Reflection of Borrowed Funds in Russian and Foreign Practice

Abstract

The rationale of the study is the fact that in the market economy there are situations when an organization in the course of its economic activity lacks its own resources. This problem is especially relevant in the field of small business. The study is concerned with the economic essence, classification and features of the reflection in the accounting and tax accounting of Russia and other countries of interest and other expenses on borrowed funds. This article discussed several approaches to defining the concept of loan and loan expenses in regulatory sources of the Russian Federation and in International Financial Reporting Standards. The Accounting Regulation 15/2008 «Accounting for loans and borrowings» means the payment of interest and additional expenses on loans and borrowings under loans and borrowings. At its core, this definition describes the classification but does not clarify the concept of «loan and borrowing costs». The study provided the detailed definition of costs used in the Federal Standard of Public Finance «Borrowing Costs», in which the costs of loans and borrowings are defined as expenses related to public debt, municipal debt, debts of organizations and enterprises with state participation, including accrued interest on such borrowed funds. This definition is more complete than the definition given in the Accounting Regulations. A variation of the definition for commercial organizations can be the concept of borrowing costs as a set of costs for debt obligations of a commercial organization, including interest expenses on such obligations. The study examined various methods of credit assessment and loans when accepting them for maintenance of accounting and tax records. We considered main normative documents on accounting of expenses on loans and borrowings (borrowing costs) used in Russian and foreign practices. The study developed a methodology for credit assessment. Classification of expenses on loans and borrowings has been developed. The study considered the procedure for showing and including borrowing costs in the forms of accounting financial statements. The key points of the financial stability of the organization, indicators of liquidity, solvency, independence and financial activity were analyzed.