Method of assessing material inventories per unit cost involves keeping records of them individually. When transferring inventories to production using this method, their actual cost is included in expenses.
The Russian Ministry of Finance recommends using this valuation method for inventories that cannot replace each other in the usual way, as well as for inventories used by the organization in a special manner (clause 17 of PBU 5/01). These financiers include precious metals, precious stones, etc.
It is also convenient to write off expensive goods that are sold in a single copy or in small quantities. For example, cars, art, jewelry. Practical accounting", N 7, 8, July, August 2007.
The organization sells expensive cars.
When selling a car, its actual cost is included in expenses. Because accounting policy The organization provides for this group of goods to use the valuation method - at the cost of a unit of inventories.
Writing off inventories at the cost of each unit allows you to obtain accurate information about the cost of assets sold. The reporting indicators generated using it are the most realistic, since they were obtained without any averaging or deviations. Data financial statements with this method of estimating inventories can be used directly for management accounting.
The valuation method based on the cost of a unit of inventory can also be used in tax accounting when determining the size material costs when writing off raw materials and supplies used in the production (manufacturing) of goods (performing work, providing services) and the cost of purchasing purchased goods when selling them.
Valuation method: at average cost
When writing off (dispensing) materials valued by the organization at average cost, the latter is determined for each group (type) of inventory as the quotient of dividing the total cost of the group (type) of inventory by their quantity, consisting respectively of cost and quantity by balance at the beginning of the month and by incoming stocks this month Order of the Ministry of Finance of the Russian Federation dated December 28, 2001 N 119n (as amended on March 26, 2007) “On approval Guidelines on accounting of inventories." Thus, to determine the average cost for each group (type) of inventories when they are written off at the average cost, the following formula is used:
Ssr = (Cost + Spost) : (Cost + Kpost),
where Сср is the average cost of inventories;
Composition and Cpost - the value of the balance of inventories at the beginning of the month and those received for the month;
Cost and Kpost - the number of units of inventory remaining at the beginning of the month and capitalized for the month.
The product of the average cost obtained in this way for each group (type) of inventory by the number of inventories written off will give the value included in expenses. Practical accounting", N 7, 8, July, August 2007.
As of July 1, the balance of the inventory is 350 units, their actual cost is 88,970 rubles. The balances were made up of the receipts of five batches of supplies in the following sequence. The first batch received 50 units. By actual cost 245 rubles/unit, in the second - 70 units. at 251 rubles/unit, in the third - 80 units. at 254 rubles/unit, in the fourth - 80 units. at 257 rubles/unit, in the fifth - 70 units. at 261 rub/unit.
During July, 800 units of inventories were purchased for the amount of 222,120 rubles. The supplies arrived in nine batches (hereinafter they are numbered from the sixth to the fourteenth). Dates of their receipt, unit cost and actual cost each batch are given in table No. 1:
After one working day (July 2, 4, 6, 10, 12, 16, etc.), 80 units of inventories are transferred to production. In total, 11 transfers were carried out in a month.
(In this example and all the ones below:
When multiplying, differences in the values of kopecks may occur. This is explained by the fact that the calculations were carried out with an accuracy of up to a tenth of it; It is considered that when goods are received and disposed of on the same day, their disposal first occurs, and then the new batch is posted.)
The total quantity and total value of inventories are determined as the combination of the quantity and value of inventories at the beginning of the month and those received during the month. These values will be 1150 units respectively. (350 + 800) and 311,090 rub. (88 970 + 222 120). Based on this, the average unit cost is 270.51 rubles/unit. (RUB 311,090: 1150 units). Since 11 transfers of inventories were carried out in July, the total number of disposed stocks is 880 units. (80 units x 11). Therefore, the cost of materials transferred into production during the month, included in expenses for common types activities will amount to 238,051.48 rubles. (270.51 rubles/unit x 880 units).
The cost of the remaining 270 units. (1150 - 880) MPZ at the end of the month (at the beginning of August) - 73,038.52 rubles. (270.51 rub/unit x 270 units).
The average cost valuation method is the most common. With a large assortment of used inventories (sold goods) and provided they are purchased in small batches, it is quite difficult to track which batch each transferred (sold) unit of such inventory belongs to. This same method eliminates the required "tracking".
In the example, the average cost per unit of inventories was determined based on the average monthly actual cost, i.e. weighted scoring was used. The above-mentioned Methodological Instructions allow the use of another calculation option, when the actual cost of inventories is determined at the time of their release. In this case, the calculation of the average estimate includes the quantity and cost of inventories at the beginning of the month and all receipts until the moment of release. Since in this case the actual cost of a unit of inventories is determined each time at the time of their disposal, in other words, the calculation operation seems to “slide” from one retiring batch of inventories to the next, this option was called a sliding estimate. Practical accounting", N 7, 8, July, August 2007.
Disposal valuation method material and production An organization's inventories (MPS) are one of its elements. We talked about calculating the cost of inventories using the FIFO method in ours. However, the most common way to evaluate the disposal of inventories is based on average cost. This method can be used both in accounting and tax accounting (clause 4 PBU 1/2008, clause 16 PBU 5/01, clause 8 article 254, clause 3 clause 1 article 268, clause 2 clause 2 of article 346.17 of the Tax Code of the Russian Federation).
Let us give an example of calculation for the average cost method in our material.
Formula for calculating the average cost of materials and goods
Calculation of the average cost of goods or materials for a month involves dividing the total cost of a group (type) of inventory by their quantity, which is the sum of, respectively, the cost and the amount of balance at the beginning of the month and the inventory received during a given month (clause 18 of PBU 5/01).
In this case, the average cost can be calculated in two versions (clause 78 of Order of the Ministry of Finance dated December 28, 2001 No. 119n):
- weighted average score;
- rolling estimate.
A weighted assessment involves finding average cost for the month based on the quantity and cost of materials at the beginning of the month and all receipts for the month.
And with a moving average, calculations are made for each moment of disposal of inventories. Accordingly, the moving average value is calculated based on the quantity and cost of inventories at the beginning of the month and the receipt of inventories until the moment of release.
Let us give an example of calculating the weighted average estimate of inventory disposal using conventional digital data.
Based on the balance of inventories as of 03/01/2018 and receipts from three batches for March, the average cost per unit of inventories is 55.9 rubles/piece.
(RUB 18,831.3 / 337 pcs.).
Accordingly, the cost of disposal is 216 units. Inventory for March 2018 is 12,074.4 rubles. (216 pcs. * 55.9 rub./pc.).
