What Is a Payment Amortization Schedule?

The expenses to be amortized refer to the expenses that have been paid but should be borne by the current and future periods, such as amortization of low-value consumables, property insurance fees with large expenditures at one time, sewage charges, technology transfer fees, advertising Fees, regular repair fees for fixed assets, prepaid rent for leased fixed assets, etc. The start-up expenses incurred during the preparation period of an enterprise unit, as well as various expenses incurred during the production and operation period with an amortization period of more than one year, shall be regarded as "long-term deferred expenses". One of the current asset items that has been paid but cannot be used as current expenses. According to China's accounting system, low-value consumables can also be included in pending expenses. The concept of unpaid expenses is accrual basis, which is also a requirement of the matching principle.

Prepaid expenses

I. Accounts for expenses of small enterprises that have been spent, but the amortization period is more than 1 year (excluding 1 year).

2. Start-up expenses: Expenses incurred during the establishment period of the enterprise, including staff salaries, office expenses, training expenses,

Such expenses, although incurred in this period, will still be effective in subsequent periods, and should not be fully charged to this period

Through the "Amortized Expenses" account

1 When incurring (paying) various expenses to be amortized, record them in the account

The accrued expenses stipulated in the original system refer to expenses that have been pre-drawn from the cost expenses in accordance with the regulations but have not been paid, such as loan interest, accrued rent, insurance premiums and

The concept and characteristics of amortized expenses and accrued expenses Amortized expenses refer to the expenses that have been paid by the enterprise, but should be borne by the current and future periods respectively, and the amortization period is within 1 year (including 1 year). Amortization of low-value consumables and leasing packages, prepaid property insurance premiums, prepaid operating leases

(1) According to the new standards, some contents of the "Amortized Expenses" account are no longer calculated in this account.

1. Expenditure on operating leased fixed assets

The improvement expenditure incurred by operating leased fixed assets shall be approved through "

Amortized expenses and withholding expenses have always been the most important accounts that embody the accrual principle. The "two fees" stipulated in the "Enterprise Accounting System" (hereinafter referred to as the "original system") promulgated by the Ministry of Finance in 2000 belong to the asset and liability categories, and their closing balances are specifically listed in the balance sheet. The "Accounts and Major Accounts Processing" appendix of the "Application Guidelines for New Standards" deleted the "Amortized Expenses" and "Accounted Expenses" subjects, and these two items were also cancelled in the enterprise's balance sheet. No explanation was given on the accounting treatment and statement display of related businesses to be amortized and withdrawn in accordance with the original system, and no place has explicitly stated that they are allowed to be amortized or withdrawn. As a result, many accounting personnel who implement the new standards have caused confusion in the accounting treatment of deferred expenses and accrued expenses. In the absence of explanations from authoritative departments, and academics expressing their own opinions, many companies try to deal with them by themselves, and their accounting methods are diverse.

For example: some companies still retain the "amortized expenses" and "withholding expenses" subjects, which will be reflected in the "other current assets" and "other current liabilities" items in the balance sheet of the new standard at the end of the period; Pre-paid accounts "and" other receivables "and other subjects replace the" expenses to be apportioned ", which will be reflected at the end of the period as" prepayments "or" other receivables "in the balance sheet of the new standard; some also passed "Accounts received in advance" and "Other payables" and other subjects replace the "Accounts collected in advance" account, which will be reflected at the end of the period in the new standard balance sheet, such as "advance receipts" or "other payables" and other items.

But do these methods meet the requirements of the new standard? How should the "two fees" be handled? Here, based on our own understanding, we analyze the reasons for the cancellation of the "Amortized Expenses" and "Withholding Expenses" subjects of the new standard and the accounting treatment of related businesses.

I. Reasons for the Cancellation of "Amortized Expenses" and "Withholding Expenses" in the New Standard

(A) follow the concept of assets and liabilities

The new standard strengthens the view of assets and liabilities and dilutes the view of income and expenses. The concept of assets and liabilities is more in line with the usefulness of information, and will no longer bring future economic benefits to the enterprise, that is, items that do not meet the definition of assets will be eliminated from the balance sheet. For example, the "expense to be apportioned" is essentially an expense, a valueless asset, and a "sinking cost" that a company consumes once it occurs. It has no use value and no liquidity. If the company goes bankrupt, it is impossible If it is used to repay debts, if it is classified as assets, it will falsely increase the total assets of the company, exaggerate the company's asset-liability ratio, seriously affect the fairness of the company's financial indicators, and be detrimental to investors' production and operation and financial status of the company. Make the right judgment.

Some of the above-mentioned companies still retain the subjects of "expenses to be amortized" and "accrued expenses" or use alternative subjects such as "advance accounts", "other receivables", "advance accounts", "other payables" and so on. The above are the same, they have not followed the concept of assets and liabilities, and do not meet the requirements of the new standard.

