To begin with, let us recall what, in fact, an accountant who forms the accounting policy of an organization can choose from.
In case of single production, WIP assessment is required to be carried out based on actual costs, but in mass or serial production, you can choose from four methods:

• according to standard (planned) production costs;
• by direct cost items;
• at the cost of raw materials, materials and semi-finished products.

Finished products must be reflected in the balance sheet in one of the following ways:

• at actual production cost;
• at standard (planned) production costs.

Moreover, the standard cost, in turn, can be determined in one of two ways:

• by the amount of standard costs associated with the use of fixed assets, raw materials, materials, fuel, energy, labor resources, and other costs for production in the production process;
• for direct cost items.

If, according to the accounting policy, products are valued at actual production costs, in current accounting there is a need to use accounting prices, which can be used as standard cost, contractual (sale) price of products, and other types of prices.
And at the end of the month, any deviations that arise (calculation differences) will be identified and written off.

Practical examples of WIP assessment

In order to make an informed choice of methods for assessing WIP and WIP, it is necessary to analyze exactly how they are applied and what consequences they lead to. And to make the difference obvious, within the framework of this article we will consider different options using the same initial numerical example.

Example 1. The company produces canned vegetables. At the beginning of the month there was neither work in progress (in the workshop) nor remains of unsold products (in the warehouse).

Within a month, 10,000 units were put into production. products, in fact, during the month 9,800 units were produced and recorded in the warehouse, of which 9,500 units were sold during the month. at a price of 90 rubles. per unit (assume that the company does not pay VAT).

Thus, work in progress at the end of the month is 200 units. (in the workshop), and the balance of unsold finished products is 300 units. (in warehouse).

The workshop's costs for the current month were:

• raw materials, materials, semi-finished products - 400,000 rubles;
  
• workers' wages and insurance premiums - 65,000 rubles;
  
• depreciation of equipment - 6,000 rubles;
  
• shop expenses (salaries of maintenance and management personnel of the shop with insurance premiums, depreciation of the shop building, utility bills, etc.), distributed at the end of the month for this type of product - 90,000 rubles.
  

The total amount of actual production costs for the month amounted to 561,000 rubles.

Administrative (general business) and commercial expenses are not considered in this example (we will assume that, according to the accounting policy, they are considered conditionally constant and are included in the reduction of the financial result, that is, they do not participate in the formation of production costs).

In accounting, cost collection is reflected in the following entries:

	Debit	Credit	Sum, rub.
The cost of raw materials, materials, semi-finished products transferred from the warehouse to production
Basic wages accrued production workers, as well as insurance contributions from her
Depreciation of production equipment has been accrued equipment
Collected general production (shop) expenses (the amount is reflected in the expenses part, attributed at the end of the month to the type of product in question)		02, 10 60, 69, 70, etc.
General production written off at the end of the month expenses

It is more convenient to move according to the principle “from simple to complex”, in our case - from the minimum set of costs included in the calculation to the maximum. After all, of course, the smaller the range of costs taken into account when assessing work in progress, the easier it is to make the necessary calculations, but, on the other hand, the more costs will be included in the cost of finished products and ultimately the cost of sales will be higher and the financial result lower ( the profit is less and the loss is more).

Assessment of work in progress at the cost of raw materials, materials and semi-finished products

This option is very convenient. After all, as a rule, the bulk of raw materials, materials and semi-finished products are released from warehouses to production departments at the very beginning of the production cycle and the amount of raw materials “launched” into the workshop corresponds to the amount of expected product output, and if less comes out, that means the corresponding part of the raw materials and materials " settled" in the WIP.

Example 2. Let's return to example 1 and assume that the accounting policy establishes a method for assessing work in progress based on the cost of raw materials, materials and semi-finished products.

The consumption of raw materials, supplies and semi-finished products per unit of product (including both finished products and work in progress, that is, based on the “launched” volume) is: 400,000 rubles. / 10,000 units = 40 rub.

Since work in progress is 200 units, its cost will be estimated at: 40 rubles. x 200 units = 8000 rub.

• the share of unfinished products in the total number of “launched” products: (200 units / 10,000 units) x 100 = 2%;
  
• share of the cost of raw materials, materials and semi-finished products related to work in progress: 400,000 rubles. x 2% = 8000 rub.
  

Accordingly, the actual production cost of manufactured products will be: 561,000 - 8000 = 553,000 rubles.

