This line is filled in by organizations that incur costs for the search, evaluation of mineral deposits and exploration of minerals in a certain subsoil area. Such organizations take into account intangible exploration assets (IPA) in accordance with the norms of the Accounting Regulations “Accounting for Costs for the Development of Natural Resources” (PBU 24/2011), approved by Order of the Ministry of Finance of Russia dated October 6, 2011 N 125n. Accounting for non-current assets is kept in a separate sub-account to account 08 “Investments in non-current assets” (clause 9 of PBU 24/2011).
Line 1130 provides information on the amount of actual costs for the acquisition (creation) of legal acts, taking into account revaluation, depreciation and impairment (clause 35 of PBU 4/99, clause 28 of PBU 24/2011). Data are provided as of the reporting date, as of December 31 of the previous year and as of December 31 of the year preceding the previous one.
Regulatory legal acts include search costs recognized as non-current assets and not related to the acquisition (creation) of an object that has a tangible form. At the same time, prospecting costs mean the costs of searching, assessing mineral deposits and exploring mineral resources in a certain subsoil area, which are incurred before the commercial feasibility of production in relation to this subsoil area is established and documented (clauses 2, 4, 6 PBU 24/2011).
Examples of legal acts are (clause 8 of PBU 24/2011):
— the right to carry out work on the search, evaluation of mineral deposits and (or) exploration of mineral resources, confirmed by the presence of an appropriate license;
— information obtained as a result of topographical, geological and geophysical studies;
— results of exploratory drilling;
— results of sampling;
— other geological information about the subsoil;
— assessment of the commercial feasibility of production.
Legal acts objects are accepted for accounting in a separate sub-account to account 08 “Investments in non-current assets” in the amount of actual costs for their acquisition (creation), which is determined in the manner established by paragraphs 13 - 15 of PBU 24/2011. Subsequent assessment of intangible assets (including depreciation, revaluation and impairment recognition) is carried out in the manner established by PBU 14/2007 for intangible assets (clause 16 of PBU 24/2011). In this case, the features given in paragraphs 17 - 20 of PBU 24/2011 should be taken into account. In particular, if there are signs of impairment, legal assets must be tested for impairment in accordance with IAS 36 Impairment of Assets, IFRS 6 Exploration and Evaluation of Mineral Reserves.
The amounts of accrued depreciation, as well as the amounts of impairment, can be recorded, for example, in separate subaccounts to account 05 “Amortization of intangible assets.”
This line of the Balance Sheet indicates the residual value of the legal acts (actual costs taking into account the revaluations made, less accumulated depreciation and impairment). This value is determined as the difference between the balances of the corresponding analytical accounts of synthetic accounts 08 and 05 (taking into account revaluation and impairment).
Line 1130 “Intangible exploration assets” = Debit balance on account 08 (analytical account of legal entities) - Credit balance on account 05 (analytical account for depreciation and impairment of legal assets)
In general, the indicators in line 1130 “Intangible exploration assets” as of December 31 of the previous year and as of December 31 of the year preceding the previous year are transferred from the Balance Sheet for the previous year.
The “Explanations” column provides an indication of the disclosure of this indicator (paragraph 2 of clause 28 of PBU 4/99).
Example of filling line 1130"Intangible search assets"
In 2014, the organization took into account the right to geological study, exploration and production of minerals (coal) in a certain subsoil area, confirmed by the presence of an appropriate license, as part of the regulatory legal acts.
The license was obtained in 2012, the cost of obtaining it amounted to 680,000,000 rubles. In 2014, the license was transferred to the NMA in connection with the establishment of the commercial feasibility of production.
Fragment of the Balance Sheet for 2013
Solution
A fragment of the Balance Sheet in Example 1.3 will look like this.
TOPIC 3. BALANCE SHEET OF THE ENTERPRISE
Balance sheet items show the amount of property and liabilities of the enterprise as of a certain date.
Balance sheet item– a separate type of funds (property) or source (liabilities), shown in the balance sheet as a separate item and expressed as a separate amount.
ASSETS
SECTION I. NON-CURRENT CAPITAL includes funds that are heterogeneous in their economic content:
Material resources
Intangible means
Investments, etc.
