MBP - what is it? Accounting for low-value and wearing items

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Accounting for low-value consumable items (IBE) is an extremely important category in accounting. In its activities, no enterprise can do without the mentioned phenomenon. In this article we will try to give the most complete and detailed answer to the question: "IBE - what is it?"

A bit of theory

Any enterprise buys and uses many products that cannot be classified as fixed assets. Here they are in accounting and are called low-value wearing items. To make it more clear, we will tell you what, in fact, we are talking about.

What can be attributed to the MBE

In fact, low-value and wearing items are means of labor, but their value is included in the company's stocks. The main principle for classifying this or that equipment, tool, etc. as an MBP is to determine its service life, as well as the initial price.

It should be borne in mind that we include a part of the organization's inventories, the service life of which is less than one year, to the IBE, while their costdoes not matter (they are wearing parts).

Another principle for classifying goods in this group is the upper limit of the cost of low-value wearing items. It is she who determines whether to attribute them to fixed assets or specifically to the IBE. Thus, the cost of the IBE is a significant criterion.

required for production; replacement parts of equipment; tools for fishing; chainsaws.

MB-items cannot include agricultural machinery and tools, construction equipment and tools, working type of livestock. All this is included in fixed assets, regardless of the service life and cost.

A bit of history

Money spent by an organization to purchase certain items should not be included in an expense item. These things can be used for a long time, and may have a one-time use. In the first case, we are talking about fixed assets. But in the second - about turnover. And the expense is recognized at the time of write-off. That's what accountants think. But back in the last century, experts in this field came to an important decision: items that have been used for several years and which, at the same time, have a rather low cost, can hardly be classified as fixed assets. That's whyour colleagues decided to remove a certain part of the objects from the mentioned category. They were called low-value wearing items (IBE) and included in working capital.

Criteria for classifying goods as infantry fighting vehicles

The name of this term already contains two principles: low price and service life - rapid wear. The main criterion was the cost limit and service life. The limit changed from time to time. But the term of service has always been understood as one year. So, theoretically, there could be only four options for attributing the purchased items to the category we are considering:

1. Item costs less than the money limit, but has been used for more than one year.
2. Thing costs less than the limit, but also lasts less than a year.
3. Item costs more than the limit, lasts more than 12 months.
4. Item costs less than the limit and lasts less than a year.

Earlier, only the fourth group could be attributed to the IBE and called working capital. Initially, it was assumed that the first, second and third groups would be classified as fixed assets. But in practice, people remembered the price limit and forgot about the time of service. So the IBP became an independent group. Entire departments of institutes were engaged in research of low-value and wearing items.

How to work with MBP. Theorists vs practitioners

Practice has developed several options:

1. Items were received and put into operation on the 12th account “Low-value quick-wearing items”. They were held at the acquisition cost in the asset. And at the end1/12 of this price was debited each month as expenses. That is, the service life could be more than a year, but the cost of equipment or, say, inventory was written off exactly for 12 months.

2. When the facility was put into operation, depreciation of 50% was immediately charged. And the remaining 50% - at the time of its cancellation.

The second option was used, of course, more often. It was more simple for an accountant. In addition, the first had its drawbacks. In the month of purchase, the entire cost of the object passed in the balance sheet, and this illogically increased the profit of this month. Further, of course, uniform depreciation reduced the profit of subsequent reporting periods, but this was not entirely correct. From a scientific point of view, both options were imperfect.

There was another shortcoming in accounting for IBEs. There are some things that are cheap. Practicing accountants insisted that these items were immediately charged to current expenses. And there is no need for any depreciation and wear. Quite convenient, isn't it? But theorists were very confused by this approach. However, their opinion did not affect the outcome of the case. Practice remains practice, because all this reduced the profit of the enterprise in the month of purchase, which means that it simplified the work of accountants.

Later decided to cancel the MBP, but this did not fix the problem. But this is all yesterday. And today, low-value and wear-and-tear items still exist, and their records are kept. How this happens will be discussed further. So, MBP: what is it and what is it eaten with?

Working with PBU 5/98

Accounting for low-value and wearing items is carried out in accordance with the provisions of accounting PBU 5/98 (“Accounting for inventories”). The life cycle of low-value wearing items has three stages: receipt, operation, disposal. In accordance with this, the following stages of accounting are distinguished:

• receipt;
• issue of IBE;
• transfer to operation;
• wear;
• decommissioning of IBP.

The first and second options are produced by analogy with the order of accounting for materials. But the IBP in operation has its own characteristics, which are due to the choice of the type of accounting and write-off.

Low-value items, the price of which is within 1/20 of the established limit per conventional unit, are written off as production costs as they become operational. For infantry fighting vehicles worth more than 1/20 of the established minimum, it is customary to charge depreciation. It is usually calculated in the following ways: percentage, linear, proportional to the volume of production. Briefly explain what it is.

When using the straight-line depreciation method, rates are taken based on the useful life of the IBE. When calculating depreciation as a percentage, they use one of two options: in the amount of 100% upon transfer to operation, or in the amount of 50% of their price when issued from a warehouse for use, and the remaining 50% upon disposal. The balances from the write-off of the IBE (tangible assets) come at the market price on the date of write-off and are recorded on the financial result (DT 10, CT 80).

More about accounting:stages, features, nuances

Each enterprise keeps records of IBE. How does it work in practice? The algorithm is simple:

1. Accounting organization comes goods.
2. Performs security control.
3. Determines the cost of low-value consumable items.
4. Controls service life.
5. Writes off worn out MBPs.

Since 2014, when things are put into operation, the depreciation of infantry fighting vehicles is charged not for the entire cost, but for half, minus the residual. The balance of 50% is credited upon debiting. When transferring low-value fast-wearing goods for use, they are assigned to financially responsible people. Then they are assigned inventory numbers, which simplifies the inventory. At the last stage, an act of write-off is drawn up (see below for a sample filling) MBP.

These items must not be forgotten to be deregistered (from the financially responsible person). Enterprises independently determine the cost limits for the IBE. What does this mean? Absolute benefit. Because the mentioned category includes, in fact, fixed assets. MBP in operation undergo moral and physical wear and tear, the cost of fixed assets decreases. In the balance sheet, they are held at the residual value, which is the difference between the initial price and the amount of depreciation accrued for a certain reporting period. The initial cost of the IBE also includes the costs of acquiring them.

Depreciation and write-off

Depreciation of the MBP is part of the costin production. It is difficult to calculate depreciation for each individual item, as for fixed assets. Therefore, one of two methods of accounting for IBE is chosen (what it is - we described in detail above), according to the accounting policy of the enterprise. There is a special write-off. A sample of such a document, presented in the photo below, will help novice accountants navigate this issue.

It happens that IBEs issued for use are immediately debited: debit of accounts 20, 23, 26, 25, 31, 43. Or DT 29, 08, 88, 81, 96. Credit of account 12, to subaccount 1.

Accounts for IBE accounting

To account for the movement of IBEs and their wear, different accounts are used: 13, 12, 15, 16, 48 … All actions related to the receipt of IBEs are the same as when accounting for materials, i.e. 15 are used, 16 counts. Then all operations are reflected previously in DT15. Then they come and write off to the 16th account of the IBP.

Failed items are issued through the act of disposal.

Well, we have considered such a concept as the IBE: what it is, how items of this category are accounted for and written off. I hope that the time spent reading the material has not been wasted for you.