology used.

In conclusion, I would like to draw attention to the following basic rules for accounting for tax differences:

1 To reliably reflect temporary and permanent differences in accounting, it is necessary to maintain analytical accounting by type of difference. Deferred tax assets (liabilities) and permanent tax liabilities (assets) should be accrued for each business transaction (clauses 6, 13-15 of PBU 18/02).

2 Deferred tax assets (liabilities) should not be accrued for which there is not sufficient confidence that they will be repaid in subsequent tax periods (clauses 14, 17 of PBU 18/02).

3Keep a history (analytical accounting) of the occurrence of temporary differences. Deferred tax liabilities (assets) should not only accrue, but also be repaid on a timely basis.

Accounting for work in progress in tax accounting

In accordance with tax accounting standards (Article 318 of the Tax Code of the Russian Federation), income tax payers working on the accrual basis are required to divide production and sales expenses incurred by them during the reporting tax period into direct and indirect.

Let us recall that indirect expenses incurred in the reporting (tax) period in full are considered expenses of the current reporting period (taking into account the requirements provided for in Chapter 25 of the Tax Code of the Russian Federation).

Direct expenses refer to the expenses of the current reporting (tax) period as products, works, and services are sold, in the cost of which they are taken into account in accordance with Art. 319 of the Tax Code of the Russian Federation.

This article of the Tax Code of the Russian Federation determines the procedure for assessing work in progress.

Please note that for tax accounting purposes, work in progress means:

“...products (work, services) are partially ready, that is, they have not gone through all the processing (manufacturing) operations provided for by the technological process. Work in progress includes completed but not accepted by the customer works and services. WIP also includes the balances of unfulfilled production orders and the balances of semi-finished products of own production.

Work in progress: invoice

Materials and semi-finished products in production are classified as work in progress, provided that they have already been processed.”

Article 319 of the Tax Code of the Russian Federation establishes that the assessment of work in progress at the end of the current month is carried out by the taxpayer on the basis of data from primary accounting documents on the movement and balances (in quantitative terms) of raw materials and materials, finished products by workshop (production and other production divisions of the taxpayer) and tax data accounting for the amount of direct expenses incurred in the current month.

The legislator has granted the taxpayer the right to independently determine the procedure for distributing direct costs for work in progress and for products manufactured in the current month. True, it is stipulated that the distribution procedure is determined taking into account the correspondence of the expenses incurred to the manufactured products (work performed and services provided).

Note!

There is no method for determining such compliance in the Tax Code of the Russian Federation, therefore we recommend that the taxpayer call the method used “the method of accounting for the compliance of expenses of manufactured products (work performed, services provided)” and consolidate it in the accounting policy.

In cases where it is impossible to attribute direct costs to a specific production process for the manufacture of a given type of product, the taxpayer has the right to independently determine the mechanism for distributing these costs using economically feasible indicators. The term “economically justified indicators” has thousands of interpretations (for example, planned cost, weight or cost of raw materials, etc.), so it is better to take such an “economically justifiable indicator” from a reference book on economics and consolidate its use in accounting policies.

Note!

The procedure for the distribution of direct costs for work in progress and for products manufactured by the taxpayer, enshrined in the accounting policy, is subject to application for at least two tax periods.

Since now in tax accounting the list of direct expenses (Article 318 of the Tax Code of the Russian Federation) is open, this actually allows the organization to create the same composition of direct expenses in accounting and tax accounting. And this, in turn, makes it possible to evaluate work in progress in tax accounting according to the methodology that it uses in accounting.

Note that in addition to this option for assessing work in progress in tax accounting, the taxpayer can also use the one that was established by the legislator in the previous edition of Chapter. 25 Tax Code of the Russian Federation. Agree that the use of the previous procedure is one of the forms of independence in establishing the procedure for the distribution of direct expenses. In this case, the taxpayer must also consolidate this procedure in the tax accounting policy and use it for at least two tax periods.