The combination of these funds in section 1 is due to the long-term nature of their use in the economic activities of the organization and their belonging to the least liquid assets.
Intangible assets (line 1110)– indicates the amount of the residual value of the intangible assets at the end of the reporting period.
The residual value of intangible assets, depending on the procedure for accounting for depreciation of intangible assets adopted in the accounting policy:
or immediately formed on account 04 “Intangible assets”;
or calculated by subtracting from the balance at the end of the year in account 04 the balance at the end of the year in account 05 “Amortization of intangible assets”.
In accordance with clause 3 of PBU 14/2007 “Accounting for intangible assets”, an object is accepted in accounting as an intangible asset if the following conditions are simultaneously met:
1. the object is capable of bringing economic benefits to the organization in the future, in particular, the object is intended:
For use in production of products;
When performing work or providing services;
For the management needs of the organization.
2. there is a right to receive economic benefits that this object is capable of bringing in the future, including the organization has properly executed documents confirming the existence of the asset itself and the right of this organization to the result of intellectual activity or a means of individualization:
Patents;
Evidence;
Other security documents;
Agreement on the alienation of the exclusive right to the result of intellectual activity or to a means of individualization;
Documents confirming the transfer of the exclusive right without a contract;
There must also be restrictions on the access of other persons to such economic benefits (control over the object).
3. the possibility of separating or separating (identifying) an object from other assets;
4. The object is intended to be used for a long time, i.e. useful life exceeding 12 months;
5. the organization does not intend to sell the property within 12 months;
6. the actual (initial) cost of the object can be reliably determined;
7. the object does not have a material form.
In accordance with Article 1225 of Chapter 69 of the Civil Code, the results of intellectual activity and equivalent means of individualization of legal entities, goods, works, services and enterprises that are granted legal protection (intellectual property) are:
Works of science, literature and art; programs for electronic computers (computer programs); databases; phonograms; communication on the air or via cable of radio or television programs (broadcasting by broadcasting or cable broadcasting organizations); inventions; breeding achievements; brand names; trademarks and service marks.
Also, licenses for the use of software products (such as 1c programs, antiviruses, etc.) do not apply to intangible assets.
In accordance with paragraph 16 of PBU 14/2007, the initial/actual cost of intangible assets at which it is accepted for accounting is not subject to change, except in cases of revaluation and depreciation of intangible assets.
An organization can revaluate intangible assets at the end of the reporting period. The use or waiver of this right must be formalized in the accounting policy for accounting purposes. Revaluation of intangible assets is carried out by recalculating their residual value (clause 19 of PBU 14/2007).
The amount of additional valuation of intangible assets as a result of revaluation is credited to the additional capital of the organization. The subsequent amount of markdown within the revaluation limits reduces the additional capital. The amount of the markdown is included in the financial result as other expenses. Subsequent revaluation within the limits of the previous depreciation amount - to the financial result as part of other income.
By line 1110 the residual value of intangible assets is reflected: = debit balance in account 04 “Intangible assets” (excluding R&D expenses) minus credit balance on account 05 “Amortization of intangible assets”
If depreciation is calculated without using account 05, then this line reflects: Debit balance of account 04 “Intangible assets” (excluding R&D expenses)
Research and development results (line 1120). This line indicates the amount of expenses for completed research, development and technological work (hereinafter referred to as R&D*), not written off as expenses for ordinary activities and other expenses. *Research work includes work related to the implementation of scientific (research), scientific and technical activities and experimental developments, defined by the Federal Law of August 23, 1996. No. 127-FZ “On science and state scientific and technical policy.”
In accordance with clause 16 of PBU 17/02 “Accounting for expenses on research, development and technological work”, if significant, information on R&D expenses is reflected in the balance sheet for a separate group of asset items (section “Non-current assets”) .
The organization's expenses on R&D, the results of which are used for the production or management needs of the organization, are accounted for on account 04 “Intangible assets” separately in accordance with the Chart of Accounts and the Instructions for its use.
In accordance with clause 2 of PBU 17/02, the following are taken into account as part of R&D:
R&D for which results were obtained that are subject to legal protection, but were not formalized in the manner prescribed by law;
R&D that produced results that are not subject to legal protection in accordance with the norms of current legislation.