Therefore, the cost of the balance is 121 units. Inventory as of March 31, 2018 is RUB 6,756.9. (RUB 18,831.3 - RUB 12,074.4).
Methods for assessing inventories
When releasing inventories for production or otherwise disposing of them, they can be assessed in accordance with one of the methods:
FIFO method;
LIFO method;
at average cost;.
at the cost of each unit. The choice of a specific method depends mainly on what problems the organization solves in the field of finance, investment and taxation Method
FIFO assumes that materials should be written off at cost of the relevant batches in the chronological order of their receipt. In conditions of inflation, it causes an underestimation of the cost of resources released into production, an overestimation of their balance in the balance sheet, and, consequently, an overestimation of the financial result from core activities and an improvement in liquidity indicators. The FIFO method is advisable to use for organizations planning to implement capital investments due to
at the cost of each unit. own funds and enjoying the corresponding income tax benefits.
at the cost of each unit. LIFO assumes priority write-off of materials at the cost of the latest batches. This method ensures an overestimation of the value of sold valuables, an underestimation of their balance at the end of the month, which means a decrease in profits and a deterioration in liquidity. It is recommended for use by those organizations that have the goal of minimizing income tax.
at the cost of each unit. average cost based on an individual assessment of material reserves. This applies primarily to inventories used by the organization in a special manner (precious metals, precious stones, etc.) and inventories that cannot be replaced in the usual way. The possibility of using this method has been officially provided since 1999.
These methods can be used in organizations subject to three restrictions:
the chosen method is fixed in accounting policy and is valid throughout the reporting year;
the method must be uniform for the type (group) of materials;
do not fall under established exceptions, namely materials that cannot replace each other. There is only one valuation method for them - at the cost of each unit.
4. Indicators of the use of working capital.
Working capital enterprises are in constant motion, making a cycle that has 3 stages:
I stage - This is the preparation of objects of labor. At this stage, working capital received by the enterprise in the form of money is spent by it on the acquisition of inventory.
II stage circuit flows in the sphere of production - material values enter production and finished products are created.
III stage – implementation finished products. Receiving Money for products sold, this stage is completed. Working capital returns to its original form and begins the circuit again.
Appendix 1 to the Guidelines for accounting of inventories, approved by Order of the Ministry of Finance Russian Federation dated December 28, 2001 No. 119n
Calculations of material write-off using average cost methods, FIFO
The first option is by determining the average cost (weighted estimate)
| Item no. | Contents of operations | Quantity, kg | Purchase price, rub. | Amount, rub. |
| 1 | 2 | 3 | 4 | 5 |
| A. INITIAL DATA | ||||
| 1 | Balance as of January 1 | 1000 | 5 | 5000 |
| 2 | Received in January: | |||
| First batch | 6000 | 10 | 60000 | |
| Second batch | 4000 | 12 | 48000 | |
| Third batch | 20000 | 20 | 400000 | |
| Total received for January | 30000 | 508000 | ||
| Total with balance at the beginning of the month | 31000 | 513000 | ||
| 3 | Released in January: | |||
| - for production | 16000 | |||
| - for sale | 1000 | |||
| 5000 | ||||
| Total released | 22000 | |||
| 4 | Balance as of February 1 | 9000 | ||
| B. WRITTEN OFF MATERIAL ACCORDING TO THE AVERAGE COST METHOD | ||||
| 5 | Average price in January: 513000 / 31000 = 16.55 | |||
| 6 | Total is written off in January (see clause 3) | |||
| 7 | Including: | |||
| - for production | 16000 | 16,55 | 264800 | |
| - for sale | 1000 | 16,55 | 16550 | |
| — service industries and farms | 5000 | 16,55 | 82750 | |
| Total | 22000 | 364100 | ||
| 8 | Balance as of February 1 | 9000 | 16,54 | 148900 |
| B. WRITING OFF MATERIAL USING THE FIFO METHOD | ||||
| 9 | Used in January | |||
| including: | ||||
| — at the price of the balance at the beginning of the month | 1000 | 5 | 5000 | |
| - at the price of the first batch | 6000 | 10 | 60000 | |
| - at the price of the second batch | 4000 | 12 | 48000 | |
| - at the price of the third batch | 11000 | 20 | 220000 | |
| Total written off | 22000 | 15,14 | 333000 | |
| Including: | ||||
| — for production (including rounding) | 16000 | 15,14 | 242160 | |
| - for sale | 1000 | 15,14 | 15140 | |
| - service industries and farms | 5000 | 15,14 | 75700 | |
| Total (including rounding) | 22000 | 15,14 | 333000 | |
| 10 | Balance as of February 1 | 9000 | 20 | 180000 |
Notes.
1) Point 9 of the calculation shows the sequence of writing off material using the FIFO method: first, the balance at the beginning of the month is written off, then receipts to reporting month: first the first batch, then the second, etc., until the total quantity to be written off in a given month is reached (in the example, 22,000 kg). From the receipts of the third batch of 20,000 kg, only 11,000 kg were taken - as much as is needed to ultimately produce 22,000 kg.
2) Materials released in a given month (for production, sale, service industries and farms and for other purposes) are written off in amounts determined based on average price, which is determined by dividing the total amount written off in a given month by the amount of material written off.
In our example, the average price for January was:
- according to the average cost method - 513000 / 31000 = 16.55 (clause 5);
- according to the FIFO method - 333000: 22000 kg = 15 - 14 (clause 9, total);
Actual amounts written off have small differences compared to estimated amounts due to rounding of the average monthly price.
3) The balance of material at the beginning of the next month using the FIFO method is determined (clause 10):
- gr. 3 - from the source data (item 4);
- gr. 5 = item 1 + item 2 (total) - item 9 (total);
- gr. 4 = gr. 5 / gr. 3 (on the same point).
4) The cost of materials issued (written off) using the FIFO method can be determined in a simplified, calculated way, when the cost of the material is first established, carried over to the next month, and the remaining amount is written off in the reporting month. In our example it looks like this:
The second option is by determining the price at the time of material release (sliding price)
The method of writing off materials at average monthly prices provided in the first option may cause inconvenience when practical application this option due to the fact that the price, as a rule, can only be determined at the end of the month, after calculating monthly turnover.
An organization can use the second option for valuing material by determining the price based on the condition of the material at the time of release, without waiting for the end of the month.
In this case, recalculation of the average price of the material can be carried out based on the option chosen in the organization (average cost, FIFO) at the time (as) of each material issue. In this case, the calculation algorithm is similar to the procedure outlined in the first option.
