Starting January 1, 2024, new rules for accounting for intangible assets (IA) introduced by the Federal Accounting Standard (FAS) 14/2022 “Intangible Assets” become mandatory. The currently applicable Russian Accounting Regulation “Accounting for Intangible Assets” (“PBU 14/2007”) is canceled with the introduction of the new rules.
Compared to PBU 14/2007, the new rules established by FAS 14/2022 add some significant changes:
- Licenses for certain activities and non-exclusive rights are now classified as IA. Means of individualization (logo, trademarks) under FAS 14/2022 are not included into IA if created by an organization independently.
- The value limit of IA is set by the organization independently (for accounting purposes only).
- Depreciation is allowed from the date of acceptance of IA into accounting records, etc.
There are two options for transition to FAS 14/2022: retrospective and alternative:
- The retrospective approach recalculates the comparative figures of the accounting statements for previous years as if the rules of FAS 14/2022 had always been applied. This method will most accurately and reliably reflect information on items of IA;
- In case of the alternative approach recalculation of previous years’ figures is not performed (only figures as of January 1 of the year when FAS 14/2022 has become applied are recalculated).
An organization has the right to choose the approach of switching to FAS 14/2022 based on the principles of materiality and rationality of accounting.
Companies that have the right to apply simplified accounting methods apply the new rules only to newly acquired IA, and do not restate previous figures at all (so called “prospective” method). They may also choose not to apply certain provisions of the FAS 14/2022 (paragraph 3 of FAS 14/2022).
At the same time from January 1, 2024, the changes in the rules of accounting for capital investments in IA introduced in the FAS 26/2020 “Capital Investments” by the Order of the Russian Ministry of Finance No. 87н dated 30.05.2022 must be applied.
To transit to the new rules of accounting for IA it is necessary to make changes to the accounting policy for accounting and tax accounting purposes for 2024, namely:
- specify the method of transition to FAS 14/2022 (retrospective, alternative or, for certain companies, prospective);
- specify the method of transition to FAS 26/2020 (retrospective, alternative or prospective);
- establish the value limit of IA;
- establish the accounting procedure for low value IA;
- make a classification, indicating types and groups of IA necessary for choosing the method of valuation and depreciation method;
- choose the method of valuation of IA: at historical cost or at revalued cost (the latter applicable only to IA for which there is an active market)
- prescribe provisions on depreciation of IA, etc.
KBK Accounting is ready to offer you our expertise and support in the preparation of relevant accounting policies, reflection of operations on transition to FAS 14/2022 in accounting, as well as on other issues.