As part of R&D, account 04 is not taken into account and is not reflected on line 1120:
Unfinished R&D, as well as R&D, the results of which are taken into account in accounting as intangible assets; expenses of the organization for the development of natural resources (conducting geological studies of subsoil, exploration (additional exploration) of developed deposits;
Preparatory work in extractive industries, etc.;
Costs for preparation and development of production, new organizations, workshops, units (start-up costs);
Costs of preparing and mastering the production of products not intended for serial and mass production;
Costs associated with improving technology and production organization, improving product quality, changing product design and other operational properties carried out during the production (technological) process.
In accordance with clause 9 of PBU 17/02, R&D expenses include all actual expenses associated with the implementation of the specified work.
Expenses for R&D include:
Cost of materials and materials and services of third-party organizations and persons used in performing the specified work;
Costs of wages and other payments to employees directly involved in performing the specified work under an employment contract;
Contributions for social needs;
Cost of special equipment and special fittings intended for use as test and research objects;
Depreciation of fixed assets and intangible assets used in performing the specified work;
Costs for the maintenance and operation of research equipment, installations and structures, other fixed assets and other property;
General business expenses, if they are directly related to the implementation of these works;
Other expenses directly related to the implementation of research, development and technological work, including testing costs.
By line 1120 information on expenses for completed research, development and technological work (R&D) is reflected: = debit balance in account 04 “Intangible assets” (analytical account for accounting for R&D expenses)
Line 1130 “Intangible exploration assets”
By line 1130 the costs of searching, assessing mineral deposits and exploring mineral resources in a certain subsoil area are reflected: =
debit balance on account 08 “Investments in non-current assets” (analytical account for accounting of legal entities) minus
Withcredit balance for account 05 “Amortization of intangible assets” (analytical accounts for depreciation and impairment of legal and regulatory assets)
Intangible and tangible search assets (lines 1130 and 1140)
These lines must be filled out by organizations that carry out the costs of searching, assessing mineral deposits and exploring mineral resources (hereinafter referred to as search costs) in a certain subsoil area, the formation procedure of which is regulated by PBU 24/2011 “Accounting for the costs of developing natural resources” (hereinafter referred to as PBU 24/2011). We are talking specifically about the costs that were incurred before the commercial feasibility of production was established. Moreover, the likelihood that the economic benefits from mining will exceed the costs incurred has been established and documented.
Line 1130 reflects the residual value of intangible exploration assets, and line 1140 - tangible exploration assets, formed as of December 31 of the reporting year.
According to clauses 7 and clause 8 of PBU 24/2011, tangible search assets recognize search costs related mainly to the acquisition (creation) of an object that has a tangible form. These usually include those used in the process of searching, assessing mineral deposits and mineral exploration:
Facilities (pipeline system, etc.);
Equipment (specialized drilling rigs, pumping units, tanks, etc.);
Vehicles.
Other search assets are recognized as intangible search assets. These, in particular, may be:
The right to carry out work on the search, evaluation of mineral deposits or mineral exploration, confirmed by the presence of an appropriate license;
Information obtained as a result of topographical, geological and geophysical studies;
Exploration drilling results;
Sampling results;
Other geological information about the subsoil;
Assessment of the commercial feasibility of production.
The list of types of search costs recognized as non-current assets is established by organizations independently and is fixed in the accounting policy of the organization (clause 4 of PBU 24/2011). The remaining search costs are recognized as expenses for ordinary activities.
Organizations that do not have this kind of assets put dashes in the indicated lines (clause 11 of PBU 4/99, see also letter of the Ministry of Finance of Russia dated 01/09/2013 N 07-02-18/01).
When recognized in accounting, exploration assets are valued at the amount of actual costs. According to clause 13 of PBU 24/2011, expenses for the acquisition (creation) of exploration assets include:
Amounts paid to the supplier (seller) or organizations for the performance of work under a construction contract (other contracts);
Intermediary fees associated with the acquisition of an asset; cost of information and consulting services;
Customs duties and fees;
Non-refundable taxes, government and patent fees;
Depreciation of other assets (including exploration assets) used to create the exploration asset;
Remuneration for employees involved in the creation of the search asset;
Obligations of the organization in relation to environmental protection, land reclamation, liquidation of buildings, structures, equipment arising in connection with the performance of work on the search, assessment of mineral deposits and mineral exploration;
Other costs.