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In the process of economic activity, organizations buy, move from warehouse to warehouse, assemble, process, sell different kinds Inventory (inventory): goods, materials, finished products.
To understand the legally regulated purposes of accounting for inventories, you can familiarize yourself with the relevant PBU (Accounting Regulations). Accounting for inventories is regulated by PBU “Accounting for inventories” (PBU 5/01), approved by Order of the Ministry of Finance of the Russian Federation dated 06/09/01 No. 44n.
And we will look at ways of assessing MPZ briefly, from the point of view of practical logic. To simplify, consider the case trading enterprise with simple document flow. But the basic principles also apply to more complex document flow (for example, manufacturing enterprise with an impressive processing cycle).
We believe that our company (Romashka LLC) sells groceries. Buys wholesale, sells small wholesale. In conditions of sharp rise in prices of goods, a strict assessment of the cost of inventories is especially relevant in order to see the profitability of our activities as realistically as possible. When selling food products Special attention requires taking into account expiration dates, but we are now discussing another issue, therefore, for simplicity, we will exclude this point from consideration.
Let’s assume that at the beginning of the month there were no buckwheat balances in the warehouse, but during the month there were movements described in the table:
| Operation No. | Type of operation | Quantity (kg) | Price, rub.) | Purchase/sale cost (RUB) |
| 1 | + Purchase | 50 | 20 | 1000 |
| 2 | + Purchase | 300 | 25 | 7500 |
| 3 | - Sale | 10 | 30 | 300 |
| 4 | + Purchase | 100 | 27 | 2700 |
| 5 | - Sale | 50 | 30 | 1500 |
| 6 | - Sale | 5 | 33 | 165 |
If we start calculating the profitability of operations, the question arises, what is cost value, each specific sales transaction, because we buy at different prices.
The second question that arises less frequently is what is the value of the remaining goods in warehouses (this question may arise, for example, if we want to take out a loan from a bank, the bank, in order to assess our creditworthiness, will ask for a report on the value of the remaining goods in warehouses). We are convinced that the cost of goods upon sale and when assessing balances may be of interest to us from a practical point of view.
Let's move on to the next point - “How to calculate the cost of goods.” There are several methods:
- The choice of a specific method depends mainly on what problems the organization solves in the field of finance, investment and taxation(from English First In First Out first to come, first to go);
- own funds(from English LastIn First Out - last to come, first to leave);
- On average.
LIFO, in general, is an unpopular method (in addition, it is prohibited by current legislation for use in accounting). Therefore, we compare only 2 methods “FIFO” and “By average”. The FIFO philosophy is in the belief that we always sell the most “stagnant” goods in the warehouse, and therefore the cost of the goods sold is determined by the purchase price of the lots that are sold. And the philosophy of “By average” is that we do not always know exactly which goods we are selling from which batch of receipt, and therefore it is more correct to calculate the average cost per unit, taking into account all batches stored in the warehouse.
Costs are given a lot of attention in enterprises. The expediency of all types of expenses must be reasoned and justified.
Thus, the choice of the method of writing off inventory items as expenses as they are disposed of depends on the characteristics of production and the goals pursued by the company.
For example, the FIFO chronological inventory method is especially suitable for goods with a limited useful life: perishable or obsolete.
In addition, it allows you to evaluate the payback and efficiency of using materials.
Despite some negative manifestations, for example, ignoring inflation processes and price fluctuations, many organizations, due to logic and simplicity, choose the FIFO method.
An example of calculation using specific figures, the scope and specifics of application, the pros and cons of the method are in the article.
Cost calculation methods
If you are serious about getting into trading, you will have to choose which costing method to use. Today, there are three legally permitted methods of assessment and calculation:
- at the cost of each unit of goods,
- at average cost,
- using the FIFO (first in, first out) method.
Each of them will give different indicators for business profitability, and therefore for tax and management accounting. Such a seemingly simple question - at what cost to write off sold goods - can seriously affect how your trade will develop.
In this material we will look at all the presented methods for calculating cost, evaluate the advantages of each, and also tell you when it is better to use which one.
At the cost of each unit
As the name implies, this method assumes that the cost of each specific product is taken into account in the calculations.
This system is used when trading unique and expensive goods when accuracy is important. For example, it is suitable for those who will sell cars, art or jewelry.
It is logical that when a product is piecemeal, and one cannot easily replace another, exactly the price at which it was delivered is entered into accounting when writing off inventory items. This method also assumes that it is always clear from which specific delivery the goods sold came from.
Average cost method
It is used more often than the previous one, and involves monthly calculation of the cost of goods using the arithmetic average. In this case, it does not matter from which specific delivery this or that product “left”. This method of writing off inventory items is suitable for companies selling products for which piece accounting is not important.
This could be, for example, stationery, clothing, shoes, toys, cosmetics and any other consumer goods. The average cost method is especially beneficial for those goods for which the price is constantly changing, both up and down. This method is the easiest to account for.The average cost of goods is calculated using the following formula:
[average cost of inventory items] = ([cost of inventory items at the beginning of the month] + [cost of inventory items received during the month]) / ([number of inventory items at the beginning of the month] + [number of inventory items received during the month])
And the cost of inventory written off per month is calculated as follows: [cost of written-off inventory items] = [average cost of inventory items] X [number of inventory items sold per month].
An example of calculation using the average cost method.
At the beginning of the month, the Stationery store had 370 ballpoint pens left at a purchase price of 10 rubles. Within a month, another 1000 pens were delivered in two batches - 500 for 9 rubles 50 kopecks and 500 for 9 rubles.
We calculate the average cost:
Cost of inventory items at the beginning of the month: 370 X 10 = 3700 (rub.)
Cost of the 1st new supply of goods and materials: 500 X 9.5 = 4750 (rub.)
Cost of the 2nd new supply of goods and materials: 500 X 9 = 4500 (rub.)
Average cost of inventory items: (3700 + 4750 + 4500) : (370 + 1000) = 9.45 (rub.)
1100 X 15 – 1100 X 9.45 = 6105 (rub.)
The advantages of the average cost calculation method are the stability of the price of materials sold and simplicity. However, from a tax accounting point of view, it is not optimal in the case where, for example, you purchase the same pens from the same supplier, and he gradually reduces your prices. Let's consider the following option.
FIFO method: example of cost calculation
This is the most popular cost calculation method. It uses the queuing principle. It is assumed that the items that were delivered first are written off first. Hence the name of the FIFO method (English: “first in, first out” - “first in, first out”).
