What are intangible search assets? Tangible and intangible search assets
This line is filled out by organizations that incur costs for the search, evaluation of mineral deposits and exploration of minerals in a certain subsoil area. Tangible exploration assets (MPA) are accounted for in accordance with the norms of PBU 24/2011. Accounting for MPA is maintained in a separate sub-account to account 08 “Investments in non-current assets” (clause 9 of PBU 24/2011).
Line 1140 provides information on the amount of actual costs for the acquisition (creation) of small motor vehicles, taking into account revaluation, depreciation and impairment (clause 35 of PBU 4/99, clause 28 of PBU 24/2011). Data are provided as of the reporting date, as of December 31 of the previous year and as of December 31 of the year preceding the previous one.
MPA includes search costs recognized as non-current assets and associated mainly with the acquisition (creation) of an object that has a tangible form. At the same time, prospecting costs mean the costs of searching, assessing mineral deposits and exploring mineral resources in a certain subsoil area, which are incurred before the commercial feasibility of production in relation to this subsoil area is established and documented (clauses 2, 4, 6 PBU 24/2011).
Examples of MPAs are those used in the process of searching, assessing mineral deposits and mineral exploration (clause 7 of PBU 24/2011):
— structures (pipeline system, etc.);
— equipment (specialized drilling rigs, pumping units, tanks, etc.);
- vehicles.
LPA objects are accepted for accounting in a separate subaccount to account 08 “Investments in non-current assets” in the amount of actual costs for their acquisition (creation), which is determined in the manner established by paragraphs 13 - 15 of PBU 24/2011. Subsequent assessment of MPA objects (including depreciation and revaluation) is carried out in the manner established by PBU 6/01 for fixed assets (clause 16 of PBU 24/2011). In this case, the features mentioned in paragraphs 17 - 20 of PBU 24/2011 should be taken into account. In particular, if there are signs of impairment, MPA assets should be tested for impairment in accordance with IAS 36 Impairment of Assets, IFRS 6 Exploration and Evaluation of Mineral Reserves.
The amounts of accrued depreciation, as well as the amount of depreciation of MPA objects, can be taken into account, for example, in separate subaccounts to account 02 “Depreciation of fixed assets”.
Line 1140 “Material exploration assets” = Debit balance on account 08 (analytical account of MPA) - Credit balance on account 02 (analytical accounts of depreciation and impairment of MPA)
In general, the indicators in line 1140 “Tangible exploration assets” as of December 31 of the previous year and as of December 31 of the year preceding the previous year are transferred from the Balance Sheet for the previous year.
The “Explanations” column provides an indication of the disclosure of this indicator (paragraph 2 of clause 28 of PBU 4/99).
Example of filling line 1140"Material Search Assets"
EXAMPLE 1.4
Indicators for accounts 08 and 02 in accounting (no signs of impairment of MPA were identified):
Fragment of the Balance Sheet for 2013
Solution
The cost of MPA is:
A fragment of the Balance Sheet in Example 1.4 will look like this.
This line of the Balance Sheet indicates the residual value of the MPA (actual costs taking into account the revaluations made, less accumulated depreciation and impairment). This value is determined as the difference between the balances of the corresponding analytical accounts of synthetic accounts 08 and 02 (taking into account revaluation and impairment).
It is the responsibility of mining firms to maintain records of the exploration assets they use in the course of their business. There are tangible and intangible search assets. You can learn more about them from this article.
The very first step in the production cycle of mineral mining firms is to find places where there are mineral deposits and assess the feasibility of mining in a particular location. During exploration, firms use prospecting assets. They represent the costs that the company incurred to find plots of land and evaluate them.
Exploration assets of a material nature
Tangible exploration assets are objects that a firm uses in the course of finding and evaluating deposits and mineral exploration. These include:
- Structures (for example, a pipeline system);
- Special equipment (for example, drills and pumps);
- Specialist. transport.
Accounting for such assets is carried out on a separate sub. account to account No. 08. In the bay. in the balance sheet they are displayed in line 1130.