Costs not directly related to the creation of search assets are not included in the cost of the assets (for example, reimbursable taxes, general business expenses).
Tangible and intangible exploration assets are accounted for in separate subaccounts to account 08 “Investments in non-current assets” (for example, in the subaccounts “Tangible exploration assets” and “Intangible exploration assets”) (clause 9 of PBU 24/2011).
Depreciation for tangible and intangible exploration assets is calculated in the same order as for fixed assets or intangible assets (clause 16 of PBU 24/2011).
Thus, line 1130 indicates the difference between the debit balance of account 08, subaccount “Intangible search assets” and the credit balance of account 05, subaccount “Amortization of intangible search assets”.
- Purpose of the article: display of material costs associated with the search, analysis and exploration of deposits, analysis of minerals.
- Line number in the balance sheet: 1140.
- Account number according to the chart of accounts: debit balance of the subaccount .12 minus the credit balance of the account. (in terms of depreciation and impairment of these objects).
Tangible exploration assets mean non-current assets on the balance sheet of an organization that have a tangible form. The main characteristic of this type of object is the purpose of use. According to the current legislation, the costs incurred when using assets in the process of searching for, analyzing mineral deposits, as well as exploration of minerals in a certain subsoil area are regulated.
Note from the author! This type of costs includes non-current assets used by the enterprise in subsoil areas until there is official documentary evidence of the commercial feasibility of extracting minerals in a given deposit, subject to the technical equipment and availability of resources of the enterprise. Recognition of exploration expenses as non-current assets of the company is carried out, as a rule, if there is a license in a certain subsoil area where exploration activities are carried out.
Material exploration assets are the company’s expended material resources associated with the acquisition or formation of objects with a tangible form, namely:
- systems of structures (for example, gas pipelines, etc.);
- specialized equipment (drill, pumps, etc.);
- units of transport.
Acceptance of costs in company accounting
The company independently decides on the types of costs included in non-current assets. All other costs are written off in accounting as expenses for ordinary activities.
In accounting, tangible search assets are taken in the amount of all actual costs incurred for their creation and use in the company’s activities.
Composition of actually incurred costs included in the cost of a non-current exploration asset:
- cost of goods and services of suppliers according to the contract;
- the cost of work performed under construction contracts and other agreements;
- payment of a bonus to intermediary counterparties through whom the search asset was purchased;
- payment for information and consulting services;
- payment of mandatory customs duties;
- taxes and duties, the further reimbursement of which is not possible;
- the amount of accrued depreciation of other non-current assets of the company used in the formation of a new exploration asset;
- remuneration of employees involved in the process of creating an asset;
- fulfilled obligations of the company in relation to environmental protection, liquidation of buildings and structures related to the implementation of prospecting and exploration activities in the subsoil, as well as mineral exploration;
- other costs incurred in creating or purchasing a search asset.
Note from the author! If an enterprise plans to use these non-current assets in activities after completion of exploration activities at a certain subsoil site, the assets can be transferred and included in the company’s fixed assets (Dt01 Kt08.12).
Line 1140 of the balance sheet contains information about the actual costs of creating assets, taking into account adjustments for revaluation and the amount of depreciation as of December 31 of the reporting year, the previous one and the previous one.
Impairment risk assessment
According to PBU, the company is required to monitor at each reporting date in order to identify possible signs of impairment of exploration assets. The following factors should be analyzed:
- validity period of the license for prospecting, evaluation of deposits and exploration of mineral resources (expiration within a year after the reporting period in the absence of plans to issue an extension of license permits);
- discrepancy between planned costs and actual expenditures on the implementation of activities for the search and analysis of deposits, as well as resource exploration;
- making a final decision by the company to terminate prospecting and exploration work in this area;
- The monitoring carried out indicates the impossibility of paying off the costs of searching and evaluating deposits in full.