However, unless the shelf life is important, it is not necessary to ship goods from an earlier delivery first - this is used as an assumption in the calculations. That is, the cost of goods that are sold first is calculated at the price of the balances from the “oldest” delivery. When the remains are quantitatively exhausted, write-off of inventory items goes at the price of the next delivery time, then the next one, and so on.
An example of calculation using the FIFO method. Let’s take our “Stationery” store with ballpoint pens and exactly the same situation as above.
We have 370 ballpoint pens for 10 rubles and are supplied in two batches of 500 pens - first for 9 rubles 50 kopecks, then for 9 rubles. 1100 pens sold for 15 rubles. We count the profit.
The first to go will be 370 pens for 10 rubles - that's 3,700 rubles. Then 500 pens cost 9.5 rubles each, which is another 4,750. There are 230 pens left, each worth 9 rubles, which is 2,070 rubles.
1100 X 15 – (3700 + 4750 + 2070) = 5980 (rub.)
As can be seen from the example of calculation using the FIFO method, the profit indicator in in this case lower than in the average cost example. Accordingly, income tax will be less.
What's better
Both of these methods work quite well. However, FIFO is considered more accurate than the average cost method. It is especially beneficial in terms of taxes if the price of the goods you purchase is constantly decreasing. Then the cost of the written-off goods will be the greatest, and the balance will be the minimum. Therefore, the answer to the question of which is better, FIFO or average cost, in most cases will be the first option.
In the warehouse program
Despite the fact that the FIFO method is quite simple in terms of understanding the principle of its operation, manually calculating the cost each time is very labor-intensive. Especially if you have a small business, and you yourself are the director, the cashier, the accountant, and the chief buyer.
It is much easier if you simply enter data on deliveries and sales and immediately get the result. This is exactly how you can work with the MyWarehouse service. The program fully automates trading processes and itself calculates the cost of written-off goods using the FIFO method.
MyWarehouse calculates profitability for each product or product group, stores and displays current and historical balances, as well as many other data that may be useful. This way, you save time and can be confident in the accuracy of the indicators on which you make decisions.
Company accounting policy
According to the law, the organization itself chooses how to calculate the cost of goods. It is important that the method you consider is necessarily reflected in the company's accounting policies. This is stated in Article 313 Tax Code RF, as well as in paragraph 73 of the Methodological Instructions, approved by order of the Ministry of Finance of Russia dated October 28, 2001 No. 119n.
Changes to accounting policies can be made once a year. That is, you can deposit them earlier, but they will begin to operate according to the law next year - at the beginning of the new year tax period. The accounting policy is drawn up by an accountant and approved by the head of the organization.For management accounting purposes, you are free to use any costing method. Our advice is to use the same one that is written down in your accounting policy - this way there will be less confusion.
Source: "moysklad.ru"
Calculation and write-off of cost of inventories sold
According to paragraph 16 P(S)BU 9, to determine the cost of disposed inventories, an enterprise can use the following methods:
- identified cost;
- weighted average cost;
- FIFO;
- LIFO;
- normative;
- selling prices.
Previously, catering enterprises traditionally used the sales price method to determine the cost of goods sold and kitchen products. But from January 1, 2003 new edition clause 5.9 art. 5 of the Law on Profit determines that for tax accounting purposes, only the identified cost method or the FIFO method can be used.
Using the identified cost method in practice is very difficult.
Therefore, today the vast majority of food service businesses have opted for the FIFO method for tax and accounting purposes to avoid double work.
And yet, we consider it appropriate to provide, within the framework of the “Accountant School,” a description of all six methods provided for by P(S)BU 9. After all, be that as it may, but changes in tax legislation do not “cross out” existing accounting standards.
- Identified cost method.
The essence of this method is that accounting is kept separately for each unit of inventory, i.e. Each unit of inventory is retired at the same cost at which it was capitalized upon receipt.
- The weighted average cost method is very convenient for enterprises that have a large range of inventories with constantly changing costs.
- The FIFO method (“first in - first out”) is based on the assumption that inventories are disposed of in the order in which they arrived at the enterprise. That is, it is believed that the inventories purchased first are also sold first.
Let's illustrate the use of the FIFO method with an example.
Example 1. As of June 1, 2003, the balance of a certain type of inventory was 10 units at a price of UAH 10.00. During the month, the enterprise received 260 units of this type of inventory: the first batch - 20 units. at a price of 15.00 UAH; second batch - 40 units. at a price of 12.00 UAH; third batch - 200 units. at a price of 20.00 UAH.
170 units dropped out in a month. Let's determine the cost of disposed inventory and balance using the FIFO method:
The table easily shows the sequence of inventory write-off using the FIFO method. First of all, the balance at the beginning of the month is written off, then the receipt in the reporting month: first - the first batch, then the second, etc., until the total amount of inventory to be written off in this month is reached (in the example - 170 units) .
From the receipt of the third batch (200 units), exactly as much as was necessary was taken to ensure that the resulting quantity was 170 units.
It does not matter that virtually all 170 units. the inventory may well have only been "taken" from the last batch - for FIFO purposes, it is the inventory that came in first that is considered to go out first.
From the above calculation it is clear that the use of the FIFO method in practice is quite labor-intensive. In this regard, we recall that accounting for the increase (loss) of inventories, in accordance with clause 5.9 of the Law on Profit, consists of comparing book value inventories at the end and beginning of the reporting period (quarter, half-year, 9 months, year).
Therefore, for tax accounting purposes, it is not important at what price the inventories were disposed of, but how they were valued at the end and beginning of the reporting period. This allows you to use a simplified version of the FIFO method, which is based on the fact that inventory balances are valued at the cost of the most recent inventory receipt.Example 2. According to the conditions of example 1, it will be sufficient:
- find the invoice for which the latest batch 3 was received;
- make sure that the actual balance of stocks of this type (100 units) does not exceed the last receipt (200 units at a price of 20.00 UAH);
- conclude that the cost of the remaining inventory of this type at the end of the period is UAH 2000.00. (100 units x 20.00 UAH).
Having transformed the well-known formula of the “commodity balance” (Balance at the end of the period = Balance at the beginning of the period + Income - Expense), we get calculation formula to determine the value of disposed inventories:
Expense = Balance at the beginning of the period + Income - Balance at the end of the period = 100.00 + 4780.00 - 2000.00 = 2880.00 UAH.
As you can see, the results are absolutely the same when using the original and simplified FIFO methods. Traditionally, when using the FIFO method, inventory is accounted for at original (purchase) cost. Meanwhile, “simplified FIFO” can also be used in the case of accounting for goods and products at sales prices.
To do this, it is necessary to organize the accounting of trade margins for each batch of goods (for example, on each invoice, mark the amount of the trade margin).
