Accounting and write-off of accounts payable

Accounting for accounts payable has many nuances. Thus, the amount of debt for which the statute of limitations for suits has expired is accounted for as financial results and refers to non-operating income.

In this regard, it is necessary in timeto write-off the accounts payable, since the failure of the given operation to be completed by the tax authorities may be considered a concealment or non-accounting of non-operating income of the company. However, judiciary practice shows that tax officials still have to prove that such indebtedness for loans with expired limitation period exists, and this causes the company to understate the taxable profit. Otherwise, the court in the suit can refuse.

Write-off of accounts payable, as well asunclaimed depositary, on which the statute of limitations expired, are carried out in accordance with the Regulations on Accounting, p.78. It states that the amounts of deferred and accounts payable with retired periods of limitation are subject to write-off based on the information that appeared as a result of the inventory, the order and the written justification of the manager. In non-profit organizations, these amounts go to increase the income, for commercial companies they are referred to financial results.

An inventory is mandatorybefore accounting for the year. The inventory commission, when reviewing the accounts payable and receivables by checking the documentation, establishes the validity and correctness of the amounts of arrears found, including those that have expired statute of limitations on the claim.

Write-off of accounts payable: entries

These funds, including VAT, are included in otherincomes that are recognized in the reporting period when the statute of limitations was completed. In accounting, this operation is secured by the posting of debit 60 accounts and loans 91. The amount of debt that has expired statute of limitations is added to other income.

In some cases, the limitation period mayfor a certain period to be interrupted and then continue. This occurs in cases of the lender's appeal to the court, and when recognizing his debt obligations as a debtor. The company needs to show that it recognizes its debt. The actions that are taken to interrupt the statute of limitations for the claim and which testify to the recognition of a debt include the following:

- partial payment of debt under the main contract, andas well as the amounts of sanctions, including partial recognition of various claims for payment of a debt, if it has only one basis, and does not obtain their various grounds;

- recognition of the claim;

- payment of principal interest;

- Acceptance of collection orders;

- the change by an authorized person of the contract, from which the debtor should acknowledge, and also if it requests a change in the contract (installment or deferred payment).

In cases where the company once every three years recognizes its debt in writing, there will be an extension of the statute of limitations, and no write-off of accounts payable will be required.

With the interruption of the statute of limitations, accounts payable are not written off, and, consequently, taxpayers do not have non-operating tax income.

For example, one company purchased from anothergoods. For example, on November 15, 2010, the recipient addressed the supplier with a request for deferred payment. As a result, the parties concluded an additional agreement on the execution of settlements for goods before January 15, 2011. In such a case, the limitation period is interrupted, and a new countdown will occur from 2.01.2011.

The existing accounts payable can be terminated if the obligation is fulfilled both by the debtor himself and by an authorized third party.