If the cost of raw materials constitutes a significant part of the cost of the finished product - say, 80% or even 90% (or at least 70 - 75%) - this assessment method can be considered quite accurate and adequate and there is little point in wasting time and effort on then to add to the cost of raw materials, materials and semi-finished products also relatively insignificant and insignificant amounts of wages, insurance premiums, depreciation charges and other production expenses, which in such circumstances are simpler, more convenient and, in general, more logical to attribute entirely to the finished (produced) products.

This situation - the predominance of material costs in the structure of product costs - is especially characteristic of the food industry, and therefore this option may be the most preferable “in all respects”: from the standpoint of simplicity, convenience, clarity, and adequacy.

Assessment of work in progress by direct cost items

If the share of material costs is not so large and the role of the labor factor is quite significant - that is, a significant part of the cost is made up of wages for the workers who manufactured the products (and, naturally, insurance premiums from this salary), as well as, possibly, depreciation charges - the first method assessments may provide an insufficiently adequate picture.

In this case, another method may be useful - assessing work in progress using direct cost items. Typically, direct articles mean:

1) “direct materials”, that is, the cost of basic materials, raw materials, semi-finished products that form the basis of the product;

2) “direct labor”, that is, the wages of those main workers who are directly involved in the manufacture of products (performing certain technological procedures, operations, etc.), and insurance premiums on it.

In addition, depreciation charges or the cost of renting production equipment may be direct in nature, but this is only relevant if only one type of product is produced on this equipment, that is, depreciation costs are not indirect and cannot be distributed among several types of products ( in such a situation, they are included in overhead costs).

Roughly speaking, “direct cost items” are those costs that the accountant attributes immediately to account 20 “Main production” (for example, in correspondence with accounts 10 “Materials”, 70 “Settlements with personnel for wages”, 02 “Depreciation of fixed assets” funds" etc.). If expenses are previously collected during the month on account 25 “General production expenses”, they are not direct and, accordingly, should not be taken into account when applying the considered method of assessing work in progress.

Example 3. Let us return to example 1 again and assume that the accounting policy specifies a method for assessing work in progress based on direct cost items and these are considered to be:

• raw materials, materials, semi-finished products;
  
• wages of main production workers with insurance contributions;
  
• depreciation of production equipment, if this equipment produces one type of product (that is, it is not subject to distribution between several types of products).
  

Let us assume that in our case there are three direct cost items, and per unit of “launched” production they are:

• raw materials, materials, semi-finished products - 40 rubles. (see example 2);
  
• workers' wages and insurance contributions: 65,000 rubles. / 10,000 units = 6.50 rub.;
  
• depreciation of equipment: 6000 rub. / 10,000 units = 0.60 rub.
  

Thus, each unit of “unfinished” products should be valued according to direct cost items in the amount of: 40 + 6.50 + 0.60 = 47.10 rubles.

And, therefore, the entire volume of work in progress should be assessed in the amount of: 47.10 rubles. x 200 units = 9420 rub.

Accordingly, the actual production cost of manufactured products will be: 561,000 - 9420 = 551,580 rubles.

If the specifics of the production process are such that during processing the future product goes through several stages at which labor costs are “added”, for a correct assessment using the direct cost method, an inventory of WIP balances should be carried out at the end of the month, recording the number of unfinished products remaining at each stage to calculate the amount of direct labor costs to be included in their cost. The accountant also needs to know the prices of direct labor for each of the operations (stages) or the time spent at each stage and the hourly wage rates.

Evaluation of work in progress at standard cost

In order to evaluate work in progress at standard cost, the accountant at the end of the month only needs to know the total number of unfinished (unfinished) products.

Well, and, of course, you need to know the value of the standard cost, but it is determined in advance based on plans and established standards, that is, this value does not depend on the actual results of the current month. In principle, it is not even the accounting department that can determine the standard cost, but the planning and economic department of the enterprise, if there is one, and then it is even easier for the accountant.

Typically, the standard cost of work in progress is determined in the same way as the standard cost of finished products - either by direct costs or by all production costs (based on established standards).

Example 4. Let us again turn to the data in example 1, but assume that the accounting policy provides for the assessment of finished products and work in progress at standard cost, which, according to the economic planning department, is 56 rubles. per unit of production.

Since the quantity of work in progress is 200 units, the accountant estimates the “work in progress” in the amount of: 56 rubles. x 200 units = 11,200 rub.

And the actual cost of finished products in this case will be determined as follows: 561,000 - 11,200 = 549,800 rubles.

At the same time, in accounting, these finished products are already reflected at standard cost in the amount of 56 rubles. x 9800 units = 548,800 rub.