Let us recall that the previous procedure for assessing work in progress depended on the type of activity of the taxpayer:

• for taxpayers whose production was associated with the processing and processing of raw materials, direct costs were distributed to the balances of work in progress in a share corresponding to the share of these balances in the raw materials (in physical terms) minus technological losses. In this case, raw materials are understood as materials used in production as a material basis and transformed into finished products as a result of sequential technological processing (processing);
• for taxpayers whose production was related to the performance of work (provision of services), the amount of direct expenses was distributed to the balances of work in progress in proportion to the share of unfinished (or completed, but not accepted at the end of the current month) orders for the performance of work (provision of services) in the total volume of work performed in within a month of orders for work (provision of services);
• for other taxpayers, the amount of direct costs was distributed to the balances of work in progress in proportion to the share of direct costs in the planned (normative, estimated) cost of products.

Let us assume that the military-industrial complex organization decided to maintain the previous procedure for assessing work in progress and enshrined this in its accounting policies.

Let's look at the procedure for calculating work in progress. For convenience of calculations, we will use the following indicators:

———T————T——————————————- ¦ WIP ¦ Rubles ¦ Amount of incoming balance of work in progress ¦ ¦ beginning ¦ ¦ production ¦ +———+———— +——————————————-+ ¦IWIP ¦Natural¦Amount of raw materials used¦ ¦initial¦meters ¦in production last month, in part ¦ ¦ ¦ ¦relating to WIP for end of last month ¦ ¦ ¦ ¦ (to WIP at the beginning of the billing month) ¦ +———+————+——————————————-+ ¦ PR ¦ Rubles ¦Total amount of direct expenses of the estimated ¦ ¦ ¦ ¦month ¦ +———+————+——————————————-+ ¦ IS ¦Natural¦Amount of raw materials used¦ ¦ ¦meters ¦in production for the billing month ¦ +———+————+—————————————-+ ¦ TP ¦Natural ¦Technological losses of raw materials, ¦ ¦ ¦meters ¦used in production for billing¦ ¦ ¦ ¦month ¦ +———+————+——————————————-+ ¦ WIP ¦ Rubles ¦Evaluation of the balance of work in progress ¦ ¦ ¦ ¦at the end of the billing month ¦ +———+————+——————————————-+ ¦ISNPP ¦Natural¦Amount of raw materials used¦ ¦con¦meters ¦in production per month in parts, relating to WIP at the end of the current month ¦ ¦ ¦ (to WIPcon) L———+————+———————————————

You need to start by calculating the coefficient of work in progress balances in the feedstock. To do this, take the amount of raw materials in physical terms attributable to work in progress and divide it by the total amount of raw materials released into production (minus technological losses). For this purpose, data from limit-fence cards (Form N M-8) is used. We remind you: unified forms of primary accounting documents for accounting of materials were approved by Resolution of the State Statistics Committee of the Russian Federation of October 30, 1997 N 71a “On approval of unified forms of primary accounting documentation for accounting of labor and its payment, fixed assets and intangible assets, materials, low-value and wear-and-tear items, works in capital construction."

Information on the amount of raw materials included in the balance of work in progress and technological losses is provided by employees who control the production process - technologists, economists.

The resulting coefficient must be multiplied by the total amount of direct expenses, equal to the amount of direct expenses attributable to the balances of work in progress at the beginning of the reporting period, and the amount of expenses incurred during the same period - the total amount of direct expenses attributable to the balances of work in progress is obtained.

Example 3

The organization JSC Arsenal is engaged in the production of military products. According to the technology, 2 kg of metal is used to produce 1 unit of finished product, the rate of technological losses is 3%.

Let us assume that the amount of the original metal in the balances of work in progress in physical terms (according to inventory data) in the organization was:

as of January 1 - 300 kg, cost of work in progress (estimated by direct cost items) - 150,000 rubles.

In January, 1030 kg of metal was released into production (taking into account technological losses). The organization's direct expenses for January amounted to 500,000 rubles. The finished products warehouse received 600 finished products in January.

