Current assets and liabilities

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Current assets and liabilities (or working capital) have high liquidity and are commonly used in the enterprise operations.

The current assets include:

Inventory.
VAT on acquired assets.
Trade and other receivables (short-term).
Investments in short-term financial assets (including loans).
Cash and cash equivalents.
Other assets.

The short-term liabilities include:

Trade and other payables (short-term).
Short-term loans.
Current maturity of long-term loans.
Current due taxes.
Due salary.
Short-term reserves.
Other short-term liabilities.

Data on current assets and liabilities is usually translated to IFRS with minimum adjustments. So, parallel accounting is generally not required for these objects, with some exceptions.

The reasons for using the current assets and liabilities accounting documents are:

NAS accounting (for example, for further translation to IFRS).
Events occurring after the reporting date (for example, generation of IFRS accruals that are not yet reflected in NAS as of the reporting date).
Intercompany discrepancy settlement.
Parallel accounting of IFRS working capital.

Accounting settings for current assets and liabilities

Before you can generate the working capital documents, you need to set up the subsystem.

General settings include:

Validating the reconfigured subsystem data (IFRS accounting object kinds, IFRS accounting transaction types, IFRS payment kinds).

Resident settings by country:

Currencies and currency rates for the Russian Federation (updating currency rates according to the federal budget of Russia).
Country of registration (for non-residents of Russia). The country specified in this field determines VAT rates and cross exchange rates.
National currency for the country of registration (if any). Available from the country card.
Types of VAT rates and other indirect taxes for the country of registration (if any). For example, you can access the list of VAT rates from the country card.

Settings for charts of accounts and accounting policies:

Setting up the chart of account: filling in the account data, specifying account categories.
Setting up accounting for accounting objects (see catalog IFRS accounting object parameters) for the used types of current assets and liabilities for each chart of accounts.
Specifying the IFRS accounting policies for companies by scenario. For example, an accounting policy determines which currency and which chart of accounts are used to generate entries.

Settings of accounting objects:

Setting up VAT rates for assets by countries. For example, you can specify different VAT rates for the same product in different countries. In this case, the VAT rates in documents will be automatically populated, depending on the company's country of registration.
Setting up the accounting parameters for accounting objects. For example, you can specify different parameters for different charts of accounts of the same construction asset. In this case, the accounting parameters in documents will be automatically populated from the chart of accounts specified in accounting policy for the specific date, scenario, and company.

In the IFRS accounting object kinds catalog, you can rename or translate the headers of accounts in accounting objects, or enable advance payments, VAT.

In the IFRS accounting transaction types catalog, you can set up operation kinds available for sale and receipt documents. For each operation kind, you can specify types of sold assets, visibility, and headers of additional columns. Also, for each operation kind, you can enable or disable VAT, ownership stakes, or quantitative accounting.

In the IFRS payment kinds catalog, you can select a payment form (cash or electronic) for payment documents, select a payer type, and set up VAT extraction from advance payments.

The accounting parameters in documents are filled automatically when you select an accounting object. For example:

Select an asset or product range to fill the product accounting parameters.
Select a counterparty contract to fill the AR/AP accounting parameters.
Select a company bank account to fill the cash flow accounting parameters.

Sales

In IFRS, asset sales are recorded in the IFRS sales document.

For currency contracts (contracts using a currency that does not match the functional currency specified in the accounting policy), a currency exchange rate or cross rate is required.

For non-residents of Russia, the exchange rates are determined from quotations of currencies of a resident country for an company.

Type of sold assets is determined automatically depending on the operation type. For example:

Sales of goods. Includes the range and quantity of sold products, VAT reflection (VAT rate, tax invoice statement).
Sales of services. Includes the range and content of sold services, VAT reflection (VAT rate, tax invoice statement).
Sales of investment. Includes the investment object (counterparty), direct share sold, effective share as of the date prior to the document date, calculated group relation (degree of control of the investor company over the investment counterparty after the disposal of the share).