(2) Comply with the definition of accounting elements in the new standard

From the definition of assets in the new standard, assets refer to resources formed by past transactions or events of an enterprise that are owned or controlled by the enterprise and are expected to bring economic benefits to the enterprise.

Expenses to be amortized are expenses that the company has incurred and should be borne by the current period and subsequent periods, which directly manifests as economic benefits flowing out of the enterprise. The reduction of corporate assets and owner's equity is not expected to bring any economic benefits to the enterprise, so it cannot be Under the category of assets. The new standard stipulates that liabilities refer to the current obligations formed by past transactions or events of an enterprise that are expected to cause economic benefits to flow out of the enterprise.

Withholding expenses are expenses that are drawn in advance from the cost of the enterprise but not yet paid. Although these expenses are expected to cause economic benefits to flow out of the enterprise, they are not current obligations formed by the company's past transactions or events, and they are not in line with the new The standard's definition of liabilities.

Let's look at the definition of expenses in the new standard. Expenses refer to the total outflow of economic benefits incurred in the daily activities of an enterprise, which will lead to a reduction in the owner's equity and have nothing to do with the distribution of profits to the owner. This definition can well accommodate the definition of "two fees" because the setting of each "two fees" detailed item is that the economic benefits are likely to flow out of the enterprise, and the outflow of economic benefits of each project can be reliably measured . Therefore, the "two fees" should be part of the expense element and not the asset or liability element in the new standard.

(3) Does not pose an obstacle to the accrual system

The new standard promotes accrual basis to accounting basis, but this does not mean that the "two fees" as the main account of accrual basis cannot be cancelled. Although the accrual basis is more advantageous than the realisation system in terms of truly reflecting the financial status and operating results of an enterprise, it also often brings huge harm due to its inherent shortcomings.

For example, the contradiction between accrual basis and accounting information quality requirements is more important than form, prudence, relevance, and importance, which can cause enterprises to falsely list assets and falsely increase current profits. In recent years, the negative impact of many accounting methods, such as the setting of "two fees", on the accurate disclosure of assets and liabilities, has been critically criticized with the outbreak of scandals such as Enron. Realization (such as cash flow) also challenges accruals. In the past, some scholars proposed to measure the importance of the quality requirements of accounting information. It is not necessary to set up the "two fees" subject to ensure that the assets and liabilities of the enterprise are more reasonably disclosed. This view just meets the requirements of the new standard.

(4) Conducive to solving problems in practice

In practice, some companies deliberately play account games when accounting for the "two fees" business, and use the "two fees" as a "reservoir" or "transformer" to regulate profits, which has become a common method for enterprises to whitewash accounting statements.

To sum up, the use of "two fees" to make false accounts mainly includes changing the amortization, withholding period and amortization of the "two fees" at random: the "hang but not amortize" masks losses; it will not be classified as "two fees" The content of "two fees" is not included in the "two fees": the "two fees" is incorrectly accrued and withheld: the "two fees" is not accurately disclosed in the accounting statements, etc. Several situations.

In addition, withholding expenses also increase the workload of tax adjustment. Therefore, the new standard eliminates the transitional subjects of "expenses to be amortized" and "withholding expenses", which limits the space for companies to adjust the profit of each period, and the expenses that occur within one year will be directly included in the current profit and loss. This not only simplifies accounting, but also is easier to understand, and reduces the workload of auditors on this type of business audit.

Accounting treatment of unpaid expenses stipulated in the original system under the new standard

The amortized expenses stipulated in the original system refer to the expenses that have been paid by the enterprise, but should be borne by the current and future periods, and the amortization period is within 1 year (including 1 year), such as low-value consumables Amortization of packaging and leasing packages, prepaid insurance premiums, prepaid rents for operating leases, prepaid newspaper and magazine fees, seasonal production company costs during the shutdown period, stamp taxes that are to be paid in a large amount and fixed asset repair costs, etc.

(I) Amortization of low-value consumables and rental and lending packaging

For the low-value consumables and packaging materials in the original system, they are classified into the "turnover materials" account calculation in the new standard. The New Standard Application Guide states that revolving materials refer to materials that can be used multiple times and gradually transfer their value but still maintain the original physical form and are not recognized as fixed assets, such as packaging and low-value consumables, which should be resold once. Amortization method or the five-five amortization method; the steel formwork, wooden formwork, scaffolding, and other turnover materials of the enterprise (construction contractor) can be carried out using the one-off rewrite method, the five-five amortization method, or the amortization method. Amortization. The "turnover materials" subjects can be calculated in detail according to their types, "in stock", "in use" and "amortization".

