Accounting of Authorized Capital

The minimum authorized capital is established by law, and its real amount is fixed and approved in the company's Charter. None of the founders will be able to change the form, the value of the property without change in the relevant document, to take their share. But they have the opportunity to make additional contributions to the development of the enterprise.

The registration of the authorized capital confirms the guarantee of the actual existence of the enterprise. This is important for lenders who make financial injections, and partners that carry out joint activities.

All enterprises, starting their activities, keep a record of the authorized capital and settlement with the founders.

From its size and effective use depends directly on the cost of production, profitability and profit of the enterprise, and most importantly, its financial stability.

You can contribute to the authorized capital:

• cash;
• Fixed assets;
• Intangible assets (these may be patents, licenses);
• Property rights, valued in monetary terms (buildings, land);
• securities.

If the contribution of one founder is more than 200 minimum monthly wages, an independent examination of the transferred property is carried out. In all other cases, the contribution is assessed by mutual financial arrangement.

Accounting for the formation of share capital

Depending on the form of ownership of the enterprise, the authorized capital has the features of formation and is divided into:

1. Statutory fund from municipal organizations, which received from the state fixed and current assets.
2. The share fund is formed from the contributions of members of the cooperative, which conduct joint activities.
3. Stacking capital consists of the contributions of the participants of the partnership for conducting economic activities. In addition to them, there are also depositors who have obligations depending on their deposits.

When formulating the authorized capital, several stages are distinguished:

- Declared, which is registered in the constituent documents.

- Subscription, which corresponds to the value of shares, which can be guaranteed to be purchased by subscription.

- Paid, consisting of contributed funds and sold on sale.

- Withdrawn. It is formed at the expense of the amount of shares bought out from shareholders by the company itself.

To register an enterprise it is necessary to make 1/2 of the authorized capital, which is declared on the settlement account and receive the relevant certificate. In accounting after registration of the company, the registration of authorized capital is conducted as follows:

D 75 To 80 - the authorized capital is formed.

D 50 K 75- money was paid to the cashier from the founder.

D 20 To 75 - a contribution of services or work.

D 58 K 75 - contribution of securities.

Д 51 To 75 - money is transferred to the account.

D 10 K 75 - the contribution of materials.

Д 41 To 75 - the payment by the goods.

D 08 To 75 - installment of fixed assets.

D 04 K 75 - a contribution of intangible assets.

When the charter documents are changed in the direction of increase, the authorized capital is accounted for by a credit of K 80, and by a debit of D 75.

Sources of increase may include:

• Reserve capital is needed to cover losses. E 82 Additional capital may be generated from revaluation or issue.

D 83

• Undistributed profit for the last years Д 84.
• If the nominal value of shares increases (when new ones are issued).

D 50

· When the authorized capital is reduced, after appropriate changes in the statutory documents in the accounting department make a record on the debit D 80, and on the loan K 75 (81). This can happen when one of the founders leaves the organization. He is credited with the receivable income D 84 K 75 and money is given D 75 K 50 (51).

· If the nominal value of K 50 shares is reduced or a part of them is bought back to K 81, then the authorized capital is reduced and reflected in the debit.

Net assets at the value at the end of the year may exceed the value of the authorized capital, which also leads to its reduction (K 84).

The accountant is obliged to know how the charter capital is formed and recorded, its minimum amount, the terms for making, the rules of regulation, the conditions established by legislative acts under which its changes may be increased or decreased.