And then, in a manner similar to that described above, you can determine the balance of trade margins attributable to the balance of goods, as well as the amount of trade margins on disposed goods.
Example 3. Suppose that in examples 1 and 2 the cost of goods is given in sales prices(subaccount 282 “Goods in trade”). We also provide information on the size of the trade margin per unit of each batch of goods:
- balance as of 06/01/2003 - 5.00 UAH. for 1 unit (5.00 x 10 = 50 UAH for the entire balance - the balance of Kt 285 “Trade margin” at the beginning of the month);
- batch 1 - 7.00 UAH. for 1 unit (7.00 x 20 = 140.00 UAH for the whole batch);
- batch 2 - 6.00 UAH. for 1 unit (6.00 x 40 = 240.00 UAH for the whole batch);
- batch 3 - 9.00 UAH. for 1 unit (9.00 x 200 = 1800.00 UAH for the whole batch).
total amount trade margin on goods of this type received during the month: 140.00 + 240.00 + 1800.00 = 2180.00 UAH. (loan turnover in subaccount 285 “Trade margin”)
Knowing that the balance at the end of the month is 100 units. goods from batch 3, we determine the balance of trade margins at the end of the month according to this species goods: 9.00 UAH. x 100 units = 900 UAH. (balance Kt 285).
Now, using a formula similar to that given in example 2, it is easy to calculate the amount of trade margins on disposed goods: 50.00 +2180.00 - 900.00 = 1330.00 UAH.Thus, the cost of goods disposed of during the month was: 2880.00 - 1330.00 = 1550 UAH.
- The LIFO method (“last in - first out”) is based on the assumption that inventories are disposed of in the reverse order of their receipt. That is, the inventory that arrived last is considered to be disposed of first.
- The standard cost method is usually used when estimating material costs as part of work in progress and finished goods.
According to this method, the cost of disposed inventories is determined based on the cost norms per unit of product (work, services). Cost standards are set by the enterprise independently, taking into account normal levels of inventory use, labor, production capacity and current prices.
In order for standard costs to be as close as possible to actual costs, cost standards and prices must be regularly (for example, once a month) checked and revised by the enterprise.
- Sales price method.
The procedure for calculating the cost of goods sold and finished products using the sales price method is presented in the table:
The following conventions are used in the table:
- TN% - average percentage of trade margin;
- ТНн - balance of trade margins at the beginning of the reporting month (balance Kt 285 “Trade margin”);
- ТНп - the amount of trade margins attributable to goods (products) received in the reporting month (credit turnover on account 285 “Trade margin”);
- Tn - sales (retail) cost of the balance of goods (products) at the beginning of the reporting month (balance of Dt 282 “Goods in trade” and Dt 23 “Production”);
- Тп - sales (retail) cost of goods received in the reporting month (products for the kitchen) (debit turnover on accounts 282 “Goods in trade” and 23 “Production”, respectively);
- ТНreal - the amount of trade margin attributable to goods sold;
- Real - sales (retail) cost of goods sold;
- C/Creal - cost of goods sold.
Example 4. We use the data from examples 1 - 3 to calculate the cost of goods sold using the selling price method.
Let us remind you: as of June 1, 2003, according to accounting data, there were goods of a certain type in the amount of 100 UAH. in sales prices, incl. trade margin - 50.00 UAH; goods of this type were received during the month in the amount of 4780 in sales prices, incl. trade margin - 2180.00 UAH; goods of this type were sold during the month in the amount of UAH 2880.00. in selling prices.
Let's determine the cost of goods sold per month using the sales price method:
- average percentage of trade margin: [(50.00 + 2180.00)/(100.00 + 4780.00)] x 100% = 45.70%;
- trade margin on goods sold: 2880.00 x 45.70% / 100% = 1316.16 UAH;
- cost of goods sold: 2880.00 - 1316.16 = 1563.84 UAH.
So, we have considered all 6 existing methods for estimating the cost of inventory disposal.
And now we present possible correspondence of accounts for writing off trade margins and the cost of goods sold, as well as reflecting income and determining financial results from sales:
It is also possible to pay by bank transfer, in which case the debit account will be 31.
The difference between the debit and credit turnover of account 791 is financial results activities of the enterprise.
Since subaccount 791 should not have a balance at the end of the month (or quarter), the resulting difference is written off to account 44. If the debit turnover of account 791 is greater than the credit turnover, then the difference between them will be the amount of loss, and if vice versa, then the amount of profit .
Source: "dtkt.com.ua"
FIFO method
Organizations must pay sufficient attention to costs. In order to justify expenses, it is necessary to be able to argue the feasibility of their occurrence. The write-off of material assets is subject to certain rules. Entities often use the FIFO method in accounting to determine the value of used inventories.
Write-off
It is almost impossible to imagine a situation in which the purchase of homogeneous groups of goods necessary for work occurs identically over a long period of time. As a rule, materials and raw materials come from several organizations and at different prices. At high turnover, it is not possible to track the cost of a specific unit used for production needs.
Legislation allows you to write off material assets as expenses as they are disposed of, using several methods. According to PBU 5/01 “Accounting for inventories”, accounting allows the use of several methodologies:
- Based on the cost of each unit. Suitable for accounting for expensive goods, when it is possible to track the disposal of each batch of materials and inventories.
- At average cost. Total costs are determined as the ratio of the average price (based on the value of the balance and the amount received) to the total quantity, determined similarly.
- The FIFO method means that the inventory that arrives first is used initially.
The FIFO rule is also often called the conveyor method. The name is an English abbreviation FIFO, which means First in first out. That is, “first in, first out.”
The method of writing off FIFO in accounting did not change in 2018. Homogeneous inventory continues to be exited in the order in which it was received. Accordingly, materials from subsequent batches are not disposed of until the previous ones are completely used up.
The FIFO principle means that write-off for production or business needs occurs at the actual cost of inventories received first in line.
Thus, the cost of inventories received later and not used is included in the cost of closing balances.
FIFO principle in warehouse
Under certain conditions, the FIFO method is preferable in conditions of warehousing of goods. Considering that FIFO in accounting in 2018 is still the priority for writing off initial receipts, inventories leave the warehouse in a strict capitalization sequence. Consignments of newly received homogeneous goods are not written off until the previous ones are used up.
The FIFO method is especially preferable when it comes to perishable goods. The chronological sequence of material write-offs must be confirmed by financial planning, which primarily affects the efficiency of the warehouse.Downtime in production processes due to shortages of raw materials must be avoided. No less important is the task of minimizing losses due to untimely damage to goods.
