Ministry of Justice of Ukraine
October 25, 1999
of October 8, 1999 No. 237
About approval of the National provision (standard) of financial accounting
In pursuance of the Program of reforming 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:
1. Approve the National provision (standard) of the financial accounting 10 "Accounts receivable" (further - the Provision (standard) 10) approved by Methodological council on financial accounting under the Ministry of Finance of Ukraine that is applied.
2. Determine that the specified National provision (standard) 10 is applied concerning accounting of transactions which happen since 2000.
3. Provide that other regulations of the Ministry of Finance of Ukraine on financial accounting are effective in the part which is not contradicting the National provision (standard) 10.
A. V. Litvin
Approved by the Order of the Ministry of Finance of Ukraine of October 8, 1999 No. 237
1. This National provision (standard) determines methodological bases of forming in financial accounting of information on accounts receivable 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. This National provision (standard) is applied taking into account the features of assessment and disclosure of information concerning accounts receivable established by other provisions (standards) of financial accounting.
4. Terms which are used in provisions (standards) of financial accounting have such value:
Hopeless accounts receivable - the current accounts receivable concerning which there is confidence about its not return by the debtor or on which passed the term of limitation period.
Debtors - legal entities and physical persons which owing to last events ran into debt to the company of certain amount of money, their equivalents or other assets.
Accounts receivable - outstanding amount of debtors to the company for certain date.
The long-term accounts receivable - the amount of accounts receivable which does not arise during normal operating cycle and will be extinguished after twelve months from the date of balance.
The current accounts receivable - the amount of accounts receivable which arises during normal operating cycle or will be extinguished within twelve months from the date of balance.
The doubtful debt - the current accounts receivable concerning which exists uncertainty of its repayment by the debtor.
The net realizable value of accounts receivable - the amount of the current accounts receivable less reserve of doubtful debts.
Recognition and assessment of accounts receivable
5. The accounts receivable are recognized asset if there is probability of receipt of future economic benefits by the company and its amount can be authentically determined.
6. The current accounts receivable for products, goods, works, services are recognized asset along with recognition of the income from sales of products, goods, works and services and are estimated at primary cost. In case of payment deferral for products, goods, works, services with education from it difference between fair value of accounts receivable and nominal cash amount and / or their equivalents which are subject to obtaining for products, goods, works, services, such difference is recognized accounts receivable on imputed incomes (percent) the period of its charge".
7. The current accounts receivable which are financial asset (except the acquired debt and debt, held for sale) join in balance sheet total on net realizable value. For determination of net realizable value on balance sheet date the size of reserve of doubtful debts is calculated.
8. The size of reserve of doubtful debts is determined by one of methods:
application of the absolute amount of doubtful debt;
application of coefficient of doubtfulness.
The size of reserve is determined by method of application of the absolute amount of doubtful debt based on solvency analysis of certain debtors.
By method of application of coefficient of doubtfulness the size of reserve is calculated multiplication of the amount of remaining balance of accounts receivable at the beginning of the period on doubtfulness coefficient.
The coefficient of doubtfulness can be calculated by such methods:
determination of specific weight of bad debts in net income;
classifications of accounts receivable by default terms;
determination of average specific weight of the accounts receivable which are written off during the period in the accounts receivable amount for the beginning of the corresponding period for the last 3-5 years.
The size of doubtful debts determined based on classification of accounts receivable for date of balance constitutes remaining balance of reserve of doubtful debts for the same date.
The remaining balance of reserve of doubtful debts for date of balance cannot be more, than the accounts receivable amount for the same date.
9. Classification of accounts receivable is performed by group of accounts receivable on terms of its default with establishment of coefficient of doubtfulness for each group. The coefficient of doubtfulness is established by the company, proceeding from actual amount of hopeless accounts receivable for products, goods, works, services for the preliminary accounting periods. The doubtfulness coefficient, as a rule, grows with increase in terms of default of accounts receivable. The size of reserve of doubtful debts is determined as the amount of works of the current accounts receivable for products, goods, works, services of the corresponding group and coefficient of doubtfulness of the corresponding group (the example of determination of size of reserve of doubtful debts is given in appendix to this National provision (standard)).
10. Charge of the amount of reserve of doubtful debts for the accounting period is displayed in the report on financial results as a part of other operating expenses.
11. The exception of hopeless accounts receivable for products, goods, works, services from assets is performed with simultaneous reduction of size of reserve of doubtful debts. In case of insufficiency of the amount of the added reserve of doubtful debts the hopeless accounts receivable are written off from assets on other operating expenses. The compensation amount of earlier cancelled hopeless accounts receivable is included other operating incomes.
The current accounts receivable concerning which creation of reserve of doubtful debts is not provided in case of recognition its hopeless are written off from balance with display as a part of other operating expenses.
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