Improving the accounting of assets held under economic management

Abstract

This Article reviews the main issues that arise while accounting for publicly owned assets under the economic management of public institutions, state- and municipal-owned enterprises, and of other similar entities. Such issues are related to the way of documenting, recognizing, valuating, and setting the useful life span of assets, as well as registering the assets received under economic management. In particular, this Article tackles some accounting aspects related to the subsequent costs incurred for the asset recovery at the expense of the entity's own resources, subsidies and funds received from the public authority that transferred the assets into economic management. In order to address the issues of accounting for favorable and unfavorable differences related to the operations of returning the aforementioned assets, there have been specified the categories of revenues and expenses to which they need to be reported. Likewise, some fiscal aspects of transactions with assets held under economic management have been investigated, including the specificities of VAT application, deduction of expenses and taxation of revenues recorded following the performance of the above-mentioned transactions. The basic research methods used: analysis and synthesis, induction and deduction, interpretation and comparison, review of normative acts which enabled us to substantiate some essential findings for the resolution of relevant research-related issues. The authors’ recommendations will lead to improving the accounting for the assets held under economic management, ensuring a higher degree of veracity and comparability of the information disclosed in financial statements.