Where the one-off amortization method is adopted, deduction of "management expenses", "production costs", "selling expenses", "engineering construction" and other subjects, and credit of "revolving materials" should be made according to their book values. When the revolving materials are scrapped, debit the "raw materials" and other subjects, and credit the "administrative expenses", "production costs", "selling expenses", "engineering construction" and other subjects based on the value of the scrap materials.

If other amortization methods are adopted, the account should be debited according to its book value at the time of receipt, and the account "working materials-in use" should be debited, and the account "working materials-in stock" should be credited; Record "Administrative Expenses", "Production Costs", "Sales Expenses", "Engineering Construction" and other subjects, and credit "Revolving Materials-Amortization" subjects. When the revolving materials are discarded, the amortization amount shall be repaid. The subjects such as "management expenses", "production costs", "selling expenses", and "engineering construction" shall be debited, and the "revolving materials-amortization" shall be credited. At the same time, according to the residual material value of the scrap turnover materials, debit the subjects such as "raw materials", and credit the subjects such as "management expenses", "production costs", "selling expenses", and "construction works"; For the sales amount, debit the account of "Working material-amortization" and credit the account of "Working material-In use".

(2) Prepaid insurance premiums, prepaid rents for operating leases, prepaid newspaper and magazine fees

For the treatment of prepaid insurance premiums, prepaid rents for operating leases, and prepaid newspapers and magazines, the prepaid amounts are included in relevant cost or profit and loss accounts, respectively. It belongs to the management expenses incurred by the administrative department of the enterprise for organizing and managing the production and operation activities of the enterprise; it belongs to the manufacturing expenses incurred by the production workshop (department) of the enterprise to produce products or provide labor services; it belongs to the process of selling goods and providing labor services by the enterprise Incurred in the calculation of sales expenses. When paying the above amount in advance, debit the subjects such as "administrative expenses", "manufacturing expenses", and "sales expenses", and credit the subjects such as "bank deposits".

(3) Expenses of seasonal production enterprises during the shutdown period

According to the new guidelines, the seasonal downtime losses incurred by enterprises should be debited for the manufacturing expenses account, and credited for the raw materials, employee payables, and bank deposits.

(4) A large amount of stamp duty to be paid at one time

For the treatment of a large amount of stamp duty to be paid at a time, the new guidelines apply that the enterprise shall calculate the mineral resource compensation fees, real estate tax, vehicle and vessel use tax, land use tax, stamp tax that are calculated and determined in accordance with the regulations, and debit the "management "Accounts" and credit "Taxes payable".

(V) Repair cost of fixed assets

The new standard stipulates that follow-up expenditures related to fixed assets that meet the fixed asset recognition conditions specified in the standard shall be included in the cost of fixed assets, and those that do not meet the fixed asset recognition conditions shall be included in the current profit and loss when incurred. The daily maintenance expenditures of the fixed assets are only to ensure that the fixed assets are in normal working conditions, and generally do not meet the recognition conditions of the fixed assets. They should be included in management expenses or sales expenses when incurred, and should not be processed in advance or amortized. The new guidelines provide that the follow-up expenses such as repair costs of fixed assets incurred by production workshops (departments) and administrative departments of an enterprise shall be directly included in the management expenses if the capitalization conditions are not met. Subsequent expenses such as fixed asset repair costs incurred by an enterprise related to a dedicated sales agency are directly included in sales expenses.

3. Accounting treatment of accrued expenses stipulated in the original system under the new standard

The accrued expenses stipulated in the original system refer to expenses that have been pre-paid from the cost according to the regulations but have not been paid, such as interest on borrowings, accrued rent, insurance premiums, and fixed asset repair costs.

(I) Interest on borrowings

The New Standard Application Guide provides that by setting up the "Interest Payable" account, the company shall calculate the interest payable in accordance with the contract, including the interest payable on deposits, long-term loans that are due for repayment of principal, and corporate bonds. At the balance sheet date, the interest expenses determined at the amortized cost and the actual interest rate shall be debited to subjects such as "interest expense", "construction in progress", "financial expenses", and "research and development expenses" and calculated at the contract interest rate. The unpaid interest payable is credited to the "interest payable" account, and the difference is debited or credited to "long-term borrowing-interest adjustment", "absorbing deposit-interest adjustment" and other subjects. When actually paying interest, debit "Interest Payable" and credit "Bank Deposit" and other subjects.

(2) Withholding expenses for repairs of fixed assets, rents and insurance premiums

According to the analysis of fixed asset repair costs in the to-be-paid expenses, it can be learned that the new standard and its application guide no longer make provision for the repair costs of fixed assets. deal with. Repair expenses that cannot be capitalized are directly included in the current expenses, and can be capitalized into the book value of the fixed assets. The rent and insurance premiums payable in the current period may not be withheld. When the rent and insurance premiums are actually paid, the amount paid is included in the relevant cost or profit and loss account respectively.