Exploration assets of an intangible nature
Intangible assets include:
- Information that was obtained based on the results of land surveys;
- Results of sampling;
- The right to carry out mining activities;
- Results of test drilling;
- Other geological information about the earth;
- Conducting an analysis of the feasibility of obtaining minerals in a specific location.
Asset recognition
Expenditures incurred to search for minerals are commonly called exploration assets. The company has the right to determine certain types of expenses that will relate to exploration assets. She should definitely reflect this in her accounting policy. In most cases, the specific list of expenses will directly depend on the specifics of the mining organization’s activities. However, when dividing the costs between search assets and other expenses, the following nuances must be taken into account:
- The plots of land on which the search is carried out, as well as special vehicles and special equipment that are used during mining, in all cases are tangible assets.
- The results of the search, evaluation, analyzes performed and the feasibility of mining in a certain location are always intangible assets.
All mining firms should reflect these provisions in their accounting policies.
Primary accounting
From the moment the company incurs the costs of searching for minerals, the costs must be taken into account in accounting. balance sheet, in the debit of account No. 08. This account requires you to consolidate expenses for:
- Purchase of a plot of land on which exploration, evaluation and production will be carried out;
- Purchase of necessary special equipment and special transport;
- Cost of services of general contractors for on-site installation and setup of special equipment;
- Cost of intermediary services (if the property was purchased through third parties);
- Information and consulting services related to exploration and assessment of a plot of land;
- Cost of laboratory services for studying found samples;
What costs can be attributed to intangible exploration assets? Only the costs of obtaining a license were collected as part of the costs of intangible exploration assets. A license was obtained for geological study, exploration and extraction of rock salt. Afterwards, work was carried out to study the subsoil and collect information on this site. At what point should the costs of intangible exploration assets be transferred to another group of assets and to which one (intangible assets, deferred expenses or other)?
Costs that may relate to intangible exploration assets are listed in Article 8 of PBU 24/2011. The costs you mentioned form the cost of the intangible search asset. Costs are transferred to another group at the moment the commercial feasibility of production or liquidation of the asset is determined. Read more about accounting, depreciation, and transfer of assets in the recommendations below.
The rationale for this position is given below in the materials of the Glavbukh System
Intangible exploration assets are:
– the right to carry out work on the search, assessment of mineral deposits and (or) exploration of mineral resources, confirmed by the appropriate license;
– information obtained as a result of topographical, geological and geophysical studies;
– results of exploratory drilling;
– results of sampling;
– other geological information about the subsoil;
– assessment of the commercial feasibility of production.
Determine the unit of accounting for exploration assets as follows:
– for material exploration assets – according to the rules of accounting for fixed assets;
– for intangible exploration assets – according to the rules of accounting for intangible assets.
This procedure is provided for in paragraph 10 of PBU 24/2011.*
Intangible exploration assets can be amortized in one of the ways listed in paragraph 28 of PBU 14/2007, namely:
Accrue depreciation, include it in costs and reflect these operations in accounting according to the general rules for fixed assets and intangible assets, taking into account the following two features.
Do not amortize the costs of obtaining a license until the commercial feasibility of mining is confirmed (clause 18 of PBU 24/2011).
If a prospecting asset is used to create another prospecting asset, include depreciation charges on it as part of the costs of the asset being created (clause 17 of PBU 24/2011).
Derecognition in accounting
Terminate recognition of exploration assets in relation to a licensed subsoil area if there is documentary evidence of:
Reflection on accounting accounts
In accounting, reflect search costs with the following entries:
Debit 08 Credit 02 (10, 70, 69...)
– expenses are reflected in the form of formation of the cost of the exploration asset.
Make such entries until the commercial feasibility of production or liquidation of the asset is recognized.
Once the commercial feasibility of production has been recognized, assign these costs to the cost of the fixed asset (intangible asset):
Debit 01 (04) Credit 08
– search costs are included in the cost of a fixed asset (intangible asset).
If mining is recognized as unpromising, then write off exploration assets as other expenses:
Debit 91-2 Credit 08
– the cost of exploration assets for unpromising production has been written off.*
Elena Popova, State Advisor to the Tax Service of the Russian Federation, 1st rank
In accordance with current legislative norms, it is necessary to reflect all transactions of a commercial and economic nature in special accounting.