Valuation of work in progress at actual production cost

And, finally, the most complex, but also the most complete and accurate method of assessing work in progress is based on actual production costs, which takes into account not only direct, but also indirect (general production) costs.

Example 5. Using the data from example 1, assume that the company decided to evaluate work in progress at actual production costs.

At the end of the month, the accountant summed up all the expenses incurred for the month, reflected on account 20 (including those written off from other accounts, including account 25), and received the total amount of actual production costs for the month - 561,000 rubles.

This means that the actual production cost of each unit of production - both completed and unfinished - amounted to: 561,000 rubles. / 10,000 units = 56.10 rub.

And the “incomplete” will be valued at: 56.10 rubles. x 200 units = 11,220 rub.

And the cost of manufactured products will be determined in the amount of: 561,000 - 11,220 = 549,780 rubles.

Ideally, here too the degree of product readiness should be taken into account, if such can be determined (then general production costs when assessing work in progress are “tied” to direct labor costs).

Let us pay special attention to the fact that the regulations refer to the assessment of work in progress exclusively at production costs. However, the understanding of this term may vary.

In foreign practice, production costs clearly do not include general (administrative) and commercial expenses - they are attributed directly to the reduction of the financial result (which is equivalent to entries from the credit of accounts 26 and 44 directly to the debit of account 90 “Sales”).

In Russia, another option is acceptable and is often used - when general business expenses are not considered as semi-fixed, but are also included in the cost of production, in other words, account 26 is closed as a debit to account 20 (as well as accounts 23, 29 when selling products, work, services, auxiliary and servicing industries and outsourced farms). With this option, “production cost” is considered to be the total amount of costs collected on account 20, including general business expenses. And what is considered “production cost” according to Western ideology, in this case is called “shop cost”.

Thus, depending on the chosen approach and the option for writing off general business (administrative) expenses, the accounting policy should further clarify the concept of production cost and the composition of its costs (costing items), on the basis of which finished products and work in progress are assessed.

Practical examples of finished product evaluation

Now, to complete the picture, we will show how finished products are assessed and how operations for the production and sale of products, as well as writing off the cost of finished products (taking into account the estimated work in progress) are reflected in accounting.

Valuation of GP at standard cost

As a rule, if an enterprise decides to evaluate finished products at standard cost and uses this estimate not as an accounting price, but as an option for generating balance sheet indicators, it becomes necessary to use account 40 “Output of products (works, services).”

Example 6. Let's continue to consider examples 1 and 4 and add the condition: let's assume that the accounting policy also provides for the use of account 40 to reflect operations for accounting for the output of finished products and the valuation of products both in account 43 and in the financial statements is carried out at standard cost.

In addition to the accounting records presented in example 1, the accountant will reflect the receipt of products (at standard cost) and their sales during the month, and at the end of the month he will write off the actual cost and the resulting deviation with the following entries:

	Debit	Credit	Sum, rub.
acceptance to the warehouse, according to the normative cost): 9800 units x 56 rub.
9500 units x 90 rub.
cost): 9500 units x 56 rub.
enterprises)
The actual cost of production is written off at the end of the month, taking into account the assessment of work in progress standard cost, component RUB 11,200, see example 4
The difference is written off (deviation, overexpenditure) between normative and actual cost: 549 800 - 548 800
855 000 - (532 000 + 1000)

As a result of all the above entries, the following account balances are formed, which must be taken into account when forming a balance sheet asset:

• on the account 20 - 11,200 rubles. (estimation of work in progress at standard cost, balance of work in progress - 200 units);
  
• on account 43 - 16,800 rubles. (estimate of the balance of unsold products at the end of the month in the amount of 300 units at standard cost).
  

And the profit and loss report will reflect:

• revenue in the amount of RUB 855,000;
  
• cost of sales in the amount of 533,000 rubles;
  
• gross profit 322,000 rub.

Actual cost and accounting prices

As already emphasized earlier, it is possible to determine the actual cost only based on the results of the month, and customers have to receive and write off products as they are released from production and received at the warehouse, as well as released from the warehouse during the month, even before summing up the results, when the exact cost of the products and the amount of work in progress are still unknown. Therefore, if the organization chose not to use account 40 and not to value products at standard costs (for the purpose of creating a balance sheet), in current accounting it is necessary to use accounting prices. These could be, for example, contract prices (sales price) or even standard (planned) cost. But at the end of the month, the difference between the actual cost and the accounting price - the so-called calculation difference - will be written off to the same account 43 "Finished Products", where the products are already reflected at accounting prices, and ultimately the balance of account 43 will reflect the actual cost of the balance of finished products products.