When writing off materials, which is the FIFO method, the following features are distinguished:
- incoming goods are considered separately by batch;
- the cost of purchased batches of goods is determined;
- preventing product damage;
- minimizing losses through efficient use of inventories.
The FIFO method in relation to warehouse accounting is relevant for the following types of products:
- perishable goods;
- products with a limited shelf life;
- goods that may become obsolete.
The FIFO method adopted in accounting, an example for writing off listed inventories, allows you to maximally avoid potential losses in the form of damage to inventories.
At the same time, in practice, the implementation of this principle can be quite difficult. Large enterprises with high turnover require developed system inventory accounting, including monitoring the movement and balances of materials. Of great importance is the organization of the placement of goods and warehouse zoning, which makes it possible to ship materials that are in demand at the right time.
Calculation example
On this moment the provisions of PBU 5/01 in relation to the issue under consideration have not changed. The FIFO method in accounting in 2018 is also valid: costs incurred include the cost of the goods used that were originally purchased. The remainder of the inventory is the cost of inventories received later.
In accounting, the FIFO method is an example of the impact of a change. purchase prices for financial results:
- Thus, when the cost of inventories of a homogeneous group increases, the initial low price will be included in the cost of production. Accordingly, product costs will be low and profits will increase.
- The FIFO method, an example of which involves reducing purchase prices, will, on the contrary, increase the cost of production, reducing profits.
Example. The company is engaged in the production of bakery products. At the beginning of the period, the remaining flour is priced at 20,000 rubles. per ton was 2 tons, only 40,000 rubles. Then the flour arrived in batches: 1st arrival 3 tons for 25,000 rubles; 2nd receipt of 5 tons for 30,000 rubles. During the period under review, 4 tons of flour were consumed.
The organization uses the FIFO method. An example of a write-off calculation would be as follows:
The cost of flour put into production is 2 tons for 20,000 rubles and 2 tons for 25,000 rubles. Total 2 x 20,000 + 2 x 25,000 = 90,000 rubles. The average cost of a ton of flour is 90,000/4 = 22,500 rubles.
The remaining flour is 1 ton for 25,000 rubles and 5 tons for 30,000 rubles. Total 1 x 25,000 + 5 x 30,000 = 175,000 rubles. The cost of the remainder is 175,000/6= 29,166.67 rubles per ton.
Based on the calculation results, the FIFO method allows you to initially take into account the goods that arrived first in time. The cost of purchasing subsequent MPZ will be taken into account as used.
Source: "spmag.ru"
The concept of FIFO. Calculation. Example
The FIFO method (English FIFO, First In First Out, conveyor model) is a method of accounting for the inventories of an enterprise in the chronological order of their receipt and write-off. Basic principle This method is “first in, first out”, that is, the materials that arrived at the warehouse first will also be used first.
Inventories include current assets used in the company’s production cycle:
- raw materials,
- materials,
- semi-finished products
- finished products.
Reserves occupy a significant part current assets enterprises and require competent accounting. There are other methods of accounting for inventories in accounting:
- at the cost of each unit;
- at weighted average cost;
- at the cost of last purchases (LIFO).
Advantages and disadvantages
The opposite of the FIFO accounting method is the LIFO (Last In First Out) method. The LIFO method is also called the “barrel model”, since the materials that were received last are written off first. It should be noted that the LIFO method is used for tax accounting purposes only. The methods are also used in warehouse logistics, for example, the FIFO method is used for warehouse accounting of perishable inventories.
Example of FIFO valuation
Let's look at an example of using the FIFO method in practice. The figure below shows the initial data on the receipt and use of fabric inventories. During the month of March, 270 meters of fabric were consumed; it is necessary to determine the fabric reserves for April.
When calculating using the FIFO method, it is necessary to use data sequentially, starting with the balances for the previous month. The total amount of fabric received for March was 13,400 rubles.
270 includes the balance for the previous month - 100 m, 120 m for the first receipt and 50 meters for the second receipt.
The cost of written-off material is calculated as follows: 100 x 35 rubles. + 120 x 40 rub. + 50 x 45 rub. = 10,550 rub.The estimated cost of one meter of fabric using the FIFO method is: 10,550 / 270 = 39.07 rubles.
Calculation of the value of the balance at the end of the month: (3500+ 13400) – 10550 = 6350 rubles.
It should be remembered that the first thing next month will be the materials from the second batch of fabric. At the end of March, the balance will include materials from the second and third batches of fabric, in quantities of 30 and 100 meters, respectively.
Source: "online-buhuchet.ru"
FIFO method in accounting
This method is used when the cost of inventories is based on the cost of materials that were received by the enterprise earlier. For example, if an enterprise had several deliveries, then first the materials are taken into account in production at the price of the first delivery, then at the price of the second delivery, etc. sequentially.
An example of the use of FIFO in accounting is discussed below. So, let's evaluate inventories using the FIFO method.
Solution. With the FIFO method of accounting for inventory, we must, when sending materials to production, first send the materials that arrived to us earlier.
So, the first batch sent to production is 170 kg. At the beginning of the period we had a balance of 200 kg at a price of 50 rubles per kilogram. Therefore, we take into account 170 kg at a price of 50 rubles per kilogram, which will be 170 * 50 = 8500 rubles.
The second batch sent to production is 160 kg.
We have a balance from the beginning of the month of 30 kilograms at a price of 50 rubles per kilogram. And in the first delivery we received 100 kg of materials at a price of 20 rubles. per kilogram. Which gives us 130 kg, but we need 160 kg. Therefore, we take another 30 kg from the second delivery at a price of 30 rubles. per kilogram (remember that in the second delivery there are (150-30) 120 kg of materials at a price of 30 rubles per kilogram.
So, the second batch sent to production will be taken into account in the amount = 30*50+100*20+30*30=4400 rubles.
The third batch sent to production is 80 kg. We still have 120 kilograms left over from the second delivery at a price of 30 rubles per kilogram. Therefore, 80 kg (the third batch sent to production) is taken into account at a price of 30 rubles, which will be 80 * 30 = 2400 rubles (remember that in the second delivery there remain (120-80) 40 kg of materials at a price of 30 rubles per kilogram.
The fourth batch sent to production is 40 kg. We still have 40 kilograms left over from the third delivery at a price of 30 rubles per kilogram.
Therefore, 40 kg (the fourth batch sent to production) is taken into account at a price of 30 rubles, which will be 40 * 30 = 1200 rubles.
In total, using the FIFO method, we send materials to production in the amount of 8500+4400+2400+1200=16500 rubles.