Case Study
A joint-stock company engaged in the search and development of oil fields hired Solnyshko LLC to drill a well. The cost of the work amounted to 5 million rubles, including VAT of 762.7 thousand rubles. The data analysis revealed that oil production in this area was inappropriate, and the well was abandoned.
Business transactions in the accounting of JSC:
- Dt08 Kt60
4.2 million rubles - the cost of the contractor’s work excluding VAT.
- Dt19 Kt60
762.7 thousand rubles. - VAT included.
- Dt68 Kt19
762.7 thousand rub. - acceptance of VAT for deduction.
- Dt91.2 Kt08
4.2 million rubles. - write-off of a exploration asset due to the inexpediency of further oil production activities.
Regulatory framework
Data on the material resources expended during the search and analysis of deposits must be reflected in accordance with PBU 24/2011, approved by order of the Ministry of Finance of the Russian Federation dated October 6, 2011 No. 125n.
Common entries for accounting for tangible exploration assets
- Formation of the initial accounting price of a material exploration asset in accounting.
Dt08.12 Kt60 - payment to suppliers.
Dt08.12 Kt70 - remuneration of employees involved in the creation process.
Dt08.12 Kt10 - materials used.
Note! Postings with accounts 69,02,96, etc. can also be generated.
- Impairment of a tangible exploration asset.
Dt91.02 Kt08.12 - recognition of loss.
Dt02 Kt91.1 - adjustment of accrued depreciation.
- Transfer of existing material search facilities to the main equipment section.
Dt01 Kt08.12.
- Write-off of incurred costs due to the futility of their further use in the company's activities (for example, due to damage).
When business entities develop natural resources, perform work on the search and development of mineral resources, costs arise, called “exploration” and associated with the use of fixed assets and intangible assets. In this regard, it is necessary to consider what is special and how tangible and intangible exploration assets are reflected in the balance sheet.
Intangible Search Assets
The following are taken into account as these assets:
- the right arising on the basis of a license to carry out work on the search, exploration of mineral deposits, and their assessment;
- information obtained as a result of prospecting studies (geophysical, topographical and geological) regarding mineral deposits and subsoil;
- results obtained during exploratory drilling or sampling results;
- assessment of field development and mining from the point of view of commercial feasibility.
In the balance sheet, line 1130, called “Intangible Exploration Assets” (IPA), reflects the amount of costs for searching for deposits of any minerals (accounted for in a subaccount to account 08/IPA). The line indicator 1130 is formed as the difference between account 08/NPA and account 05/NPA, i.e. intangible search assets are reflected in the balance sheet at their residual value.
Tangible exploration assets on the balance sheet are...
In the balance sheet, line 1140, called “Tangible Exploration Assets” (MPA), forms information about the fixed assets (equipment, transport, structures) used in the process of searching for mineral resources. MPA is taken into account on account 08, in a separate sub-account 08/MPA. The indicator for line 1140 is calculated as the difference between accounts 08/MPA and 02/MPA, i.e., in the balance sheet, tangible exploration assets are reflected at their residual value.
Some types of fixed assets used in the development and extraction of mineral deposits, such as equipment, transport, and structures, are recognized as tangible exploration assets. Among the structures used during exploration operations for mineral deposits, pipelines can be distinguished. Among the equipment used during prospecting activities, there is specialized equipment for these purposes, for example, drilling rigs, storage tanks for extracted minerals, and pumping units.
What is included in the actual costs of exploration assets?
When creating or acquiring exploration assets (both tangible and intangible), the following are included in the actual costs (PBU 24/2011):
- amounts paid by the business entity to the supplier upon purchase according to the contract;
- amounts paid by an economic entity to organizations for work performed during the construction or other creation of a prospecting asset;
- amounts paid by a business entity to intermediaries who participated in the acquisition of a prospecting asset;
- when creating a search asset, amounts are paid to employees who create it;
- amounts paid by a business entity for services in the field of information or consultation provided;
- the amount of fees and duties paid at customs;
- the amounts of patent duties, state duties, and taxes paid by an economic entity that are non-refundable;
- the amount of depreciation charges for non-current assets used in the process of creating an asset classified as a search asset;
- costs incurred by an economic entity during the development and extraction of mineral deposits and associated with environmental protection, liquidation of fixed assets, land reclamation, etc.