Example 7. Now let’s take examples 1 and 2 and assume that, in accordance with the accounting policy:

• WIP is assessed based on the cost of raw materials, materials and semi-finished products;
  
• finished products are assessed at actual production costs (not including general business expenses, which are written off “month to month” directly to account 90, but in this example they will not be considered);
  
• Accounting for finished products is kept on account 43 (without using account 40), while contract prices are used as the accounting price (90 rubles per unit), and the calculation difference is reflected in a separate sub-account, that is, the following sub-accounts are used:
  

43-1 "Finished products at the accounting (contractual) price";

43-2 "Calculation difference".

In addition to the accounting records presented in example 1, the accountant will reflect the receipt and sale of products (at accounting prices) during the month, and at the end of the month he will write off the actual cost and the resulting deviation with the following entries:

	Debit	Credit	Sum, rub.
Products are capitalized (as they are released and acceptance to the warehouse, at discount prices, corresponding to the selling price): 9800 units x 90 rub.
Revenue from sales of products is reflected in within a month (as products are shipped): 9500 units x 90 rub.
Sold products are written off (according to the standard cost): 9500 units x 90 rub.
Payment received from product buyers (according to as funds are credited to the current account enterprises)
The calculation difference is written off (the difference between the cost is reversed products at accounting prices and actual cost of production at the end of the month from taking into account the estimate of work in progress amounting to RUB 8,000, see example 2): 882 000 - 553 000
The accounting document is written off (reversed) difference in the part attributable to sold products: (329,000 / 882,000) x 855,000
The financial result was identified and written off - profit from product sales for the month: 855 000 - (855 000 - 318 929)

As a result of all the above entries, the following account balances are formed, which must be taken into account when forming a balance sheet asset:

• on the account 20 - 8000 rubles. (estimation of work in progress at the cost of raw materials, materials and semi-finished products, balance of work in progress - 200 units);
• on account 43 - 16,929 rubles. (estimate of the balance of unsold products at the end of the month in the amount of 300 units at actual cost), including:

on subaccount 43-1 (cost at accounting prices) - 27,000 rubles;

on subaccount 43-2 (calculation difference, reversal) - 10,071 rubles.

And the profit and loss statement will reflect:

• revenue in the amount of RUB 855,000;
• cost of sales in the amount of RUB 536,071;
• gross profit RUB 318,929.

Taking into account the specifics of the food industry, in cases where the cost of raw materials constitutes a significant (about 80 - 90%) part of the cost, the simplest method of assessing work in progress - based on the cost of raw materials, supplies and semi-finished products - is quite adequate.

However, in any case, when choosing a method for assessing work in progress and finished products, it is necessary to take into account not only the ease of its application, but also its impact on the generated accounting indicators in order to ensure acceptable accuracy in the assessment of assets (balances of work in progress and unsold finished products) and financial results. The technological features of the production process and the specifics of the activities of a particular organization as a whole are also important.
In addition, many accountants strive to bring accounting and tax accounting as close as possible. Therefore, another factor that influences their choice is the requirements of tax legislation on this issue. In upcoming issues we will discuss this problem.

The article will reveal the main points regarding the accounting of work in progress. What you need to know about the procedure, which transactions to display, and whether there are any nuances - further.

Dear readers! The article talks about typical ways to resolve legal issues, but each case is individual. If you want to know how solve exactly your problem- contact a consultant:

APPLICATIONS AND CALLS ARE ACCEPTED 24/7 and 7 days a week.

It's fast and FOR FREE!

At the end of each month, the organization has products that have not been finished processing - unfinished. How is it accounted for and sold, what methods are used to account for such goods?

What you need to know

Work in progress includes products that have not gone through all stages of processing and those products that have not been tested or are not fully completed. Its volume depends on the duration of the production cycle.

The production that is not completed does not include:

• materials that arrived at the workshop, but did not begin to be processed;
• purchased semi-finished products that have not passed the first stage - assembly into units;
• parts, goods and products with defects.

Products classified as work in progress:

• serviceable parts and products that need to be assembled or processed;
• completed parts, but not accepted by the technical control department;
• products that are being tested;
• an order suspended indefinitely;
• finished products, but not having the necessary parts;
• goods that have not passed inspection;
• items that need to be fixed.

The quantity of remaining goods must be set every month. Using this indicator, you can calculate your own cost of production.

Taking inventory will help with this. Its goals are:

• determine the presence of products that are not fully processed;
• determine whether all products are equipped with the necessary parts;
• identify defective goods;
• check accounting data;
• determine the remains of work in progress, the production of which has been suspended;
• check whether expenses are allocated correctly.