For convenience of calculations, we summarize the data in a table:

——————————T———————————- ¦ WIP initial ¦ 150,000 rubles ¦ +——————————+———————— ———-+ ¦ ISNZPnach ¦ 300 kg ¦ +——————————+———————————-+ ¦ PR ¦ 500,000 rubles ¦ +——————— ———+———————————-+ ¦ IS ¦ 1030 kg ¦ +——————————+———————————-+ ¦ TP ¦ 30 kg ¦ +——————————+———————————-+ ¦ ISNZPkon ¦ 94 kg ¦ L——————————+——— —————————

Then the cost of work in progress at the end of the month is determined as follows:

WIP = (PR + WIP) x ISNZP: (IS + ISNZP - TP) = end start end end = (500,000 rubles + 150,000 rubles) x 94 kg: (1030 kg + 300 kg - 30 kg) = 46,800 rubles.

Consequently, in January, direct costs in the amount of:

PR + WIP - WIP = 500,000 rubles + 150,000 rubles - 46,800 beginning to end rubles = 603,200 rubles.

To consider the 3rd stage of calculation, it is necessary to supplement the conditions of the example. Let’s assume that the balance of finished products in the organization’s warehouse in quantitative terms was 100 pieces, and its cost for direct items of expenses was 200,000 rubles. In January, the organization sold 400 units of finished products. The balance of finished products in the warehouse at the end of the month was (100 pieces + 600 pieces - 400 pieces) = 300 pieces.

The cost of finished products in the warehouse is:

200,000 rubles + 603,200 rubles = 803,200 rubles.

Let's calculate the ratio of WIP balances of finished products in the warehouse:

300 pieces: (100 pieces + 600 pieces) = 0.429.

Then the share of direct costs attributable to the balance of products in the warehouse will be:

803200 x 0.429 = 344573 rubles.

Direct costs attributable to products sold:

803,200 rubles - 344,573 rubles = 458,627 rubles.

Valuation of work in progress

The evaluation of work in progress products is carried out in the following ways:

• At actual cost . The method is usually used for the finished product. Not suitable for mass production.
• At planned cost . The method is suitable for mass production.
• According to the amount of direct expenses . Direct costs can be transferred to the cost of blanks or raw materials.
• At the cost of raw materials used in production . The method is relevant for a shortened technological cycle.

The choice of a specific method depends on the characteristics of a given production.

IMPORTANT! The chosen valuation method must be reflected in the accounting policy of the enterprise. This is necessary for accounting purposes.

Accounting and evaluation of work in progress

Almost every production has a balance of work in progress at the end of the reporting (tax) period in order to ensure uninterrupted production and prevent downtime.

Work in progress is subject to valuation at direct costs. At the same time, the methods for assessing work in progress in accounting and tax accounting are different.

In tax accounting, the assessment of work in progress is carried out in accordance with Art. 319 of the Tax Code of the Russian Federation. According to this article, work in progress means products (work, services) of partial readiness, i.e. not having undergone all processing (manufacturing) operations provided for by the technological process. Work in progress also includes work and services completed but not accepted by the customer, as well as the balance of unfulfilled production orders and the balance of semi-finished products of own production.

In this case, materials and semi-finished products in production are classified as work in progress, provided that they have already been processed.

The assessment of work in progress balances at the end of the current month is made on the basis of data from primary accounting documents on the movement and balances (in quantitative terms) of raw materials and materials, finished products by workshop (production and other production units) and tax accounting data on the amount of goods carried out in the current month direct expenses. In this case, the organization independently determines the procedure for distributing direct expenses for work in progress and for products manufactured in the current month (work performed, services rendered), taking into account the correspondence of the expenses incurred to manufactured products (work performed, services rendered).

How to take into account work in progress in income tax expenses

Work in progress (WIP) refers to products (work, services) that are partially completed, work and services completed but not accepted by the customer, the balance of unfulfilled production orders and the balance of semi-finished products of own production.

When applying the accrual method to the amount of balances of work in progress at the end of the reporting (tax) period, the total amount of expenses for the production and sale of products (performance of work, provision of services) is reduced. These amounts are included in the direct expenses of the next month.

It is necessary to evaluate the balances of work in progress at the end of each month in order to determine that part of the direct expenses of the current month (taking into account the balance of work in progress at the beginning of the month) that falls on products manufactured in the current month (work performed, services rendered).

