ORDER OF THE MINISTRY OF FINANCE OF THE RUSSIAN FEDERATION

of November 24, 2003 N№105н

About approval of the Accounting regulation "Information on Interests in Joint Ventures" PBU 20/03

In pursuance of the Program of reforming of financial accounting according to international accounting standards approved by the order of the Government of the Russian Federation of March 6, 1998 N283 (The Russian Federation Code, 1998, N 11, to the Art. 1290), I order:

1. Approve the enclosed Accounting regulation "Information on Interests in Joint Ventures" PBU 20/03.

2. Declare invalid the order of the Ministry of Finance of the Russian Federation of December 24, 1998 of N68n "About Approval of Instructions about Reflection in Financial Accounting of the Transactions Connected with Implementation of the Property Trust Management Agreement and Instructions about Reflection in Financial Accounting of the Transactions Connected with Implementation of the Agreement of Particular Partnership" (it is registered in the Ministry of Justice of the Russian Federation on January 14, 1999 N 1682), since January 1, 2004.

3. Enact this order from accounting records for 2004.

Approved by the order of the Ministry of Finance of the Russian Federation of November 24, 2003 No. 105n

Accounting regulation "Information on Interests in Joint Ventures" PBU 20/03

I. General provisions

1. This Provision establishes rules and procedure for disclosure of information on interests in joint ventures in accounting records of the commercial organizations (except credit institutions), being legal entities by the legislation of the Russian Federation.

2. This Provision is not applied by the organization in case:

a) the conclusions of the foundation agreement or the agreement on creation of financial and industrial group of which formation of legal entity or financial and industrial group, and also introduction of deposits to the authorized, share capital, share fund of other organization is result;

b) the conclusion of the contribution agreement in joint activities which does not provide extraction of economic benefits or the income.

3. For the purposes of this provision information on interests in joint ventures is understood as information opening part of the organization activity (reporting segment) performed for the purpose of extraction of economic benefits or the income together with other organizations and (or) individual entrepreneurs by consolidation of deposits and (or) collateral actions without formation of legal entity.

4. Information on interests in joint ventures is subject to disclosure in accounting records of the organization in the presence of agreements which conditions establish distribution between participants of obligations on financial and to other jointly the performed activities for the purpose of receipt of economic benefits or the income.

5. This provision determines rules of reflection of economic activities in financial accounting and accounting records of the organization in cases of joint implementation of transactions, joint use of assets and joint implementation of activities.

II. Jointly the performed transactions

6. For the purposes of this provision under jointly the performed transactions accomplishment by each agreement party of certain production phase of products (performance of work, rendering service) with use of own assets is understood. At the same time each agreement party reflects the part of expenses and obligations, and also the share of economic benefits or the income which is due to it in accordance with the terms of the agreement in financial accounting.

Example. Agreement parties combine resources and efforts for cultivation of agricultural products. One organization carries out sowing campaign, the second organization provides technology of cultivation of agricultural products, and the third organization reaps crop. The grown-up agricultural products are subject to the Section between participants according to terms of the contract.

Income, expenses, obligations and assets on jointly to the performed transactions by each agreement party are considered separately in the share relating to the participant in analytics according to the corresponding synthetic income accounts, expenses, obligations and assets.

Each agreement party performs reflection in financial accounting of the share of products and (or) the income from sale of products which is due to it (performance of works, rendering services) for the accounting period in accordance with the terms of the agreement. At the same time the participant who is carrying out the final stage of joint production process, shares of products which are due to other agreement parties considers behind balance and if the agreement provides sale of products (works, services), reflects the income which is subject to obtaining by other agreement parties in financial accounting as the obligation to them.

8. When forming indicators of accounting records of each participant inclusion of data on interests in joint ventures regarding assets, obligations, the income and expenses is performed by line-by-line summing of the corresponding indicators. At the same time within reporting segment about joint activities are reflected:

the assets used for participation in the agreement;

the obligations which arose directly at the participant in connection with participation in the agreement;

the expenses incurred directly by the participant in connection with participation in the agreement;

income gained directly by the participant as a result of participation in the agreement.

III. Shared assets

9. For the purposes of this provision assets are considered shared in case the property is in common property of agreement parties with determination of share of each of owners in the property right (equity property) and owners sign the contract with the purpose of joint use of such property for receipt of economic benefits or the income. At the same time each of agreement parties reflects in financial accounting share of expenses and obligations, and also the share of the income from joint use of assets which is due to it according to terms of the contract.

Example. Two or more organizations possess the building on the right of equity property which according to the agreement signed between them is leased. According to terms of the contract each participant bears the share of expenses (depreciation, payment of utilities, running repair of the part of the building, etc.) and receives the share of the rent.

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