When conducting an inventory, the following must be taken into account:

• For each site, a separate inventory is drawn up, which indicates the name of the reserve and what stage of readiness it is at. After this, it is necessary to compare the data with the information in the accounting;
• there is no need to include materials for which processing has not begun;
• it is necessary to apply technical calculations;
• If a defect is detected, employees of the control department must formalize it properly.

Documents required for this:

• established inventory form;
• inventory;
• act of product balances that are not completed;
• act on those balances that have not begun to be processed;
• statement based on the results of the inventory.

Required terms

The following concepts are used in construction economics:

Investor	A legal or physical person who invests in construction
Customer	The person who implements the project
Developer	An organization that specializes in the construction process and monitors its implementation
Unfinished construction	Costs of the customer for the construction of the facility from the beginning of its construction until it is put into use
Unfinished production	Expenses for work that was not completed
Inventory	Checking the availability of enterprise property and assessing its condition

Tasks set

WIP accounting has the following objectives:

• control over the safety of products and parts;
• eliminating the possibility of product defects;
• identifying shortages of goods;
• increasing the responsibility of those involved in receiving products and processing them;
• improving the quality of planning;
• control over the remains of production that is not completed.

Legal grounds

Accounting is regulated by a four-tier system:

• acts of legislation;
• regulatory documents of the Ministry of Finance;
• explanatory documentation – methodological recommendations, letters;
• documents used by the organization.

When maintaining accounting records in the construction industry, you should be guided by the following laws:

It is also necessary to carry out an inventory cost. To calculate it, the costs of the construction work carried out and other expenses associated with it are summed up. If there are several objects, then the amount of costs is distributed equally.

The cost of inventory does not include:

Construction in progress is considered to be objects that are in the process of construction and stopped for an indefinite period of time; objects that are already in use, but no acts have been drawn up for them.

In construction accounting, there are 2 concepts - accounting for construction that is not completed, and accounting for completed construction.

Accounting for unfinished construction can be reflected in the investor, customer, developer, if these responsibilities are performed by different citizens.

Costs must be maintained for each object separately, using the cost structure:

• construction work;
• installation of equipment;
• costs for materials submitted for repair and those that do not require installation;
• investment costs.

What types of offenses and abuses may there be?

When working with products, abuse may include the following:

• theft of goods;
• underweight;
• body kit during product acceptance;
• calculation when issuing finances;
• replacing one brand with another;
• inaccuracies when receiving goods.

Display in tax accounting

According to the Tax Code, at the end of the month, the taxpayer must make an assessment by comparing indicators on the balances of completed products and tax accounting information on the amount of costs.

The balance of goods is estimated by the amount of expenses that went into processing them. If the taxpayer's production involves the processing of raw materials and their processing, the amount in the cost accounts is allocated to the balances of unfinished products.

When maintaining a record, the tax payer is obliged to establish the type of raw materials that form the basis of the product. For tax purposes, 70% of direct expenses are written off, the rest (30%) remains as part of unfinished products.

Expenses are divided into indirect and direct. The first are:

• costs of purchasing raw materials;
• expenses associated with remuneration of workers in workshops and warehouses;
• costs of performing work and providing services.

Indirect expenses include expenses that the taxpayer uses during the reporting period.

Thus, unfinished products are subject to accounting. The information must be displayed both in the accounting report and in the tax report.

Wiring must be indicated. The cost of manufactured products must be calculated correctly.

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.

That's why FREE expert consultants work for you around the clock!

The production of a product is a process that fits into various time periods. For some types of products the production cycle is short, while for others it takes a very long time. Experienced accountants use the abbreviation WIP to indicate the unfinished process in the reporting period, the decoding of which is simple - unfinished production. To adequately assess the cost of a company's finished products, it is important to correctly calculate the volume of work in progress, i.e., products that are at the stage of an unfinished technical process and have not passed all stages of production, packaging and acceptance. Let's talk about the features of accounting for this asset, as well as about which account the work in progress is reflected in.

What is considered work in progress?

The WIP category includes:

• semi-finished products and MCs that are in the process of processing them into finished products;
• understocked products;
• products that have not passed the acceptance of the technical department or are required by testing regulations;
• work/services already completed but not yet accepted by the customer.

The following cannot be considered as work in progress:

• materials, raw materials, components transferred but not processed;
• defective semi-finished products, the correction of which is impossible.

Work in progress: accounting account

Costs in work in progress are taken into account in the accounts:

• account 20 “Main production”;

If the company decides to formulate costs for work in progress in the accounts of general production (account 25) and general economic (account 26) costs, then this fact must be recorded in the accounting policy (AP) of the company.