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This also applies to various types of assets – including intangible search assets. This issue is addressed in the legislation in force in the Russian Federation. If possible, you should familiarize yourself with the most significant points in advance.
This way it will be possible to reduce the likelihood of a large number of difficulties and other difficulties associated with the process of conducting audits by tax authorities.
Inappropriately registered intangible assets will lead to fines and other difficulties.
General points
Intangible assets are the property of a company, which is expressed not as tangible property, but as intellectual or some other property.
There are many different types of intangible assets. The regulatory documents reflect their complete list. It is worth familiarizing yourself with all the nuances in advance.
Issues that should be considered in advance include:
- what it is?
- what is their role?
- current standards.
What it is?
Today, on line 1130, intangible search assets must be designated in accordance with legal regulations. But first of all, you should understand the very concept of intangible assets.
Typically, such assets are present in the accounting and tax reporting of an organization that is engaged in the following activities:
- deals with resource discovery;
- carries out development.
This issue is discussed in as much detail as possible in. In this case, the distribution of this type of assets is carried out by the enterprise independently, without outside participation.
Distribution is carried out between the following types of assets:
- intangible search engines;
- for other types of activities.
We should also not forget that the choice made must be reinforced accordingly in the enterprise.
This is necessary to maintain proper accounting and tax records. The issue is covered in detail in. A complete list of search-type intangible assets is reflected in the same document.
What is their role
Reflecting assets of this type directly in accounting and tax reporting allows you to implement standard tasks.
These today include the following:
The organization directly receives quite significant benefits from the use of search-type intangible assets. Since they mean information or the right related to the extraction of useful resources.
Moreover, the right to production is often exclusive. There is also depreciation of the type of asset in question.
This question is also worth revealing to yourself in advance. This way you can avoid some difficulties when preparing financial statements.
Current standards
At the moment, there is a fairly large number of various documents directly related to the reflection of intangible exploration assets in reporting.
An equally significant effect is the reflection of their depreciation. The main regulatory document regulating this issue is - it regulates the application.
PBU 14/2007 includes the following:
The process of reflecting information about assets in financial statements must also comply with the regulatory document. The main one is
This legislative act includes the following main sections:
Federal Law No. 402-FZ of December 6, 2011 includes the following main sections:
| List of objects reflected in the financial statements | |
| Lists the persons who are required to maintain accounting records | |
| How is accounting carried out? | |
| The process of choosing accounting policies and the features of each type are considered. | |
| What are the primary accounting documents? | |
| What are accounting registers | |
| How an inventory of liabilities as well as assets is performed | |
| The procedure for monetary measurement in this type of accounting | |
| What are the requirements for financial reporting? | |
| What is meant by the composition of financial statements | |
| What is the reporting period, as well as the date of reporting | |
| Reporting procedure for | |
| Reporting procedure during the procedure | |
| Internal control | |
| Basic principles related to accounting regulation | |
| A list of documents required in this case is indicated. |
It is important to remember the need to comply with standards regarding the reflection of search-type intangible assets. Since it is often with their help that all sorts of corruption schemes are implemented.
Therefore, the tax service pays the closest possible attention to all this when conducting audits.
In some cases, concealing intangible search assets leads to quite serious disciplinary consequences.
Features of search intangible assets
The intangible search assets themselves have a large number of features and nuances. You should definitely deal with all of them in advance. This will significantly reduce the likelihood of making any mistakes.
Significant issues related to this topic, familiarization with which is strictly necessary, include the following:
- What are intangible search assets?
- How are they reflected in accounting?
- value in tax accounting.
What does this mean?
For 2019, the list of intangible exploration assets includes the following:
| Exclusive or joint right to perform a certain list of works |
|
| Information that was obtained as a result of conducting a certain type of intelligence work |
|
It is important to remember that the actual costs of search assets must include:
- amounts that are paid in accordance with the agreements of the contractor, which is the supplier;
- amounts charged to a specific contractor for performing a volume of work on a special basis;
- a certain commission or other remuneration accrued to the intermediary who provided the opportunity to purchase intangible exploration assets;
- all customs duties without exception, as well as;
- state, patent duties;
- amounts of taxes paid that are not subject to reimbursement;
- depreciation of current as well as non-current assets;
- rewards to employees who directly contribute to the creation of a specific type of asset.
