Theoretical Bases of Accounting for the Formation and Use of Enterprise Reserves

The need to create reserves of the enterprise is due to one of the principles of accounting, namely the division of income and expenses between reporting periods. Moreover, if the reserves are not created, it is regarded as a violation of the established order of accounting. The purpose of the article is to summarize the national and international provisions for accounting for the formation and use of enterprise reserves and to develop proposals for complying with the procedure for their reflection in financial statements. The structure of provisions was disclosed in accordance with the requirements of current legislation. A comparative analysis of the norms National Accounting Standard 11 "Liabilities" and IAS 37 "Provisions, contingent liabilities and contingent assets" was carried out. The general and distinctive features of national and international legislation in terms of the formation and use of reserves have been identified. The common features include: conditions for the recognition of the reserve; purpose of the reserve; the prohibition of creating a reserve to cover future losses from the activities of the enterprise. The distinctive features are the procedure for assessing the created reserve for contingent liabilities, a different list of expenses for which the reserve is created. The basic principles of creating a reserve of doubtful debts in accordance with the requirements of National Accounting Standard 10 "Receivables" were disclosed. It was revealed that in essence any obligation is always the inevitable expenses of a curent period or future periods. In this regard, it is proposed to define the concept of collateral as the inevitable costs associated with the fulfillment of an liability, which is characterized by an uncertain amount or time of repayment at the balance sheet date.