How to calculate the amount of work in progress

Account 20 is used to accumulate information about all expenses for the production of goods, the provision of services for the declared types of activities, and the performance of various contract works (design, engineering, geodetic, scientific and survey, etc.). The debit of this account includes direct costs associated with the listed types of activities, as well as indirect costs of general order and auxiliary facilities.

Direct production costs are transferred to the debit of the account. 20 from credit accounts:

• depreciation ( , 05);
• Inventory ( , , );
• settlements with customers (, 76), as well as personnel () and funds (69);
• accounting for defects that can be eliminated (28).

In addition to the main one, the company often involves auxiliary and service production. Every month in debit account. 20 part of the expenses is transferred from the credit accounts:

• auxiliary farms (23);
• indirect costs for maintaining maintenance and management personnel (25);
• share of general business expenses (26).

After the costs are fully collected at the end of the month in the debit of the account. 20, the total cost of producing the finished product or performed work/services is written off from the account credit, i.e. completed production. The accounting entry here will be as follows: D/t 40 (43, 90) K/t 20.

Remaining on account 20 the final debit balance will reflect the volume of work in progress, i.e. the cost of expenses allocated for processing, which was not completed at the end of the reporting period.

If the production process involves auxiliary and service facilities, where expenses related to the company’s activities are also recorded, and at the end of the month there remain open balances - debit balances, then this means the following:

• according to account 23 reflects the cost of auxiliary work in progress;
• according to account 29 – the amount of work in progress of the service economy.

The total amount of work in progress for the whole company in this case will consist of the balances of the debit accounts on the 20th, 23rd, 29th. Thus, not one, but several production cost accounts are involved in the formation of work in progress. The summed debit balances in these accounts create the real value of the work in progress at the end of the accounting period in question.

Costs in work in progress in the balance sheet

A firm's work in progress can be measured in several ways. Their choice depends on the technological specifics of production and the rationale for its use in the company’s software. Usually one of 4 options is practiced:

1. at actual cost;
2. at planned and standard cost;
3. by direct items of expenses;
4. at the cost of raw materials and MC.

WIP in accounting: basic entries

The most common method of accounting for full costs (at actual cost), when all costs incurred in the reporting period - direct and indirect - are attributed to work in progress. Postings reflecting the calculation of work in progress at actual cost are presented:

Operation			Base
The costs of auxiliary production were transferred to the main ones			Accounting certificate-calculation
General production expenses are divided into main
General business expenses are included in the main
General business expenses (not allocated to the main production) are written off to the sales account
MC expenses for main production			Requirements-invoices, LZK
Depreciation of fixed assets			Help-calculation
Travel expenses			Advance report
Employees' salaries			Payslip
Contributions to funds			Help - calculation
Third Party Services			Certificates of completed work
Shortages of MC within established standards			Inventory report, calculation
Deferred expenses allocated to main production			Help-calculation
The cost of expenses for main production is transferred to the cost of finished products
The cost of services provided was transferred to the sales account

Reflection of work in progress in the company’s balance sheet

There is no separate line for recording work in progress in the balance sheet. The amount of expenses is present in the current assets section in line 1210 “Inventory”. If the product production cycle is long, then such assets should move from current to long-term and be accounted for as non-current assets in financial investment accounts.

unfinished tax accounting

Work in progress in accordance with clause 63 of the “Regulations on Accounting and Reporting” includes: products (works) that have not passed all stages of the technological process and incomplete products that have not passed testing and technical acceptance.

In accounting, work in progress may be reflected:

* for single production - at actual costs incurred

* in mass and serial production

1. at actual production cost,

2. at planned production cost,

3. according to direct cost items,

4. at the cost of raw materials, materials, semi-finished products.

The method of estimating work in progress at actual cost is the most common and reliable. The essence of this method is that, according to inventory data, the amount of work in progress at the end of the reporting period is determined. By multiplying the quantity by the estimated average cost per unit of work in process, the actual production cost of all work in process at the end of the month is determined.

Valuation at standard (planned cost) is used in conditions of mass and serial production. With this method of assessment, the accounting (planned) price of a unit of work in progress, calculated by economists, is used. The use of accounting prices greatly simplifies the accounting of work in progress, but in this case the process of determining the cost of finished products is more labor-intensive. When using this method, it is necessary to keep records of deviations from the cost of work in progress at accounting prices and the actual cost recorded on account 20 “Main production”.