There is also a certain list of actual costs that are not included in the list of those related to the costs of acquiring such assets:
- reimbursement of tax fees;
- general expenses;
- costs that occurred during the process of obtaining a license or are directly related to the process of registering exploration assets.
The points outlined above have the most significant role related to the reflection of information in accounting and tax reporting. It is important to remember that there is no room for error. This can lead to quite serious problems.
How are they reflected in accounting?
It is also worth familiarizing yourself in advance with what kind of account this is – intangible search assets. For these purposes, line No. 1130 is always used.
The reflection process looks like this:
In the case of reflecting depreciation in accounting, the organization must do this starting from the 1st day of the month that follows the month in which the obligation to take into account arose.
Typically the following accounts are used for this:
It is important to remember to take into account all the different types of search costs. They are recognized as non-current assets. This rule applies to all search assets used.
Before you begin to reflect information in tax and accounting, you should carefully understand all the nuances.
Importance in tax accounting
Assets of this type are taken into account when calculating tax for the use of natural resources. There is a separate section of the Tax Code of the Russian Federation that regulates this issue.
The tax rates are set. A significant factor is the type of mineral. The algorithm for calculating the rate is reflected on the official website of the Federal Tax Service.
There is a fairly large number of different difficulties associated with the process of reflecting intangible search assets.
An important factor is the accounting policy chosen by the enterprise itself. Based on this, the tax base is calculated and other actions are implemented.
Attention!
- Due to frequent changes in legislation, information sometimes becomes outdated faster than we can update it on the website.
- All cases are very individual and depend on many factors. Basic information does not guarantee a solution to your specific problems.
The organization itself determines the types of search costs that will be classified as non-current assets. The remaining search costs are recognized as expenses for ordinary activities.
Material prospecting assets
Tangible exploration assets include those used in the process of searching, exploration and evaluation of mineral deposits:
- structures (for example, piping systems);
- equipment (for example, drilling rigs);
- vehicles.
Intangible search assets
The remaining search assets are classified as intangible. This is for example:
- the right to carry out search, assessment and (or) exploration work, confirmed by the presence of an appropriate license;
- information obtained as a result of topographical, geological and geophysical studies;
- results of exploratory drilling and sampling;
- other geological information about the subsoil;
- assessment of the commercial feasibility of production.
Exploration assets are recognized in accounting if the company has a license giving the right to carry out work on search, evaluation of deposits and (or) exploration of minerals. They are assessed based on the amount of actual costs. In this case the following wiring is done:
DEBIT 08 subaccount “Investments in exploration assets” CREDIT 10, 20, 23, 60, 69, 70, etc.
– the initial cost of the search asset is formed;
DEBIT 08 subaccount “Tangible (or intangible) search assets” CREDIT 08 subaccount “Investments in search assets”
– the search asset is accepted for accounting.
Exploration assets are depreciated and revalued in the same way as fixed assets and intangible assets. To calculate depreciation, you can open a subaccount to account 02:
DEBIT 23 subaccount “Expenses for ordinary activities” CREDIT 02 subaccount “Depreciation of exploration assets”
– depreciation of exploration assets has been accrued.
After confirmation of the commercial feasibility of production, exploration assets are transferred to fixed assets and intangible assets at their residual value. In this case, the following entry is made in accounting:
DEBIT 02 subaccount “Depreciation of exploration assets” CREDIT 08 subaccount “Tangible (intangible) exploration assets”
– depreciation of exploration assets is written off as a reduction in initial cost;
DEBIT 01 (04) CREDIT 08 subaccount “Tangible (intangible) search assets”
– search assets were transferred to the operating system and intangible assets.
If the extraction of minerals at a subsoil site is deemed unpromising, then exploration assets are written off as a financial result:
DEBIT 91 sub-account “Unpromising production” CREDIT 08 sub-account “Tangible (intangible) exploration assets”
– the search asset is written off.
The same should be done when a prospecting asset is disposed of. A similar accounting entry will reflect the depreciation of exploration assets.
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