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Ministry of Justice

Republic of Uzbekistan

On August 26, 1998 No. 483

Approved by the Ministry of Finance of the Republic of Uzbekistan of August 20, 1998, No. 41

National Accounting standard of the Republic of Uzbekistan NSBU No. 2

Purpose

This National Accounting Standard (NAS) is developed on the basis of the Law of the Republic of Uzbekistan "About financial accounting" and is element of system of normative regulation of financial accounting in the Republic of Uzbekistan.

Within conceptual basis for preparation and accounts presentation, the income is determined as increase in economic benefits during the accounting period in the form of increase in assets or reducing obligations which lead to increase in equity, except those increases which are connected with investments from owners of equity.

The income from economic activity includes the income from the main, from operating and financial activities.

Income in this standard is understood as the income which is gained in the course of ordinary activities business entity, including the income from realization, products (performance of works and rendering services) which is drawn interest dividends, royalty, etc.

The purpose of this Standard is determination of concept of the income of business entity from the main economic activity and procedure for its accounting.

When accounting the income from the main economic activity the main question is determination of timepoint of recognition of the income. The income from the main economic activity is reflected at the moment when there is opportunity that economic benefits will arrive to business entity in the future, and also these benefits can be reliably and are precisely measured. This Standard determines circumstances under which requirements for these criteria will be fulfilled and, therefore, the income from the main economic activity will be acknowledged. It also provides practical instructions for use of these criteria.

Coverage

1. This standard is applied when accounting of income gained from the following spheres of economic activity:

1.1. Sales of goods, performance of works and rendering services;

1.2. Transfers to use of assets to other business entities allowing receipt of percent, royalty and other income;

2. Treat goods products made by business entities for the purpose of realization and the goods acquired for resale or other assets stored for the purpose of resale.

3. Rendering services usually includes accomplishment by the subject of the conditions stipulated by the agreement during the approved period of time. Services can be rendered within one or several periods of time. Some contracts on rendering services are directly connected with contract construction, for example, service contracts of project managers and architects which are considered according to requirements of the Contract Construction standard.

4. Use of assets of business entity by other business entities will lead to income acquisition in type:

4.1. The percent representing payment for use of the money or cash equivalents or the amounts which are due to business entity;

4.2. The royalty representing payment for use of non-current assets of business entity, for example patents, trademarks, copyright and computer programs;

4.3. Other income representing profit distribution between participants (founders) it is pro rata to their share in equity.

5. The standard is not applied to the income resulting:

5.1. Leasing agreements (see NSBU "Leasing Accounting");

5.2. Charges of the dividends and income gained from investments;

5.3. Insurance contracts with insurance companies;

5.4. Changes in current value of financial assets and financial liabilities or in case of their realization;

5.5. Changes in the cost of other current assets;

5.6. Natural increase of the cattle and products of rural and forest farms;

5.7. Production of mineral ores.

Determination

6. The terms used in this Standard:

6.1. The income from the main economic activity - Receipts during the period, the business entity when these receipts lead to increase in equity, except for those increases which are connected with fees of owners in equity arising in the course of ordinary activities.

6.2. Cost in current prices is the amount on which the asset can be realized or the obligation is extinguished;

7. The income from the main economic activity consists only of the gross receipts received or which are subject to obtaining by business entity into its account. The amounts levied on behalf of the third parties such as indirect taxes which arrive managing subject and do not lead to increase in equity, do not join in the income from the main economic activity. In case of intermediary activities gross receipts is not the income from the main economic activity. In this case the income is the commission amount of remunerations.

Measurement of the income

8. The income from the main economic activity is estimated at cost received or subject to receipt of revenue (compensation) in current prices.

9. In most cases revenue exists in the form of money or their equivalents. The income amount is the amount of the money received or subject to obtaining or cash equivalents. However, when cash receipt or cash equivalent are delayed, benefit cost in current prices can be less nominal size of the money received or subject to obtaining. For example, the business entity can grant non-interest loan to the buyer or accept the bill of exchange provided by the buyer as payment for the realized goods with interest rate below market. When carrying out financial transactions as a result of the agreement, compensation cost in current prices is determined by discounting of all future receipts using imputed interest rate. The imputed interest rate more is clearly determined in one of the following determinations:

9.1. The prevailing rate on similar financial assets of the issuer with identical credit rating;

9.2. Percent rate which discounts the nominal amount of the financial instrument to current price of sales of goods or services.

The difference between cost current prices and nominal compensation amount is recognized quality of the income on percent according to Items 20 and 21 of this NSBU.

10. If the goods on goods exchange equivalent or identical, then such exchange is considered the transaction not revenue-producing. Sales of goods or rendering services in exchange for other goods or services, that is barter, is considered as the transaction, revenue-producing. The income from the main economic activity is measured at the cost of the received goods or services in current prices, corrected on the amount of the listed money or cash equivalents. If the cost of the received goods or services cannot be precisely measured in current prices, then the income from the main economic activity is estimated at the cost of shipped goods or services corrected on the amount of the listed money or cash equivalents.

Determination of the fact of the conclusion of the transaction

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