Valuation of work in progress at the cost of raw materials, materials and semi-finished products is mainly used in material-intensive industries. This method differs from the previous ones in that work in progress includes only direct costs or only raw materials, materials and semi-finished products, and all other costs are written off to the cost of finished products.

The production organization must choose a method for valuing work in progress and consolidate it in its accounting policies.

The volume of work in progress is determined by inventory or documentary method.

Organizations that produce products with a long manufacturing cycle or provide complex services (construction, scientific, design, etc.) can recognize the sale of:

* in general, as a completed and delivered work to the customer;

* for individual stages of work performed.

The first option is traditional; with the second option, accounting is carried out using account 46 “Completed stages for work in progress.” The debit of the account reflects the cost of the completed stages of work paid by the customer in correspondence with account 90 “Sales”. At the end of all stages, the cost paid by the customer is written off from account 46 to the debit of account 62 “Settlements with buyers and customers”.

The assessment of work in progress balances is carried out on the basis of data from primary accounting documents on the movement and balances of raw materials and materials, finished products in workshops. The presence and size of work in progress balances depend on the nature and duration of the technological process, as well as the characteristics of the manufactured product. The size of work in progress balances is determined by conducting an inventory.

Account balances 20 “Main production”, 23 “Auxiliary production”, 29 “Service production and farms” at the end of the month show the value of work in progress.

Methods for assessing work in progress:

At actual cost (suitable for both mass and piece production)

All costs associated with the production of products are included. Optimally accurate method.

Example. From a sheet of metal worth 1000 rubles. This makes 100 door hinges. Manufacturing costs 1 pc. - 50 rub. The balance of work in progress at the end of the period is 200 units. Cost of 1 product: 10 rubles. + 50 rub. = 60 rub. Work in progress at the end of the period: 200 pcs. x 60 rub. = 12,000 rub.

At standard production cost (used in serial and mass production)

The write-off rate for each cost component is determined by the economic department of the enterprise based on industry standards, guidelines and features of the production process. During recalculation, deviations of actual costs from accounting prices may occur. If standards change in the current period, it may be necessary to revaluate the balance of work in progress at the beginning of the period.

Example. The actual cost of producing 100 door hinges was 3,760 rubles: the cost of 1 sheet of metal was 1,000 rubles. + staff salary 2000 rub. + social insurance contributions 560 rub. + depreciation of the machine 200 rub. According to the standard established at the enterprise, the cost of producing 100 door hinges is 3000 rubles. The deviation was 3,760 rubles. and can subsequently be written off as an increase in the price of the product or a decrease in its value.

By direct cost items (used in material-intensive industries)

The cost includes only direct costs associated only with the production process, the composition of which is determined by the accounting policy. With this method, all other costs are included directly in the cost of finished products.

Example. Direct costs for the production of 100 door hinges amounted to 3,760 rubles: the cost of 1 sheet of metal is 1,000 rubles, the salary of production personnel involved in the manufacture of products is 2,000 rubles, social insurance contributions are 560 rubles, depreciation of the machine is 200 rubles. The balance of work in progress at the beginning of the period is 10,000 rubles. During the period, 100 loops were produced, 60 pieces were released. The size of work in progress at the end of the period is equal to: (3,760 rubles: 100 pcs. x 60 pcs.) + 10,000 = 12,256 rubles.

According to the cost of raw materials, semi-finished products, materials (applicable for a short production cycle)

The cost includes only the actual cost of the material transferred to production. All other costs are included directly in the cost of finished products.

Example. The cost of 1 sheet of metal is 1000 rubles. During the period, 100 loops were produced, 60 pieces were released. Size of work in progress: 1000 RUR: 100 pcs. x 60 = 600 rub.

Various methods of distributing costs when using accounts 25 “General production expenses” and 26 “General operating expenses” significantly affect the size of work in progress.

The full cost method allows you to take into account all indirect costs as part of account 20 “Main production”, in this case, part of the indirect costs will always not only be included in the cost of finished, shipped products, but also settle in work in progress.

Example 1. Within a month, an enterprise must produce 1000 new products:

Account correspondence
			Materials written off for production
			Costs for remuneration of production personnel are reflected
			Insurance premiums related to wages of production personnel
			Depreciation of production equipment reflected
Total direct expenses
			Materials written off for the repair of general production equipment
			Depreciation of general production equipment is reflected
Total indirect costs
			Costs for remuneration of management personnel are reflected
			Insurance premiums related to management salaries
Total indirect costs
Accounting for full production costs
Account correspondence
			General production expenses written off
			General business expenses written off
			1000 units of finished products were capitalized based on the full production cost

Let’s assume that only 800 products were transferred to the warehouse, then the balance of work in progress in total terms will be 10,780 rubles. (RUB 53,900: 1000 pcs. x 200 pcs.).