The tax invoice is entered on the basis of this document.

The document generates the following entries:

Received advance offset:

Dr "Customer advance account".

Cr "Account of AR/AP accounting with the customer".

Amount of advance offset (if any). Partial repayment is allowed.

Asset value write-off:

Dr "Asset sale expense (cost) account".

Cr "Asset account".

Current asset value (if any). If quantity is specified, value is written off at the average price. If extra dimensions of batches are specified for the asset account, value is written off at the batch price, FIFO.

Revenue from sales:

Dr "Account of AR/AP accounting with the customer".

Cr "Asset disposal income account".

Revenue amount (including VAT, if any).

Received VAT reflection:

Dr "VAT expense".

Cr "VAT budget settlements".

VAT amount (if any).

Purchases

In IFRS, asset purchases are recorded in the IFRS receipt document.

For currency contracts (contracts using a currency that does not match the functional currency specified in the accounting policy), a currency exchange rate or cross rate is required.

For non-residents of Russia, the exchange rates are determined from quotations of currencies of a resident country for a company.

Type of sold assets is determined automatically depending on the operation type. For example:

Receipt of goods. Includes the range and quantity of sold products, VAT reflection (VAT rate, tax invoice statement).
Receipt of services. Includes the range and content of received services, VAT reflection (VAT rate, tax invoice statement).
Investment inflow. Includes the investment object (counterparty), direct share received, effective share as of the date prior to the document date, calculated group relation (degree of control of the investor company over the investment counterparty after the receipt of the share).

The tax invoice is entered on the basis of this document.

The document generates the following entries:

Issued advance offset:

Dr "Account of AR/AP accounting with the supplier".

Cr "Supplier advance account".

Amount of advance offset (if any). Partial repayment is allowed.

Receipt from supplier:

Dr "Asset account".

Cr "Account of AR/AP accounting with the supplier".

Received amount (not including VAT, if any).

Received VAT reflection:

Dr "VAT account upon purchase".

Cr "Account of AR/AP accounting with the supplier".

VAT amount (if any).

Cash

In IFRS, incoming and outgoing payments are recorded in the IFRS payments document. Both cash and non-cash payments are allowed.

For currency accounts or cash accounts (accounts using a currency that does not match a functional currency specified in the accounting policy), a currency exchange rate or cross rate is required.

For non-residents of Russia, the exchange rates are determined from quotations of currencies of a resident country for a company.

Type of payment is determined automatically depending on the operation type. For example:

Payment to supplier. Includes the counterparty account, VAT reflection (VAT rate, VAT amount).
Payment by customer. Includes VAT reflection (VAT rate, VAT amount).
Salary transfer. Includes an employee's name and bank account.
Tax payment. Includes a government agency's (counterparty's) name and bank account.

The tax invoice for advance is entered on the basis of the counterparty payment document.

The document generates the following entries:

1Cash receipt (for incoming payments):

Dr "Cash account".

Cr "Account of AR/AP accounting with counterparty".

Payment amount.

Cash write-off (for outgoing payments):

Dr "Account of settlements with counterparty".

Cr "Cash account".

Payment amount.

Tax invoice

To accept VAT for deduction, a tax invoice is required.

The IFRS tax invoice document can be entered on the basis of IFRS sales, IFRS receipt, or IFRS payment.

Tax invoice type is determined automatically depending on the base document type.

The document generates the following entries:

VAT deduction from prepayment (for documents entered on the basis of IFRS receipts):

Dr "Account of settlements with budget".

Dr "VAT account upon purchase".

VAT amount for the base document.

VAT deduction from received advance payment (for documents entered on the basis of incoming payments):

Dr "Supplier advance account".

Cr "Account of VAT AR/AP accounting with budget".

VAT amount for the base document.

VAT deduction from issued advance payment (for documents entered on the basis of outgoing payments):

Dr "Account of VAT AR/AP accounting with budget".

Cr "Customer advance account".

VAT amount for the base document.

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