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Ministry of Justice of Ukraine

January 19, 2000

No. 27/4248


of December 31, 1999 No. 318

About approval of the National provision (standard) of financial accounting

(as amended on 29-09-2020)

In pursuance of the Program of reforming of the system of financial accounting using international standards approved by the resolution of the Cabinet of Ministers of Ukraine of October 28, 1998 No. 1706, I ORDER:

Approve the National provision (standard) of the financial accounting 16 "Expenses" (further - the Provision (standard) 16) approved by Methodological council on financial accounting under the Ministry of Finance of Ukraine which is applied.

Deputy minister

A. V. Litvin


Approved by the Order of the Ministry of Finance of Ukraine of December 31, 1999 No. 318

National provision (standard) of the financial accounting 16 "Expenses"

General provisions

1. This National provision (standard) determines methodological bases of forming in financial accounting of expense information of the company and its disclosure in the financial reporting.

2. Regulations of this National provision (standard) are applied by the companies, the organizations and other legal entities (further - the companies) irrespective of patterns of ownership (except budgetary institutions and the companies which according to the legislation constitute the financial reporting under International Financial Reporting Standards).

3. The national provision (standard) 16 is applied to the expense accounting under construction contracts taking into account features of their recognition and structure established by the National provision (standard) of financial accounting 18 "Construction contracts". The national provision (standard) 16 does not extend to the expenses connected with primary recognition and change of fair value of the biological assets connected with agricultural activities, and with primary recognition of agricultural products.

4. Terms which are provided in provisions (standards) of financial accounting have such value:

Expense element - set of economically uniform expenses.

Direct expenses - expenses which can be carried directly to specific expense object in economically reasonable way.

Normal capacity - the expected average amount of activities which can be reached under conditions of regular activities of the company within several years or operating cycles taking into account the planned production servicing.

Expense object - products, works, services or type of activity of the company which need determination of the expenses connected with their production (accomplishment).

Recognition of expenses

5. Expenses are displayed in financial accounting along with reduction of assets or increase in obligations.

6. Expenses of the accounting period either reduction of assets, or increase in obligations which leads to reduction of equity of the company (except for capital reductions owing to its withdrawal or distribution by owners) are recognized provided that these expenses can be authentically estimated.

7. Expenses are recognized expenses of certain period along with recognition of the income for which receipt they are performed.

Expenses which cannot be connected directly with the income of certain period are displayed as a part of expenses of that accounting period in which they were performed.

8. If the asset provides economic benefits within several accounting periods, then expenses are recognized by systematic distribution of its cost (for example, in the form of depreciation) between the corresponding accounting periods.

9. Are not recognized expenses and do not join in the report on financial results:

9.1. Payments under commission agreements, agency agreements and other similar agreements for benefit of the consignor, the principal and so forth.

9.2. Advance (advance) payment of inventories, works, services.

9.3. Repayment of the obtained loans.

9.4. Others of reduction of assets or increase in obligations which do not correspond to the signs given in Item 6 of this National provision (standard).

9.5. Expenses which are displayed by reduction of equity according to provisions (standards) of financial accounting.

9.6. Book value of currency.

Structure of expenses

10. Cost of the realized goods is determined by the National provision (standard) of the financial accounting 9 "Inventories".

11. Cost of sales (works, services) consists of production product cost (works, services) which was realized during the accounting period, unallotted fixed general production expenses and above-standard production expenses.

Join in production product cost (works, services):

direct material expenses;

direct expenses on compensation;

other direct expenses;

the variable general production and fixed distributed general production expenses.

Production product cost decreases by fair value of the accompanying sold products and cost of the accompanying products in assessment of its possible use which is used at the company.

The list and structure of Articles of calculation of production product cost (works, services) are established by the company.

11.1. No. 1204 is excluded according to the Order of the Ministry of Finance of Ukraine of 26.09.2011

12. Direct material expenses the cost of raw materials and the main materials which form basis of the made products, purchasing semifinished products and components, auxiliary and other materials which can be directly carried to specific expense object is included. Direct material expenses decrease by the cost of the returnable waste received in production process which are estimated according to the procedure, stated in Item 11 of this National provision (standard).

13. Direct expenses on compensation the salary and other payments to the workers occupied in production, performance of works or provision of services which can be directly referred to specific expense object are included.

14. Other direct expenses all other production expenses which can be directly carried to specific expense object, in particular assignments on social actions, the hire charge of land and property shares, depreciation of loss from scrap consisting of the cost of the products (products, nodes, semifinished products) which are finally rejected for the technological reasons reduced by its fair value and expenses on correction of it technically of inevitable scrap are included.

15. General production expenses are included:

15.1. Expenses on production management (compensation of management personnel by shops, sites and so forth; assignment on social actions and medical insurance of management personnel by shops, sites; expenses on payment of official journeys of personnel of shops, sites and so forth).

15.2. Fixed asset depreciation general production (shop, local, linear) appointments.

15.3. Intangible asset deprication general production (shop, local, linear) appointments.


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