This method can also be used in tax accounting, provided that the share of overhead costs in the cost volume is small, otherwise the share of fixed costs in the cost of production may be distorted.

The partial production cost method allows you to accumulate only general production expenses on account 20 “Main production”; the general business balance is written off at the end of the month to account 90 “Cost of goods sold”.

The initial data of example 1 is used, the enterprise must also produce 1000 units of product within a month:

Let's assume that the company also manages to produce only 800 units of products, then work in progress at the end of the period will amount to 8,520 rubles. (RUB 42,600: 1000 pcs. x 200 pcs.).

According to the direct costing method, only direct costs are collected on account 20 “Main production”, and indirect costs are written off at the end of the month to the cost of goods sold.

Example 3. Using the initial data of example 1, the enterprise must also produce 1000 units of product within a month:

Let's assume that the company also manages to produce only 800 units of products, then work in progress at the end of the period will be 7,520 rubles. (RUB 37,600: 1000 pcs. x 200 pcs.).

To enable detailed analysis when using the direct costing system, it is recommended to open subaccounts to account 25 “General production expenses”.

25/1 “General production variable costs” - this part of the costs that depends on the volume of output is taken into account (costs for repairs of general production equipment, fuels and lubricants, etc.)

25/2 “General production fixed costs” - created to account for part of the expenses that do not depend on the volume of production, for example, depreciation of general production equipment.

If in accounting the methodology for assessing work in progress varies, then tax accounting offers the only method in Art. 318 Tax Code of the Russian Federation.

Leaving room for maneuver, the Tax Code allows you to independently determine the composition of direct expenses in your accounting policy. The method adopted at the enterprise, including for work in progress, for determining direct costs is mandatory for use within two tax periods.

Thus, the composition of costs taken into account in work in progress is much wider for accounting than for tax accounting. The choice of method for classifying direct and indirect costs must be economically feasible and take into account the characteristics of a particular production.

Work in progress is products (work) that have not gone through all the stages (phases, redistributions) provided for by the technological process, as well as incomplete products that have not passed testing and technical acceptance (clause 63 of Order of the Ministry of Finance dated July 29, 1998 No. 34n). We will tell you about accounting for work in progress (WIP) and its assessment in our consultation.

Costs in work in progress

The costs of main production are collected according to the Debit of account 20 “Main production” (Order of the Ministry of Finance dated October 31, 2000 No. 94n) from the Credit of accounts:

• 02 “Depreciation of fixed assets”;
• 10 "Materials";
• 25 “General production expenses”;
• 26 “General business expenses”;
• 60 “Settlements with suppliers and contractors”;
• 69 “Calculations for social insurance and security”;
• 70 “Settlements with personnel for wages”, etc.

So, on account 20, in particular, the costs are taken into account:

• for the production of industrial and agricultural products;
• for the implementation of construction and installation, geological exploration and design and survey work;
• for the provision of services to transport and communications organizations;
• to carry out research and development work;
• for the maintenance and repair of highways, etc.

When products are produced or services are provided, the costs collected on Debit Account 20 are written off from the Credit of this account to the Debit Accounts:

• 43 “Finished products”;
• 90 “Sales”, etc.

Therefore, at any point in time, the debit balance of account 20 means the part of the costs of the main production that has not yet been converted into finished products, or the amount of expenses incurred for the performance of work (rendering services) that are not completed and not accepted by the customer. This is the cost of work in progress.

Cost accounting in work in progress

The above means that the question of which entries for work in progress are generated in accounting is not correct. After all, the amount of work in progress is not the turnover of the accounts, but the balance of account 20, i.e., its slice as of a certain date. The answer to the question “Costs in work in progress - an asset or a liability” should not raise any doubts. Work in progress is part of the organization’s property, which is reflected in the balance sheet asset in the “Inventories” line (clause 20 of PBU 4/99).

But in what assessment the balance of the work in progress is reflected depends on the procedure adopted by the organization and enshrined in its.

There are the following options for assessing work in progress (clause 64 of Order of the Ministry of Finance dated July 29, 1998 No. 34n):

Moreover, in addition to standard accounting entries for the release of finished products or write-off of costs when performing work (services), it is also possible to write off work in progress as a loss. For example, WIP for a canceled production order will be written off by the accounting entry:

Debit account 91-2 “Other expenses” - Credit account 20.