Organizations providing services have the right to attribute the entire amount of direct expenses of the reporting (tax) period to the reduction of income from production and sales of this reporting (tax) period without distribution to the balances of work in progress (clause 2 of Article 318 of the Tax Code of the Russian Federation). They can establish such a procedure in their accounting policies for tax purposes.

Methods for assessing work in progress balances for profit tax purposes under Code of the Russian Federation have not been established. The Code only prescribes that the balances of work in progress in tax accounting must be assessed at the end of each month, using the data (clause 1 of Article 319 of the Tax Code of the Russian Federation):

• primary accounting documents on the movement and balances (in quantitative terms) of raw materials and materials, finished products by workshops (productions and other production units);
• tax accounting on the amount of direct expenses of the current month.

In order to evaluate the balance of work in progress at the end of each month, it is necessary to determine in the accounting policy for tax purposes:

• list of direct costs for the manufacture of products (performance of work, provision of services) (clause 1 of Article 318 of the Tax Code of the Russian Federation);
• a mechanism for distributing direct costs by type of product (work, service), if it is impossible to attribute direct costs to a specific production process for the manufacture of a certain type of product (work, service) (clause 1 of Article 319 of the Tax Code of the Russian Federation). The allocation must be economically justified;
• the procedure for distributing direct costs for work in progress and for products manufactured in the current month (work performed, services rendered), taking into account the correspondence of the costs of manufactured products (work performed, services rendered). The specified procedure for the formation of work in progress is subject to application for at least two tax periods (clause 1 of article 319 of the Tax Code of the Russian Federation).

To evaluate work in progress for a specific type of product (work, service) at the end of the current month, you must do the following:

• determine the estimate of work in progress (in quantitative and total terms) at the beginning of the current month. It is equal to the corresponding indicators at the end of the previous month recorded in tax accounting;
• determine the amount of direct expenses for the current month. Direct costs related to several types of products (works, services) must be distributed between these types in accordance with the mechanism established in the accounting policy for tax purposes;
• to the amount of direct expenses of the current month, add the amount of direct expenses at the beginning of the month (i.e., the assessment of work in progress at the beginning of the current month according to clause 1);
• distribute the amount of direct expenses under clause 3 between the products manufactured in the current month (work performed, services provided) and the balances of work in progress at the end of the current month in the manner established in the accounting policy.

An example of the distribution of direct costs if direct costs relate to several types of products

LLC “Brick for People” produces two types of bricks: clay and silicate.

The accounting policy for tax purposes establishes that depreciation on production equipment used in the manufacture of several types of products is distributed in proportion to the number of operating hours of the equipment per month for the manufacture of each type of product.

For February, the amount of depreciation on equipment used for the production of clay and sand-lime bricks amounted to 1,200,000 rubles.

In February the equipment produced:

• clay brick – 144 hours (40%);
• sand-lime brick – 216 hours (60%).

Depreciation of equipment for February by type of product was:

• for clay brick – 480,000 rubles. (1,200,000 x 40%);
• for sand-lime brick – 720,000 rubles. (1,200,000 x 60%).

An example of calculating work in progress balances during production

The accounting policy of Legprom LLC for tax purposes establishes:

"1. Direct costs are:

• the cost of raw materials and basic materials used in the production of products;
• remuneration of key production workers;
• insurance premiums from the wages of key production workers;
• depreciation of production equipment.

The remaining costs are indirect.

1. To distribute direct costs to the balance of work in progress, the amount of direct costs per kilogram of raw materials is determined in the tax register “Statement of distribution of direct costs for production and the balance of work in progress.”

The calculation of direct expenses attributable to the balance of work in progress at the end of the month in the specified tax register is as follows:

List of distribution of direct costs for production and the balance of work in progress for March

At the end of March, the amount of direct expenses attributable to the balance of work in progress amounted to 290,000 rubles, and for production output - 2,300,000 rubles.

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Accounting for work in progress in tax accounting

This procedure for the distribution of direct expenses is established in the accounting policy for tax purposes and is subject to application for at least two tax periods.