Let us summarize the data obtained in the table:
Source: "goodstudents.ru"
Let's look at fifo using an example
The FIFO method is a method of writing off materials in which previously purchased materials are written off first. As a result, materials are listed on the balance at a price that is most consistent with current prices on the market.
Let's look at a simple example. The following data is available on the remaining materials in the warehouse:
Let us determine the cost of materials supplied to the production of FIFO valuation methods.
(50 * 23 rub.) + (23 * 23 rub.) + (7 * 22 rub.) = 1833 rub.
The balance of materials is: 35 pcs. 22 rubles each, 30 pcs. 24 rub. for the amount of 1490 rubles.
Let's look at a typical problem to reinforce the material. According to the accounting data of Start LLC as of 01/01/2013. The warehouse contains the following balances of materials according to account 10.1:
01/05/2013 From the supplier Logos LLC, the warehouse of Start LLC received fabric - a tapestry in the amount of 500 meters at a price of 136.88 rubles. per meter, including VAT.
01/07/2013 Paid for materials from Logos LLC in the amount of 68,440 rubles. 01/12/2013 From the supplier Decor LLC, the warehouse of Start LLC received fabric - tapestry in the amount of 750 meters at a price of 138.65 rubles. per meter, including VAT.
01/18/2013 fabric - tapestry was released from the warehouse for the purposes of main production in the amount of 1480 meters.According to the accounting policy of Start LLC, when materials are released into production or otherwise disposed of, they are assessed using the FIFO method. It is necessary to calculate the cost of materials released into production and compile accounting entries. Let's make a journal business transactions Start LLC for January 2013:
There are 480 meters in the warehouse at a price of 115 rubles, it remains to write off another 1000 meters, we take 500 at the price of the first delivery of 116 rubles and 500 meters from the last receipt at 117.5 rubles.
We get: 115*480 + 116*500 + 117.5*500 = 55,200+58,000+58,750 = 171,950 rubles.
Thus, the cost of written-off materials will be 171,950 rubles. and the remainder of Start LLC will have 250 m of tapestry at a price of 117.5 rubles.
In addition to FIFO, there is the average cost method. Until 2008, the LIFO method also existed, but it is no longer used. Schematically, the differences between these methods look like this:
Currently, for accounting purposes, the following methods are used to estimate the cost of inventory:
- at the cost of each unit;
- FIFO method;
- at the cost of the first acquisition of inventories (FIFO method).
For tax accounting purposes, an organization may use the following methods for assessing inventories upon disposal:
- valuation method based on the cost of a unit of inventory;
- average cost valuation method
- valuation method based on the cost of first acquisitions (FIFO);
- valuation method based on the cost of recent acquisitions (LIFO).
- when determining the amount of material costs when writing off raw materials and supplies used in the production (manufacturing) of goods (performing work, providing services), the methods are enshrined in paragraph 8 of Article 254 of the Tax Code of the Russian Federation;
- When selling purchased goods, the methods are enshrined in clause 3, clause 1 of Art. 268 Tax Code of the Russian Federation;
- upon sale or other disposal valuable papers the methods are enshrined in clause 9 of Art. 280 Tax Code of the Russian Federation.
This is explained by the desire to bring domestic accounting standards closer to international ones. However, for tax purposes, four methods of valuing inventories are still used.
Let us briefly describe each of the methods.
At the cost of each unit inventories used by the organization in a special manner (precious metals, precious stones, etc.) or inventories that cannot normally replace each other are assessed. This method is used in exceptional cases or with a small range of inventory items. It is characterized by particular labor intensity, provided that it is used in enterprises with a large product range.
For example.
The company produces cabinet furniture. The balance at the beginning of the stained glass month is 5 sheets in the amount of 125,000.00 rubles.
During the month, the following was purchased: 3 sheets of stained glass for the amount of 84,000.00 rubles.
Transportation costs are included in the cost and amount to 3,000 rubles.
Within a month, 2 sheets from the remainder were used, 1 sheet from the supply of stained glass.
Let's determine the actual cost of the balance: 125,000 / 5 = 25,000 rubles per sheet;
Let's determine the actual cost of receipt: (84,000 + 3,000) / 3 = 29,000.00 rubles per sheet;
The cost of raw materials consumed in the production process per month will be: 25,000 * 2 + 29,000 = 79,000 rubles.
As the example shows, when using this method there is no need to produce additional calculations. If it is possible to accurately determine which materials are used in production, the use of this method has advantages, since materials are written off at their real cost, without deviations.
Average cost calculation is made by dividing the total cost of a group (type) of inventory by its quantity, which consists of the cost and the amount of balance at the beginning of the month and the inventory received during the month. This method is the most common and is included in standard versions of accounting programs.
For example, an organization is engaged in the production of cabinet furniture. The balance of chipboard at the beginning of the month is 300 sheets in the amount of 600,000.00 rubles.
During the month, receipts were made in several batches, including:
- 100 sheets in the amount of 180,000.00 rubles;
- 50 sheets in the amount of 105,000.00 rubles.
Let's calculate the average cost of one sheet of chipboard: (600,000 + 180,000 + 105,000) / (300 + 100 + 50) = 885,000 / 450 = 1,966.67 rubles per sheet.
Let's calculate the cost of chipboard written off for production: 410 * 1,966.67 = 806,334.70 rubles.
The balance of chipboard at the end of the month will be 300 + 150 - 410 = 40 sheets in the amount of 40 * 1,966.67 = 78,666.80 rubles.
P using the FIFO method Inventories that are the first to enter production (sale) are valued at the cost of inventories that were first acquired in time, taking into account the cost of inventories listed at the beginning of the month. Thus, the sequence of write-offs when applying this method is as follows: first, balances at the beginning of the period are written off, then the first batch, then in order. Otherwise, this method can be called a conveyor method. In conditions of rising prices for purchased materials, the cost of purchased products is minimal, while the assessment of inventories and profits is maximum. And when prices fall, on the contrary, inventories and profits are minimized.
When using the FIFO method when calculating the cost of materials released into production, you can use one of the following methods:
The first method is based on writing off the cost of each batch in order: first, the cost of the balance is written off, if the amount of materials written off is greater than the balance, the first batch received is written off, then the second and subsequent ones. The balance of materials is determined by subtracting the cost of written-off materials from total cost materials received for the month (taking into account the balance at the beginning of the month).
The second method is based on determining the balance of materials at the end of the month at the price of the most recent purchase. The cost of materials written off for production is determined by subtracting the resulting value from the total cost of materials received during the month (taking into account the balance at the beginning of the month).
Using the conditions of the previous example, we will calculate using the FIFO method using two options.
Option 1:
Written off for production:
300 sheets in the amount of 600,000.00 rubles; 100 sheets in the amount of 180,000.00 rubles; 10 sheets worth 21,000.00 rubles. Total: 801,000.00 rubles. The balance at the end of the month is 40 sheets in the amount of 84,000.00 rubles.
Option 2:
The balance of chipboard at the end of the month is 40 sheets (300 + 150 - 410), the entire balance from the second batch. Accordingly, the cost of the balance is: 84,000.00 rubles;
Let's calculate the cost of written-off chipboard: 600,000 + 180,000 + 105,000 - 84,000 = 801,000.00
The average cost of one sheet of chipboard written off for production is 801,000 / 410 = 1,953.66 rubles per sheet.
With the LIFO method Inventories that are the first to enter production (sale) are valued at the cost of the last in the acquisition sequence. The LIFO method is the opposite of the FIFO method. In conditions of rising prices - a minimum estimate of reserves and profits. In conditions of falling prices - maximizing inventory valuation and profit.
There are two ways to calculate the cost of materials released into production using the LIFO method. The methods are similar to those above for the FIFO method, with the difference that for the first calculation option the cost of the last received batch is used, then the batches are written off in reverse order. The cost of the earliest purchased batch is used to determine the closing balance. For brevity, we will use the last method of calculation.
The conditions of the example are the same.
The balance of chipboard at the end of the month is transferred from the balance at the beginning of the month, since 410 sheets of chipboard were used for production, of which 50 sheets were from the last batch, 100 sheets from the first batch, 260 sheets from the balance at the beginning of the month.
So, the balance will be 40 sheets at a price of 2,000 rubles per sheet, in the amount of 80,000.00 rubles.
Let's determine the cost of chipboard used for production: 600,000 + 180,000 + 105,000 - 80,000 = 805,000.00
The average cost of 1 sheet of chipboard written off for production is 1963.41 rubles.
Let us make a reservation that in practice there are two options for using methods of average estimates of the actual cost of inventory items when released into production or written off for other purposes:
The first involves a weighted assessment based on the average monthly actual cost; in this case, the calculation includes the quantity and cost of materials at the beginning of the month and all receipts for the month (reporting period).
The second method is based on determining the actual cost of the material at the time of its release (rolling estimate); in this case, the average estimate is calculated based on the quantity and cost of materials at the beginning of the month and all receipts until the time of release.
Thus, the choice of the date on which the inventory is assessed determines the difference between the weighted and rolling assessment.
The use of a rolling assessment must be economically justified and supported by appropriate computer technology.
Options for calculating average estimates of the actual cost of materials for accounting and tax accounting purposes should be disclosed in the organization’s accounting policies.
Let's compare the results:
| Index | Average cost method | FIFO method | LIFO method |
| Written off for production (RUB) | 806 334,70 | 801 000,00 | 805 000,00 |
| Average cost of items written off in production (RUB) | 1 966,67 | 1953,66 | 1963,41 |
| Balance at the end of the month (RUB) | 78 666,80 | 84 000,00 | 80 000,00 |
| Average cost of materials in balance | 1 966,67 | 2 100,00 | 2 000,00 |
In the example given, there is no clear tendency for the values obtained to differ when using in various ways estimates of inventories, since the conditions of the example provide for fluctuations in the purchase price of materials. So the cost of the balance at the beginning is 2,000.00 rubles, in reporting period materials were purchased at prices of 1,800.00 and 2,100.00 rubles.
Subject to a steady increase in prices, the most profitable, undoubtedly, is the LIFO method, since the cost of written-off inventory items increases, and profit, accordingly, decreases. When prices decline, the exact opposite pattern occurs when applying the FIFO method. To avoid jumps, accountants usually choose the method for both accounting and tax purposes. write-off of inventories at average cost. This method is time-tested and does not cause difficulties in calculations, and also gives average indicators for any changes in prices on the market.
To make the right management decisions in the field of inventory management, there is a need to choose a method for assessing inventories for accounting purposes.
For tax purposes, one or another method of assessing materials is used to optimize taxation, in particular to reduce income tax payments, provided that the method that provides for write-off for reduction is chosen. tax base maximum possible expenses.
Consequences of applying different methods of inventory valuation for accounting and tax purposes.
How to take into account the differences that arise when applying different methods of valuing inventories for accounting and tax purposes. In this case, it becomes necessary to apply the requirements of PBU 18/02.
So, the organization uses different methods for valuing inventories for accounting purposes and for tax purposes. What differences arise?
If the amount of expenses reflected in the accounting records exceeds the amount of expenses accepted for tax purposes, a deductible temporary difference arises, and, as a result, a deferred tax asset(SHE). If the amount of expenses reflected in the accounting records is less than the amount of expenses accepted for calculating income tax, a taxable temporary difference arises, and, as a consequence, deferred tax liability. Let's look at how differences arise based on our example data.
When calculating by the average cost method, the amount attributable to the cost is 806,334.70 rubles, with the FIFO method - 801,000.00 rubles, with the LIFO method 805,000.00 rubles.
| Applicable assessment of the MPP for the purposes | Differences that arise | SHE/IT | |
| Accounting | Taxation | ||
| At average cost 806 334,70 | Using the FIFO method 801 000,00 | Deductible temporary difference | SHE |
| At average cost 806 334,70 | Using the LIFO method 805 000,00 | Deductible temporary difference | SHE |
| Using the FIFO method 801 000,00 | At average cost 806 334,70 | IT | |
| Using the FIFO method 801 000,00 | Using the LIFO method 805 000,00 | Taxable temporary difference | IT |
The optimal method for assessing inventories for tax accounting purposes in organizations using a simplified taxation system is the FIFO method, since the method of assessing inventories at average cost for the purposes of tax accounting of expenses under the simplified tax system does not allow compliance with the requirements of Art. 346.17 of the Tax Code of the Russian Federation, regarding control of payment of expenses. At the same time, the organization retains the opportunity to keep track of inventories “on average” in accounting.
Of course, the emergence of differences between accounting and tax accounting leads to complication of the accounting process, as a consequence to a greater number of errors. However, market conditions, the presence of multiple approaches of users of financial statements (for example, it is beneficial for an organization to show profits in order to pay larger dividends) and last changes legislation increases the number of situations where these differences arise. In addition, if the range of materials (goods) is small and the accountant has the option of batch accounting, you should think about whether the weighted average valuation method is convenient and practical from a tax point of view.