Moreover, if it is impossible to attribute direct costs to a specific production process for the manufacture of a given type of product (work, service), then the accounting policy for tax purposes determines a different procedure for distributing these costs using economically sound indicators.

The amount of work in progress balances at the end of the current month is included in the direct expenses of the next month. At the end of the tax period, the amount of work in progress balances at the end of the tax period is included in the direct expenses of the next tax period in the manner and under the conditions provided for by law.

The assessment of the balances of finished products in the warehouse at the end of the current month is also made on the basis of data from primary accounting documents on the movement and balances of finished products in the warehouse (in quantitative terms) and the amount of direct expenses incurred in the current month, reduced by the amount of direct expenses related to work in progress balances. The assessment of the balances of finished products in the warehouse is determined as the difference between the amount of direct costs attributable to the balances of finished products at the beginning of the current month, increased by the amount of direct costs attributable to the output of products in the current month (minus the amount of direct costs attributable to the balance of work in progress) , and the amount of direct costs attributable to products shipped in the current month.

The assessment of the balances of products shipped but not sold at the end of the current month is made on the basis of shipment data (in quantitative terms) and the amount of direct expenses incurred in the current month, reduced by the amount of direct expenses related to the balances of work in progress and the balances of finished products in the warehouse . The assessment of balances of products shipped but not sold at the end of the current month is determined as the difference between the amount of direct costs attributable to the balances of shipped but not sold finished products at the beginning of the current month, increased by the amount of direct costs attributable to products shipped in the current month (for minus the amount of direct costs attributable to the balances of finished products in the warehouse), and the amount of direct costs attributable to products sold in the current month.

In accounting, work in progress refers to “products that have not gone through all stages (phases, redistributions) of processing provided for by the technological process, as well as products that are incomplete and have not passed technical acceptance” ( clause 63 of the Regulations on accounting and financial reporting in the Russian Federation) . At the same time, according to the Instructions for using the Chart of Accounts, the balance of account 20 “Main production” at the end of the month reflects the value of work in progress.

In accounting, it is customary to reflect the balance of work in progress in one of four possible ways ( clause 64 of the Regulations on accounting and financial reporting in the Russian Federation):

1) at actual production cost;

2) according to standard (planned) production costs;

3) for direct cost items;

4) at the cost of raw materials, materials and semi-finished products.

At the same time, organizations engaged in serial production can choose any of these methods, and organizations engaged in single (piece) production must necessarily use the method of assessing work in progress at actual cost.

Based on the different accounting and assessment of work in progress, the difference in assessment in accounting and tax accounting will be reflected in accounting in the form of a deferred asset or deferred tax liability, depending on the resulting temporary differences ( PBU 18/02 ).

List of recommended literature

1 Tax Code of the Russian Federation (TC RF) – access mode: garant.ru

2 Order of the Ministry of Finance of the Russian Federation dated June 9, 2001 No. 44n “On approval of the accounting regulations “Accounting for inventories” PBU 5/01” (with amendments and additions) – access mode: garant.ru

3 Antoshina, O. A. Costs and prime costs in accounting and tax accounting in 2009 // Economic and Legal Bulletin. - No. 3. - 2009.

4 Bekhtereva, E.V. Cost: from management cost accounting to cost accounting. – M.: Omega-L, 2008.

5 Snegirev, A.G. Valuation of work in progress balances // Industry: accounting and taxation. - No. 1. - 2011.

Date added: 2016-03-20; ;

Work in progress: postings

The formation of the WIP value is accompanied by the following entries:

Debit balance on account. 20 will reflect the amount of “work in progress” as of the reporting date.

The enterprise is obliged to control the volume of work in progress, preventing its sharp growth, which is possible due to various circumstances, for example, due to equipment failure, the release of a defective batch, the termination of an unpromising project or the cancellation of an order.

The cost of work in progress in accounting can be written off:

Real estate in the WIP stage often becomes the subject of purchase or is sold by the owner. They are listed on account 08 and during a purchase and sale transaction, VAT must be charged on the planned value of the object. Postings: