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PRINCIPAL ISSUES OF ACCOUNTING POLICY FOR BUSINESS ACCOUNTING (2009) ORGANIZATIONAL AND TECHNICAL ASPECTS OF ACCOUNTING POLICY The Statutes was worked out in compliance with Russian Federation account, financial and tax legislation requirements dated of March 20 2008 year, and based on professional opinion and judgment of: IDGC of Volga, JSC employees; Head of Financial Accounting and Reporting Department, Financial Accounting and Reporting divisions of the Branches; people responsible for presentation of comprehensive and reliable information of the company business and its property status. The aims of the Statutes are: to declare the main acceptances, requirements and approaches to organization and conducting of the account process (including preparation of reports); to provide the unity of methodological approaches to conducting of the account process; to provide the actuality of prepared financial (accounting) statements; to provide the presentation of comprehensive and reliable information of such tax accounting objects as income, expenses, property, property rights, liabilities and business activity of the Company, cost estimate of which determines taxation base for the current accounting (tax) period; to provide inner and outer users with the information to control the accuracy of assessment, completeness and prompt tax payment to the budget, taking into account the organizational and industry characteristics of the Company; to provide comprehensive and reliable information to present actual data in the budget equation system; Other Company order documents should not conflict with the statements of the present aspects of accounting policy. ORGANIZATIONAL PRINCIPLES AND AIMS OF BUSINESS ACCOUNTING. General Director of IDGC of Volga, JSC is responsible for organization of business accounting, provision of all accounting reports of the Company, complying with the law in business activity, provision of the compulsory audit. To keep accounting and tax records and prepare accounting and tax reports Company: sets up the accounting departments headed by Chief Accountants who is subordinate directly to the Director of the Company (functionally – the deputy General Director for accounting services) Chief Accountants is responsible for account policy, keeping of the accounting records, timely performance of complete and reliable accounting reports. Chief Accountants controls the flow of assets and debts, income and expenses generation, preservation and increase of capital and performance of Company obligations. Moreover, all executive management and branches employees must meet the Chief Accountant’s requirements for business activity paperwork and provision of the essential documents and information to the accounting departments. Company accounting department organization follows through with Company management organization. Company accounting department consists of Financial Accounting and Reporting department (executive management) and Financial Accounting and Reporting departments of the Branches. As the Company management structure is hierarchical the accounting department is also hierarchical to the extent concerning administrative subordination movement of the accounting information flows and the order of the accounting reports making. Besides the administrative subordination to the Directors of the Branches, the employees of the Accounting and Reporting Departments of the Branches submit to the Accounting and Reporting Department (of the administrative staff). Heads of the Accounting and Reporting Departments are responsible for the accounting record-keeping in their Branches and timely provision of the full and reliable information. They control the asset movement, income and expenses generation. Every month Branches close and furnish the accounts to the Accounting and Reporting Department based on the forms established by the Company. The recording of the Branches where their income and expenses of ordinary activities are reflected is considered to be finished (gives information about financial results of the Branches to assess their activity). Distribution of functions between the Accounting and Reporting Departments and establishing of the list of the accounting entities for every Accounting and Reporting Department is made depending on the production functions of the Branches and business-processes held there and fixed in the Regulations of the Accounting Department organizational structure of the Branch. PRIMARY ACCOUNTING DOCUMENTS’ FORMS AND RULES OF DOCUMENT FLOW Accounting records are made on the grounds of supporting primary documentation recording of business activity. The non-typical primary and consolidated accounting documents made by the contractors are taken on discount if they include all the obligatory requisites of the basic document. Company supporting primary documentation paperwork is a subject of paperwork schedule (making or receiving the documents from business organizations, authorities and institutions, movement between the branches and structural subdivisions, reflecting in the accounting records, document processing and filing – is paperwork). The paperwork schedule is approved by Director of the Company. Company keeps primary accounting documents, legers and accounting reporting during the terms established by the internal executive documents of the Company, but not less than five years. Company keeps business accounts working plan, other documents of accounting policy, coding procedures, computerized data processing programs (with the terms of their usage), memorandums about the amendments to the accounting and reporting not less than five years after the year when they were used for accounting reporting last time. Director of the Company is responsible for documents’ custody and account books. ORDER AND PERIODS OF ACCOUNTING Accounting is based on the account books information. To provide the responsibility of accounting department employees the account books are quarterly printed out and signed by the employees they were made. These people are responsible for accuracy of booking. Company provides interest users with the accounting reports reflecting the assets and liabilities condition, income and expenses as prescribed by accounting law. Director and Chief Accountants of the Company sign the accounting reporting. The annual accounting reporting is approved by Resolution of Annual Shareholders Meeting. The intermediate accounting reporting of the Company is being made during 30 days after the end of the quarter, the annual – during 90 days after the end of the year. Property, liabilities and business activity accounting is kept in rubles and kopecks. Accounting reports are made in thousand rubles. Resolution about the income distribution of the financial year is approved by the Company Annual Shareholders meeting and reflected in the accounting reporting in the period when the meeting was held, i.e. in the following after the accounting year period. The final part of the auditors report given in accordance with the results of the compulsory audit of the accounting reporting is added to the reporting given for Shareholders Meeting approval. Besides, the Company publishes the annual reporting not later than June 1 of the year after the financial year. THE ORDER OF FORMATION, APPROVAL AND CHANGE OF ACCOUNTING POLICY. During the year Chief Accountants prepares and proves the decision to change of the accounting policy regulations that can be filed beginning with the next year. Every change of the accounting policy is recorded as additions and changes to the present Statutes and approved as the Statutes itself. The addition and change of accounting policy is compiled if new economic events appeared in the Company business activity the accounting methods of which are not determined by the accounting policy. The addition and change of the accounting policy is compiled as the addition to the present Statutes. It is not considered as the new edition of the present Statutes and is use from the moment of its approval. Company discloses business accounting methods adopted during the development of the accounting policy which have the essential influence to the assess and resolutions of the interested users of the accounting reporting by inclusion of the extracts from the present Statutes to the explanatory note of the accounting reporting for the financial year. The essential methods of the accounting record-keeping are the methods without knowledge of usage of which by the interested users of the accounting reporting the reliable valuation of the financial state, flow of funds, and financial results of the Company activity is impossible. CHAT OF ACCOUNTS Company uses the working plan of accounts of business accounting which is developed on the grounds of the common plan of accounts and is the addition to the present Statutes. The working plan of the business accounts allows to implement the registration chart and to group the information about business activity which is essential to make the necessary reporting forms (financial, statistical, tax, budget management system) and is set to unify the Company business accounting. The process of data registration and grouping is made by standard set of accounts (control accounts), analytics reference books on accounts (control accounts), and correspondent accounts combined with the analytics reference books. The working plan of accounts was developed without the junction to the particular software. The updating of the separate indexes of the analytical accounting in accordance with the characteristics of the implementing software is possible in case of adoption of the working plan to the software INTERNAL ACCOUNTING STANDARDS Company uses the internal accounting rules (Company internal accounting standards) which are being developed on the grounds of typical corporate internal accounting standards. Company internal accounting standards contain the requirements (detailed instruction material) to the accounting record-keeping of the particular Company business activities, workflow management All the current changes in the Company internal standards caused by the change in legislation, character of the activities or the organization of the accounting process are made centrally and documented by the order of Director of the Company. ORDER OF ASSETS AND LIABILITIES INVENTORY CHECK Inventory check is held by the Company to provide the business accounting data reliability and accounting reports. All kinds of assets and liabilities of the Company including property (irrespective to its location) beneficially owned by the Company, work-in-process sizes, volume of inputs in progress to the current and non-current assets, credit debts, capital items and property not owned by the Company but are in the business accounting on the balanced accounts (under custody, for sale under the committee contract, rented and etc.) are the subject of inventory check. Main goals of inventory check are: to reveal real property, to compare real property with the business accounts data, to check the fullness of reflection of the liabilities in the accounting reporting. Besides the inventory check aimed to compare the accounting reporting, Company holds the inventory checks essential to confirm the operating accounting data and for other purposes. Schedule of inventory check is approved by Director of the Company or the authorized Heads of the Branches entrusted to them. Difference revealed during the inventory check between the property really had and the accounting reporting data are reflected on the accounts of the business accounts in the following order: surplus of the property is entered at market value at the date of the inventory check. The relevant sum is placed on the account 91 “Other income and expenses” shortage or destruction of assets within the limits of the natural loss is allocated to the manufacturing costs, over the limits – to the guilty persons. If the guilty persons are not determined or the court refused to lay the damage at them, than the losses from the shortage of assets or their spoiling are placed on the account 91 “Other income and expenses” METHODOLOGICAL ASPECTS OF THE ACCOUNTING POLICY GENERAL REPORTING REQUIREMENTS. REQUIREMENTS AND CONVENTIONS TO THE RECORDS KEEPING AND ACCOUNTING. REQUIREMENTS TO THE INFORMATION FORMED BY BUSINESS ACCOUNTING. Company accounting system should provide the reliable, complete and solid reporting information along with the acceptable level of the expenses for its organization and performance. Financial reporting is considered reliable and full if it was made according to the rules of business accounting statutory regulations. Financial reporting is considered solid if it doesn’t have the essential mistakes. To provide the solidity of the information Company multilevel control of accounting reliability and reporting is established: control of the specialist who carries out the corresponding accountant’s procedures, control of the Head of Accounting and Reporting Department who signs the multiple account ledgers, the inner supervision and auditing service control, financial audits. The information (accept special-purpose reports) should be neutral, i.e. many-sided and take into account the requirements of different users of the financial reporting (for example, not only tax authorities’ requirements). The information is not neutral if though selection and form it influences the decisions and assessment of the concerned persons to achieve predetermined results and consequence. Company property status information (accounting balance-sheet form – form №1), financial results of activity and changes of the financial status of the Company (profit-and-loss report form – form №2), interpretations and explanations useful for the wide range of interests users while making the decisions (balance sheet supplement form – form № 3 “Statement of the changes in assets”. №4 “Cash Flow Statements”, №5 “Balance sheet attachment” and in the explanatory note) are included in the outer financial reporting. Company presents its financial reporting in all forms with an explanatory note, progress reports is presented in balance sheet and profit-and-loss report. As for the information for the internal users the aim of the accounting is to form the information useful for the Company’s management team to make the management decisions. The Company’s management team is interested in the information provided by the external users and in different additional information which is presented in the forms of internal accounts in the volume approved by the Head of the Company or the authorized persons. Company is governed by the generally accepted requirements to the records keeping and accounting in the organization of information: the requirement of wariness, completeness, consistency, rationality, priority of content before the form requirement. Besides the stated requirements the Company accounting process (including the organization of the accounting) is based on the following assumptions: property and liabilities of the Company are taken on discount apart from the property and liabilities of the owners of this Company (economic entity assumption of the Company); Company will continue its activity in the foreseeable future if it does not have the intention and need to liquidate or essentially minimize the activity. Therefore the obligations will be discharged according to the established procedure (Company going concern assumption); the accounting policy chosen by the Company is applied in turn: from one financial year to the other within one organization and by the group of interrelated organizations (accounting continuity assumption); the facts of Company business activity are referred to the financial period when they took place (and consequently are reflected in the accounting) independent on the time of their real entry or cash outflow connected to them (accrual principle assumption) GENERAL APPROACHES TO THE ACCOUNTING ENTITIES CLASSIFICATION Company assets are divided into assets and expenses (assets in progress inputs). Company uses (consumes) different types of resources during the year: material, financial, labor, etc. Cost estimate of the used resources taken on discount is qualified as the expenditures (incomplete inputs to the assets development). At the end of accumulation period the expenditures result in the assets development (fixed assets, finished manufactures, etc.) or expenditures development (making the decision to write off to the losses from the incompleted capital investments because of the liquidation or sale of the incomplete building project, to write off the losses to the research-and-development activity with no result, to write off the prime cost of the fulfilled works and services, etc.) The end of the losses accumulation period is determined when the conditions to the assets recognition are observed or when it is essential that the losses decrease the economic benefits of the Company without the asset development. The expenditures are divided into investment expenditures (non-current) and current expenditures. The aim of investment expenditures is to establish the non-current assets, including the expenditures to bye, build, develop, reconstruct, modernize and technically reequip the new objects. Other expenditures are the current ones. Cost accounting is objective. On the financial expenditures accounts for acquisition (making) of the non-current assets the cost accounting is held according to objects. On the financial expenditures accounts for acquisition of current assets the cost accounting is held according to nomenclature numbers, parcels, business inventories peer groups. At the end of expenditures accumulation period Company admits that the realization of the expenditures resulted in the asset establishment, if the property object was formed and the usage or expropriation of which will give economic benefits in future. As the assets Company acknowledges only the property objects beneficially owned by the Company (economic entity assumption). Future economic benefits - are the potential opportunity of the property expressly or by implication to assist the money or its equivalent on flow to the Company. The cost of property object should be safely measured to recognize it in the accounting. Company acknowledges the variation of price reliable enough if the property object is ready to use for the planned purpose and all the expenditures to its conditioning are accepted in the accounting and valued on the basis of pay documents and market prices and tariffs. If the regulatory document requirements in distinct objects qualification change Company will qualify all the accounting objects according to the new requirements. If the expenditures didn’t bring to the assets foundation than at the end of expenditures’ period the Company acknowledges the expenses. As the same time the decrease of Company economic benefits as the result of assets retirement (cash resources and other property) and (or) the creation of obligations led to the capital decrease (accept decrease of members’ deposits) are acknowledged as the expenses. Company admits the expenditures only if the retirement of assets has the absolute character. If under the certain conditions the retired assets would be returned to the Company the accounts receivable or new asset are admitted in the accounting (e.g. financial investments). Company does not admit cash assets or other property as expenditures given under the condition of possible or obligatory subsequent return (given loans, advance payments, property transfer to the merchandise agent or law agent, turnover taxes marked out by the separate entry in the accounting documents with the suppliers, etc.). Company does not admit cash assets or other property as the income received under the condition of possible or obligatory subsequent transfer to the other members of the business movement (received loans, advance fee and prepayment, turnover taxes marked out by the separate entry in the accounting documents with the buyers, etc.). Company admits in the accounting the accounts payable if there is a possibility of Company resources runoff which can bring the economic benefits and are the result of discharge of the obligatory and size of the obligatory could be safely changed. GENERAL APPROACHES TO THE ACCOUNTING ENTITIES VALUATION To receive property for the compulsory accounting Company assesses it terms of money. The valuation of property is carried out in the following way: Property received as the contribution to the charter capital is assessed according to the money value determined by the promoters (stockholders) of the Company in accordance with the active legislative requirements; Property acquired for fee is valued according to the sum of actual expenses. In case the securities expenses are minor (5% from the agreed cost) and accept the sum paid to the vendor according to the contract, such expenses are considered as miscellaneous expenses. Property produced by the Company is valued at cost of its production (actual expenses connected to the production of the property object); Monetary physical things remained after writing off outworn basic assets, replacements appeared as the result of restoration (reconstruction, modernization and repair) of the basic assets are valued according to their current market price on the date of basic assets writing off or when the replacements were taken on discount; Property received without compensation or property discovered during the inventory check of assets and liabilities is valued according to the current market price on the date when the property was taken on discount; Under the current market price we mean the sum of money could be paid as the result of the specified assets sale on the date it was taken on discount. The current market price is formed on the basis of prices for the given and similar kind of property. At the same time the current price should be confirmed documentary and by the expert examination. The information about the prices to the similar fixed assets received in the written form from the producers, State statistical authorities, trade inspections, mass media and special literature, expert reports (e.g. brokers) about the cost of the separate fixed assets can be used to determine the current market price. Under the experts’ reports we understand the report of the independent expert or the authorized specialist (specialists) of the Company having special knowledge and experience. These specialists are appointed by the administrative staff order of Director of the Company and of Director of the Branch – by the branch order (or by the authorized persons) as the members of the permanent commission devoted to take on discount and write off the property. The assets current market price with the marketing quotation accept in the amount of their market price, calculated by the trade organizer of the severities paper market in accordance with the established procedure and duly documented (by the professional press massage, exchange market listing, etc.); The property received according to the contracts, stipulated fulfillment of obligations (payment) with the help of nonmonetary assets (in particular under the swap contracts) is valued according to the cost of real value delivered to the Company. The cost of values given or are to be given is set on the grounds of the price the Company usually apprises the similar values in the similar conditions. Assessing the property purchases according to any ground its actual value is formed with the addition of the expenses spent to bring the property to the condition suitable for use (for carrying out expert examinations, consulting and valuation, payment for the agent’s service and other dealers, for delivery, installation and trial startups, trade registration, payment of fees, etc.) Property and liability valuation priced at foreign currency is made in rubles by the foreign currency translation at the rate of Central Bank of the Russian Federation at the date the property objects were taken on discount. The valuation of fixed assets which were bought in foreign currency is made in rubles by foreign currency convention at the change rate of Central Bank of Russian Federation at the date of the object was included for accounting purpose as the investment to the non-current assets. The cost of property in which they were included for accounting purpose is not variable accept the cases established by Russian Federation legislation. It is allowed for the non-current assets (accept the intangible assets) in case of further construction, further equipping, reconstruction, modernization, partial liquidation or reappraisal of the fixed assets. It is allowed for the current assets if the inventories are off-market, partially or fully lost their initial quality or the current market price, the sale price of which has reduced. The reduction of the inventory cost is reflected in the accounting as the reserve allowances. It is allowed for the financial investments the current market cost of which can be determined. The book value is updated to the market value. If by the time the property (basic assets, business inventories, etc) delivered without the commodity cost documents it is taken on discount according the conditional assessment taking into account the agreed cost, transport expenditures determined by the transport and railway bill and other transport documents. Cost of property, income and expenses size is determined taken into account (raises or reduces) of the exchange difference when payment in made in rubles in the sum equal to the sum in the foreign currency (standard currency unit). As to the property the exchange differences connected to the acquisition of the fixed assets, intangible assets, securities including their cost in case the exchange differences were added before the property was taken on discount. Debt and creditor indebtedness (including received / presented credits, loans) is reflected in the accounting and reports taking into account the acknowledged or awarded rates, penalty taxes, fines, forfeits. Loan and credit charges are reflected in the accounting separately from the debt (creditor) indebtedness. The property relating to the depreciable asset (basic assets, immaterial assets, income- bearing investments to the material values) is reflected in the remaining value (original value mines accumulated amortization). In the securities and debit indebtedness reports net assess method is used specified the creation of provisions under the cost reduction of specified resources in the special accounts. SELECTED METHODS OF CAPITAL INPUTS AND NON-CURRENT ASSETS ACCOUNTING Capital inputs are connected to: capital construction in the form of new construction, reconstruction, widening and technical re-equipment (later - construction); purchasing of buildings, constructions, transport means and other separate objects (or their parts) of the fixed assets; purchasing of ground areas and the land use facilities; purchasing and making of intangible assets. Capital investment in the form of own-account construction (reconstruction, modernization) of the objects are monthly reflected in the accounting as far as they are financed. At the same time the department (branch) which makes capital investments monthly reflects them on the account “Investments in non-current assets”. Capital investment during the capital construction made for the Company by the third- party contracting organization are taken into account as the work advances on the ground or signed act of provided services and calculation documents. The Company chooses the investment assets among the building projects to set the order of capital expenditures accounting in the part of interests of raised debts and borrowings. Under the investment assets we understand the property objects which will be included for accounting purpose as the fixed assets, intangible assets or other non-current assets independent on the term or size of the investments. Borrowing costs and credits expenses spent before the assets development are not included in the cost of investments to the nun-current assets and belong to the other expenses. If purchasing, construction and (or) making of the investment assets is stopped for a long period (over three months) the interests payable to the loaner (creditor) are stopped to include to the cost of the investment project from the first day of the month following to the month the purchasing, construction and (or) making of this asset was stopped. During this period the interests payable to the loaner (creditor) are included in the other expenditures. If purchasing, construction and (or) making of the investment asset was restarted the interests payable to the loaner (creditor) are included in the cost of the investment project from the first day of the month following the month purchasing, construction and (or) making of this asset was restarted. The term of the additional coordination of technical and (or) management questions arisen during purchasing, construction and (or) making of the investment project is not considered to be the abeyance period of purchasing, construction and (or) making of the investment project. The borrowing costs are acknowledged as the other expenses excluding the part which is to be included in the cost of the investment asset. As the basic assets the Company acknowledges the assets meeting simultaneously the following requirements: it is supposed to use the goods in the production, performance of work or service, or for the management needs during the long term (useful life is over 12 months or average operating cycle if exceeds 12 months); the ability to bring the economic benefits (income) in future and Company does not plan the resale of these assets; assets which meet the stated requirements, cost within 20000 rubles for a unit and are included in the list approved by the General Director are reflected in the accounting and reporting as part of the inventories. Company doesn’t acknowledge as the basic assets the objects when they were taken to discount (at the moment of qualification) was made a decision of their expropriation to the advantage of other people (sale, exchange, etc.). In this case the object is qualified as the subject of sale. Inventory item of the fixed assets is the item with all the accessories and belongings or the functionally separated item devoted to fulfill the independent functions. The whole complex is taken on discount as the inventory item seamlessly if one or several items of similar or different purpose constitute a separate complex consisted of functionally joint items which have common accessories and belongings, common management, built on one base and as the result each item can fulfill its functions only within a complex. If one inventory item consists of separate parts which have the essentially different usage life each part is taken on discount as the independent inventory item irrespective of the fact weather this part can function independent or not. The following objects are taken on discount as separate inventory items: Capital investments to the leased fixed assets; Capital investments in reclamation (drainage works, irrigation and other reclamation works); Parts of the fixed assets which are the Company or the other (others) owner (organization) common property; Computers are taken on discount as constructively independent item with its own number or as the object consisted of separate items (system unit, monitor, etc.) and each of them has its own inventory number. Fixed assets are included for accounting purpose in its initial cost defined depending on the way they were received – purchasing for fee, force-account building activity (construction), receiving free of charge, etc. The sum of actual expenses for purchasing, construction or making (excluding the value- added tax or the other indemnifiable taxes) is acknowledged as the initial cost of the fixed assets purchased for fee. The valuation of fixed assets which were bought in foreign currency is made in rubles by foreign currency convention at the change rate of Central Bank of Russian Federation at the date the object was included for accounting purpose as the investment to the non-current assets. Transfer of the objects of fixed assets between the branches and structural subdivisions of the Company is reflected on the account 79 “Intra-organizational settlements”. At the same time the cost of the fixed assets and accumulated amortization is also transferred. Expenses for the internal transfer of fixed assets between the branches are not included in the initial cost and referred to the current expenses. The ground for the fixed assets taken of discount received from the branches is the notice (letter of advance), the way-bill for internal transfer of the fixed assets (b. FA-2) and the account card of fixed assets (b. FA-6). Fixed assets received or taken for accountable keeping are registered on the off- balance account 002 “The inventory received for accountable keeping” in the prices sated in transfer certificates. If Company decides to stop the operation of the separate objects of the fixed assets than the following is reflected in the accounting depending on the situation: If the stated objects are temporary closed-down – than the data is isolated in the analytical discount; If the stated objects were written off from the accounting of permanently unemployed objects (moral and physical wear) – than the Company acknowledges them as other expenses. The expenses for all types of repair of the fixed assets (current and capital) are included in the ordinary activities expenses in the period the repair works were finished and accepted. Company does not make reserve for the repair of the fixed assets or the reserve fund. Change of the initial cost of fixed assets in which they were included for accounting purpose is admitted in case of further construction, further equipment, reconstruction, modernization, partial liquidation or revaluation of the fixed assets. Revaluation of the fixed assets is made by recalculation of the initial (replacement) cost. The methods (way, groups) of revaluation are based on the order documents of Director of the Company. Further construction, reconstruction and modernization (including partial liquidation) of the Company fixed assets are made on the grounds of the annual plan of reconstruction and modernization of the fixed assets approved by Director of the Company. If fixed assets are partially liquidated the accumulated amortization is written off in the same proportion. The modernization of the fixed assets is possible during the capital repair of the fixed assets. The delivery and take-over of the fixed assets from the reconstruction and modernization is documented in the delivery- take-over act of the reconstructed and modernized objects (form FA - 3) on the grounds of the repair work completion certificate (form FA-2). The value of work done and expenses certificate is filled in on the grounds of this act (form FA-3). To determine the period of basic assets objects beneficial use is made on the base of expected deterioration depending on the operative conditions, natural conditions and influence of aggressive atmosphere and the system of carrying out of the repair. The period of beneficial use of the basic assets is determined within the bounds established by the Russian Federation governmental regulations dated 01.01.2002 №1 “About the basic assets classification included to the amortization groups”. The useful life of the fixes assets is defined when they are taken on discount on the grounds of the object certificate, other technical documents or on the Company technical services assessment of the executive administration or by the branch in accordance with the internal documents based on the permanent commission’s decision. The useful life is fixed in the inventory card (FA-6). The useful life of fixed assets is revised if the initially accepted standard indicators of the object operation are improved (increased) as the result of further construction, further equipment, reconstruction or modernization. At the same time the useful life of the fixed assets can be increased within the terms established for the amortized group which includes this object. The useful life of the modernized part of the object is counted as the difference between the established useful life of the object after the reconstruction and the useful life to the end of modernization. The useful life of the fixed assets, already been used by the other organizations, is determined on the basis of remaining working period of the fixed assets or the other supposed useful life, which is determined taking into account the following: The expected life of this object in the Company in accordance to the productiveness and power; The expected depreciation which depends on the operating conditions; natural environment and influence of aggressive atmosphere, repair operation system; Regulatory and other this object use limitations. The expected useful life of fixed assets is set by the commission and approved by the Director of the Company or the Branch (which will operate this object) on the grounds of the documented terms when the object is taken on discount as the fixed assets. The fixed assets are paid by adding of the annual depreciation amount during their useful life. Company uses the straight-line amortization method of the basic assets. The amortization of every inventory item is calculated every month through application of the prescribed norms calculated according to the period of the beneficial use of the object The amortization of property received by the Company under the leasing contract and booked on the Company balance is added on the grounds of the term of contract except the otherwise provided herein. Real properties where the capital investments came to an end, the appropriate primary custody transfer accounting documents are completed, the documents were given to the state registration and also the actually operated objects are include for accounting purposes as the basic assets and differentiated in the analytic account. If the amortization is depreciated on the fixed assets received free of charge and the fixed assets purchased attracting the special purpose funds sum the part of the deferred income is acknowledged as the other income in the same proportion simultaneously with the writing off of the amortization. The accrual of depreciation is stopped: On the fixed assets for laying-up. The Company acknowledges as laying-up the shutdown of the object for the term over three months. The Company acknowledges as other expenses the expenses for laying-up of the objects (inspection, smearing, casing, fencing in, etc.) and the object shutting down for a term within three months; For the period of reconstruction and modernization, capital repair of the fixed assets is the period of works within 12 months. Amortization is stopped for these objects since the month following to the month of their transfer and begins since the month following the month the objects were put into operation. Amortization is added in the usual way to the property in stock (reserve) not placed in laying-up. Company (leasing holder) can rent out the fixed assets purchased for its own production or for the management needs. These fixed assets are taken on discount “Fixed assets” but are separated in the analytical report. Expenses for the current repair are acknowledged as expenses if the current repair at the expenses of lessor is set in the rental contract otherwise lessee is obliged to maintain the working condition of the property and make the current repair at his own expense. Lessor should make the capital repair at his own expense if otherwise is not provided by the law or the other legal acts and rental contract. In this case lessor places the expenses for the capital repair of the leased property to the expenses connected to the rental income. Company (Lessor) can rent the fixed assets of another owner under the signed contract. Lessee should maintain working condition of the property, make the current repair at his own expenses and bear the expenses connected to the property keeping, if otherwise is not set by the law or rental contract. These expenses are reflected in the same accounts as the expenses for the lease of the fixed assets. Lessee has the rights to make the capital repair provided by the contract or caused by urgent necessity (if lessor violates his obligations of capital repair). In this case the cost of repair can be exacted from the lessor or an offset against the rental payment. The offsetting of claim is made if the expenses for capital repair are compensated to the Company (lessee) as the rental payment: lessee owes the lessor the settled rental payment sum, the lessor owes the lessee the settles sum for capital repair. The improvements which can be separated made at the expenses of the Company (lessee) and without the agreement of lessor to compensate them are the properties of lessee. The useful life of such property is determined in the generally established order (in accordance with the internal documents on the grounds of permanent commission’s decision). The cost of improvements made by the Company (lessor) which cannot be separated without the damage to the leased property and made at the Company (lessee) own expenses and with the permission of lessor can be accounted in the rent or the lessee has the right for compensation of these improvements after the determination of the contract if otherwise is not provided in the rental contract. The Company fixed assets meant only as the payment for temporary possession and use with the aim to acquire the income are reflected in the accounting and reporting within the profitable investments to the stocks of materials and capital equipment. The equipment for installation is the equipment set to the operation only after the assembling all of its parts and fastening to the basement and abutments, floor, inserted floors and other supporting structures of the buildings and installations and also set of spare parts for such equipment. The equipment for installation is taken on discount on the 07 account under the actual cost of acquisition which consists on the acquisition prime costs and the expenses for the acquisition and its delivery to the stock of the Company. Intangible asset are the nonmonetary objects owned by the Company without physical structure apart from their cost intended for the beneficial use for the products output, for provision of services and for the management needs. The objects decided to be disposed to the benefit of other persons (resale, exchange, etc.) when they were taken on discount (during their qualification) are acknowledges by the Company as intangible assets. In this case the object is qualified as goods. The following assets are referred to nonmaterial assets made or purchased on the grounds of corresponding contracts: computer programs; inventions; useful models; production secrets (know-how); trademarks and service marks; business reputation. The collection of rights originated from one license, certificate, other protection documents, agreement on the alienation of the exclusive right for intellectual property, document of the exclusive right transfer without the contract are acknowledged as the intangible asset. The main feature used to identify one object form the other is its independent functions in the production of goods, execution of work or services rendering or usage for the management needs of the Company. The intangible assets are taken on discount at the initial price determined depending on the reason of their acquisition (purchasing, making with the help of the company own resources, received as the contribution to the charter capital, etc.). The cost of intangible assets according to which they are taken on discount is not changeable accept the cases established by the Russian Federation legislation and the present standard. Change of the initial cost of the intangible assets (IA) according to which it is taken on discount is made in case of the price change or devaluation of the IA. Testing of IA on devaluation is made only for intangible assets with the unlimited useful life, the assets which are not used for their intended purpose to the date of accounting, goodwill (business reputation). The testing is made daily on the grounds of inventory check. The IT Department having the exclusive right to use the software holds the testing. Other departments being the centers of financial IA test the other IA. The following external and internal reasons are the reasons of the possible decrease of intangible asset’s cost. The information about the essential decrease of the market cost of intangible asset or the data of the fundamental changes of technologies. The information that the results of the asset usage are worth than it was supposed is among the internal reasons. The essential changes during the operation, plans of assets retirement in the nearest future and other factors are important. When the fact of the intangible asset depreciation is discovered the cost of such asset is reflected in the balance-sheet according to the recoverable amount and the difference of the cost is reflected in the income and losses report as the other expenses on the grounds of the testing act. Testing act is made by the department which holds the testing. The business reputation is taken on discount as the difference between the actual price of the Company (or its part) as the property complex and the balance-sheet liabilities. The negative business reputation is fully referred to the Company financial results as the other income. Positive business reputation is viewed as the extra charge to the price the buyer pays for the future economic benefits. It is taken on discount as the separate inventory number. The acquired business reputation is being amortized during twenty years (but not more than the company activity period). The amortization charges of the positive business reputation are calculated with the help of straight-line method. The sum of the amortization charges of the intangible assets is determined according to the norms calculated on the basis of the initial price and the beneficial use (straight-line method). The useful life of the intangible assets concerning to the object used by the executive administration is calculated by the expert commission and approved by Director of the Company or by Directors of the Branches if the object is used in the branch (or by specially authorized persons) when the object is taken on discount on the grounds of the following conditions: The period of Companies rights validity to the results of intellectual activity or mean of ascertainment and the control period over the asset; The expectancy of the asset usage during which the Company plans to get the economic benefits; The amortization is charged every month to the special account “Amortization of intangible assets” (accept of the goodwill the value of which draws upon with the reduction of the account balance of the intangible assets). The intangible assets the beneficial use of which is impossible to determine are considered as the intangible assets with the indefinite useful life. The amortization is not charged to the intangible assets with the indefinite useful life. The amortization of intangible assets begins with the first day of the month following the month the asset was included for the accounting purpose and is charged until the full payment of the cost of the asset or its writing off from the accounting. The charging of amortization continues during the useful life of the intangible asset. The usage of intangible assets for the production purpose, service or management needs stops as the result of: expiration of validity stated in the licenses, certificates or the other similar documents; expiration of validity stated in the corresponding contracts; impossibility of useful usage of the object before the expiration of abovementioned terms if there is the confidence that this object will not be used in the production, service and for the management needs of the Company; with cession of the exclusive right and its transfer according to the order established by the normative acts. In case of the intangible assets retirement its cost should by written off in the appropriate financial period. The sum of the accumulated amortization is to be written off simultaneously with the cost of the IA. The inventories (hereafter inventories) are: The inventories used as the materials and etc. during the provision of services of delivery and transit of electric power, the performance of work (production of the products held for sale) including the special instruments, devises, special equipment and work wear; Meant for sale – the goods; Used for the management needs. The Company material support can be both centralized and decentralized. The centralized material support is organized through the Materiel management Department, the decentralized – through the subdivisions of the Materiel management Department of the Branches. The accounting of centralized supply is made by the accounting and reporting department of the executive administration, of the decentralized supply – by the accounting and reporting departments of the branches. Nomenclature number is the item of the business accounting inventories. The inventories for taking on discount purpose are evaluated depending on the reason of their arrival: purchasing for fee, making with the company’s own recourses, arrival free of charge, etc. The sum of actual Company expenses for purchasing excluding the value added tax and the other indemnifiable taxes is acknowledged as the actual cost price of the materials acquired for fee. The actual cost price of materials acquired for fee includes: Cost of materials for agreed prices; Ordering costs; The expenses for carrying of the materials to a condition suitable for use for the provided purpose; Other expenses directly connected to the purchasing of the materials. The inventories which do not belong to the Company on the basis of the right of ownership and transferred to it under the commission contract, storage agreement, etc. are taken on discount in the balance-sheet at the valuation covered by the corresponding contracts and in the delivery - take-over documents (acts, way-bills, etc.) The reserve for decrease of cost of the items of value is made for every unit of the inventories acknowledged in the accounting. The calculation of the current market price of the inventories is made by the Company on the grounds of the information valuable since the date of the signing of the financial statements. The following is taken into account during the calculation: The change of price or the actual cost price are directly connected to the event happened after the reporting date which confirms the economic conditions of the Company business activity at the reporting date; The purpose of the inventories; The current market price of the production per annum which was manufactured using the raw, materials and other inventories. The reserve for decrease of the items of value is not made on the grounds of the raw, materials and other inventories used for manufacturing of the production per annum, works, services corresponds or exceeds its actual cost price. Company should confirm the calculation of the market cost of the inventories. If during the period following the reporting one the market cost of inventories the reserve for decrease of which was made in the reporting period increases than the corresponding part of the reserve will is referred to the decrease of the inventories’ cost acknowledged in the period following the reported one. Charging of the reserve for the decrease of the resources’ cost is reflected in the accounting on the account “Other income and expenses”. The charged reserve is written off for the increase of the financial results (account “Other income and expenses”) as far as the reserves referred to it were released. The charging of reserve is made at the end of the financial period. Work wear and special footwear apart from the price and useful service are accounted by the Company in the cash cycle. The cost of special wear with the useful life over 12 months is discharged by the straight- line method based on the useful life determined in accordance with the Ministry of Labour and social security norms. The cost of special wear the useful life of which according to the allowance is within 12 months should be written off at once in the moment it is given (delivered) in the operation. Special wear with the useful life over 12 months is to be written off during the useful life since the month it was put into operation. Materials – are the type of recourses. The raw, basic materials and supplies, bought-in semi-finished products and inventory materials, fuel, package, spare parts, constructional and other materials, and special instruments, special devises, special equipment and special wear. The expenses directly connected with the storage and delivery of materials are acknowledged as the ordering costs. The ordering costs include: The expenses for material handling in the transport means and transportation according to the contract are the charge against the buyer in excess of the price of these materials; The safe custody fee of materials in the places they were purchased, in the railway stations, ports, docks; Other expenses. Materials are taken on discount on the account 10 (“Materials”) at the actual cost of their purchasing (production) or at accounting prices. The accounting price is the price stated in the supply contract (contract price). If it is impossible to include the ordering costs in the actual material cost (to add to the contract price of material) directly (straight), the ordering costs are taken on discount by referring on the account 15 “Procurement and acquisition of tangible assets” with the usage of account 16 “Deviation in value of tangible assets” On the account balance “Storage and purchasing of the material values” of the buying organization only price materials stated in the supplier’s accounting documents should stay. The buyer received the right to posses, use and dispose (the proprietary rights) the materials even if they have not been received yet. The total variable sum (the difference between actual price of the purchased material values and the book value (agreed cost)) at the end of every month is attached to the account “Deviation of tangible assets value”. The writing off of the deviation of materials price (ordering costs) of the selected materials or groups of materials is made proportionally to the book value of materials based on the deviation price (ordering costs) at the beginning of the month (financial period) and the current deviation (ordering costs) per month (financial period) to the sum of remained materials at the beginning of the month (financial period) and received during the month (financial period) at the book value. The received centupled amount gives the per cent which should be used during the writing-off of the deviation or the ordering costs for increase (rise in price) of the book value of the used materials. Nonfloat material assets are the assets received by the Company without the settlement documents. The unbilled deliveries are debited and accounted in the financial and synthetic accounting at the accounting price – the price stated in the supply contract (contract price). The inner movement expenses of the inventories (between the branches and departments or the warehouses) are not included in the price of the received material values and are attributed to the services, works or production prime costs. The inventories charged off to the operating department, loaded off or worked out on the other items are valued at prime cost of the unit. Under the issue of raw materials to workshop we understand their warehouse release for the service (work delivery, production of goods) and also warehouse release for management needs. The order of warehouse release to the branches, brigades, to the workplaces is established by the Head of Department of Material Supply of the Company in coordination with the Chief Accountants of the executive administration. Spare parts taken away from the reconstructed fixed assets and entered in the books are valued according to the books value of the fixed assets at the time similar spare parts were purchased and taken into account the observed depreciation of the entered objects (not less than the cost of scrap metal). If this information is lack they are valued at the current market price. Spare parts taken away from the reconstructed fixed assets and entered in the books are taken on discount apart from the new ones as the independent nomenclature numbers. If the spare parts taken away from the reconstructed fixed assets and entered in the books are necessary to repair the accounting records are made in the following order. Spare parts for repair are written off from the credit side of the stock accounting (account 10 “Materials”) to the debit side of the cost accounting for the repair by the efforts of the structural subdivisions of the factory services (e.g. account 23 “Factory services”). All the expenses for repair of the spare parts are written off to the debit side of this account. At the end of repair the reconstructed spare parts are entered from the credit side of cost accounting to the debit side of stock accounting (account 10 “Materials”) according to the cost taking into account the repair. The inventories (including spare parts) remained from the fixed assets and other assets disposal are valued on the grounds of the current market price at the date they were included for accounting purpose. Under the current market price we understand the sum of money which can be received as the result of sale of these assets. The company income is divided into the ordinary activities income and other income. The ordinary activities income is the earnings received from the service performance, work delivery, output realization to the third parties. The ordinary activities income is: The power transmission service income; The technical network connection service income; The repair and operational service income; The technical network connection service income; The installation and construction works income; The property lease income; The other works and services income; Industrial character income; Non-industrial-character income; The power transmission service income includes the income from the power transmission to the market entries of the service region. The power transmission is the controlled business activity. The power transmission service income is classified according to the types of consumers and the consumers’ voltage levels: high voltage (HV), medium voltage (MV1 and MV2) and low voltage (LV). The technical network connection service income is the income received from the technical and organization works to provide the opportunity for power transmission to the legal and physical bodies’ electric devices according to the stated characters and also to provide the power from the power plants. The technical network connection income is divided according to the applicant groups which in their turn are divided according to the voltage level, attached voltage and applicant voltage groups. The repair and operational service income is the income from operative and technical service, current and capital repair of electric network equipment provided by the Company to the third party organizations. The installation and construction works income is the Company income received from the work and service performed according to the building contract with the third party. The receipts from the installation and construction works and the repair service with the circle more than one financial period are acknowledged as soon as the works are ready except the otherwise provided by the contract. The other works and services income is the income received from the other works and services performance (accept the power transmission, power transit, repair and operation services and installation and construction works). This income is divided into: other industrial works and services income - transport services; communication services; other industrial works and services; other non-industrial works and services income. Other income is the income received from the performance of the average business activities. The earnings are taken to business accounting in monetary value in the amount of received money and property and (or) in debtor indebtedness. The income according to the accruals concept is acknowledged to the financial period when it was made apart from the actual date it was received. The income received (paid) during the financial period but related to the future financial periods and the debts for shortage discovered during the last years financial periods and the difference between the sum offenders have to pay and the cost of values included for accounting purposes when the shortage or spoiling was discovered is acknowledged as the future period income. The Company expenses are divided into the average business activity expenses and other expenses. The average business activity expenses are the expenses connected to the service and work performance, production and realization of output, purchase and realization of goods. The average business activity expenses are formed from the expenses connected to the production (prime cost of services, works and goods), management and commercial expenses. The average business activity expenses are: - power transmission expenses; - technical network connection expenses; - technical network connection expenses without additional investments; - repair and operational expenses; - installation and construction works expenses; - property lease expenses - other works and services expenses: - industrial; - non-industrial; - consulting services expenses. The prime cost calculation methods: - power energy transmission and distribution – simple; - repair, construction, technical connection works – job-order. The power transmission and distribution prime cost is the total sum of expenses related to the maintenance and operating of: - power transmission lines, distributing devises, substations and other constructions and equipment use for power transmission and distribution; - recording and control devises. Technical network connection prime cost is the total sum of expenses connected to the performance of the works (operations) of the organizational and technical character aimed to provide the opportunity of the power transmission to the legal and physical bodies’ electric devises in accordance with the stated characters and also to provide the generation of power by the power plant. The repair and operational services prime cost is the total sum of expenses connected to the operating and technical service, basic and current third parties electrical networks repair. The installation and construction works prime cost is the sum of expenses connected to the performance of works and services according to the building contracts with the third party organizations. They include the expenses for object constructing and delivering to the investor. Other works and services prime costs are the total sum of the expenses connected to the other works and services performance. These expenses are classified according to the types of works: other industrial works and services expenses; other non- industrial works and services expenses; The average business activity expenses are taken of discount in the sum calculated in monetary terms and equal to the volume of payment in monetary and other terms or to the volume of accounts payable. At the end of financial period the general business expenses are written off from the credit side 26 “General business expenses” to the debit side of the cost accounting for the production. The distribution of the general business expenses according to the types of activity is made proportionally to the prime costs and ordinary activities services. The power transmission income is acknowledged on the grounds of the acts of provided services in the volume of the stated power transmission services according to the contract. The act is filed by the consumers on the basis of the monthly summary list of the power consumption (in the real measures). The power transmission income is acknowledged in the business accounting with the date of act of provided services of power transmission approval. The accounting of power transmission service expenses is made by the Financial Accounting and Reporting Departments of the Branches, which bear the expenses connected with the maintenance and operating of the power transmission lines, distributing devises, substations and other constructions and equipment used for transmission and distribution of the power energy. The information about expenses is sent to the Financial Accounting and Reporting Department every month. The power transmission expenses are taken on discount by the Branches (the places they appeared) according to the items of expenses and cost elements. The following items of expenses are set according to the type of activity “power transmission and distribution services”: - Main direct labor cost; - Additional direct labor cost; - Uniform Social Tax from the direct labor cost from it: RF pension contribution - Depreciation of operating equipment; - Maintains and operation of equipment costs including: - repair of equipment costs; - servicing costs; - Preproduction and start-up costs (set-up expenses); - Shop costs; including: - repair costs; - servicing costs; - other costs; - Power energy bought to compensate the losses in grids; - JSC “FGC UES” services; - Power energy commercial accounting operators’ services; - Services of cooperating grid enterprises; - General business expenses; including: - repair costs; - taxes (excluding Uniform Social Tax ) - other costs; The following items of expenses are set according to the type of activity “Repair and operation service” and “Technological connection”: - Main direct labor cost; - Additional direct labor cost; - Uniform Social Tax from the direct labor cost from it: RF pension contribution - Depreciation of operating equipment; - Maintains and operation of equipment costs including: - repair of equipment costs; - servicing costs; - Preproduction and start-up costs (set-up expenses); - Shop costs; including: - repair costs; - servicing costs; - other costs; - Power energy bought to compensate the losses in grids; - JSC “FGC UES” services; - Power energy commercial accounting operators’ services; - Services of cooperating grid enterprises; - General business expenses; including: - repair costs; - taxes (excluding Uniform Social Tax ) - other costs; Power energy transmission process has no incomplete production. The total sum of expenses for carrying out of these activities is acknowledged as expenses. The ordinary costs are being accumulated on the “Primary production”, “Auxiliary production” and “General production expenses” accounts. The direct expenses connected to the power transmission and transit expenses, indirect expenses connected to the primary production service and auxiliary production expenses are accumulated on the “Primary production” account. Auxiliary production expenses are charged off the “Auxiliary production” to the “Primary production” account. Indirect costs connected to the services to production are charged off the “General production” to the “General expenses of production” account. The expenses connected to the supportive process in relation to the main technological process of the power transmission are accumulated on the “Auxiliary production” account. The supportive process are repair yards, transport and mechanization department. Direct expenses (materials, repair parts, direct labor cost, third party organizations’ services and etc.), directly connected with the production of goods, performance of work and service reflected in sub-account “Direct expenses of the auxiliary productions” of the “Productions» account. Burden costs connected to the management and services to productions: the staff maintenance expenses, apart for the production staff, the upkeep of buildings, constructions, equipment, amortization of fixed assets, job safety expenses and etc. are accumulated on the sub- account “Indirect expenses of the auxiliary productions” of the “Auxiliary productions” account without accumulation on the “General production expenses” account. Distribution of the burden costs of the auxiliary productions is made between the types of usage (for the primary production, general production costs, general business expenses and etc.) according to the procedure in the “calculation of expenditures and price costs of works and services” standard. Auxiliary productions expenses are included to the prime cost of the products (works, services) which were produced using the products (works, services) of the before-mentioned organization departments. The distributed production value, works and services of the auxiliary production is included to the primary production, general production costs, and general business expenses. “General production expenses” account is used to record the information of the management and service of the primary production departments’ expenses. The general production costs information is accumulated according to the cost items. At the end of financial period production costs of every branch are distributed and written off to the prime cost of the works (services) fulfilled by the branches on the expenditures sides: “Power transmission services prime cost”, “Technological connection services prime cost”, “Repair and operation services of the external agencies grids”, “Prime cost of building and installation works for the external agencies”, “Other industrial services”. The distribution is made according to the elements of cost. Direct salary costs for this or other business activities are accepted as the ground of production expenses distribution (excluding property costs) of the structural subdivisions of the primary production. The property costs are charged depending on the distribution of the fixes assets they are connected to. “General business expenses” account is used for management expenses accounting. It provides the functioning of the Company as the integral business entity. Management expenses are not directly connected to the performance of business functions in the branches on the primary and auxiliary productions. The general production costs information is accumulated according to the cost items. The expenses for the other works, services are taken on discount by the accounts departments of the branches (places they appeared) by the elements of costs. At the end of financial period the information about the production expenses is delivered to the accounts department administration. The other income is the income from the independent business activity which is not the objects of activity and performed with the aim to acquire the income. These are: company assets sale (apart of money, productions and goods.): basic assets realization income; materials and recourses realization income; other assets realization income; independent contracts income; third party organizations authorized capital income; joint-cooperation income; interests; other income. The output distribution and other property income are acknowledged when the ownership right of this property is transferred to the customer. The point when the ownership right of the property is transferred is determined according to the terms of the contracts. Generally the property right is transferred from the seller to the customer when the goods ware shipped (except as otherwise provided herein). Other expenses are: Expenses related to commercialization; Profitable property mortality expenses (exchange, realization, transfer as the contribution to the charter capital); Expenses on the fulfillment of commutative agreements which do not fall into the category of transactions on ordinary activities; Such expenses may be both nonrecurring (depreciable value of retiring depreciable assets, cost of materials, etc.) and recurring (payment of direct taxes on property, etc.); Expenses which are a result of purposive actions (transactions) defined by operational or economic need but not accompanied by corresponding expenditures as recurrent (expenses on deactivation of assets, payment of interests on credits and borrowings) and nonrecurring (connected with participation in the company assets of other companies, deprecation of production orders, forming of assessed reserves, etc.); Expenses which are a spin-off of economic transactions concerning which there were no actions undertaken specially for their fulfillment (currency differences); Expenses revealed in the case when the undertaken actions lead to an unexpected or even opposite result – loss (paid fines, penalty fees, forfeits, deactivated uncollectible receivables); Beneficent and social expenses; In the process of taking into account unexpected balances the corresponding amount is numbered on account of incomes in the assessment of commercial value of excess stock; In the process of debiting of shortage of assets in excess of planned rate of normal wastages under the condition that guilty persons are not defined or a court does not lay damage at these persons the corresponding amount is joint to the account of expenses in the assessment on the actual cost of shortage of assets. The cost of excess stock is the cost of the similar property purchased last time taking into account the observed depreciation of the objects revealed as the surplus. If the similar property was not purchased the cost of surplus is determined by the inventory commission and approved by Director of the Company. The rates of natural loss for accounting purpose are approved by the Company order or the authorized persons within the indexes established by the normative documents of the Federal executive body. Other incomes of the Company are those which appear as consequences of emergencies of economic actions (act of God, fire, accident, nationalization, etc.): insurance money; cover of loss from extraordinary events (fires, accidents, etc.); salvage value of useless property; other extraordinary expenses. Consisting of other expenses the Company reflects expenses which are a result of emergencies of economic actions (act of God, earthquakes, floods, fires, accidents, nationalizations of property, etc.) for example: payment for damages caused to the environment, debiting of depreciable cost of lost or inadequate for reconstruction objects of major assets, cost of lost or spoilt materials and goods, etc. In the accounting expenses connected with emergencies are reflected on the account 91 “Other incomes and expenses”. To the incomes of the coming periods are referred the incomes on uncompensated receipts of assets, coming incomes of debts on shortages revealed for the previous years, difference between amounts which are to be called out of guilty persons and net assets values on the shortages of assets, surplus balances which were not used in the accounting period of the means of special-purpose financing (including taken from the budget), etc. Calculation of the income of the coming periods is made taking into account the following: main assets received free of charge; other main assets received free of charge coming incomes of debts on shortage, revealed during the previous years; difference between the amount to be taken from guilty persons and net assets value on shortage of assets; other incomes of the coming periods. Income of the coming periods of the assets received free of charge is attached to the other expenses account proportionally to the cost of the assets received free of charge acknowledged as expenses: on the main assets – proportionally to the charged amortization, on the working assets – at a time, at the moment of debiting on expenses of the cost of materials or debiting on the account of the calculation of sales of goods cost. In case fixed assets are transferred from the balance on different grounds before the due date of their full amortization the parts of the incomes of future periods which were not debited are considered to be other expenses at the moment of debiting of objects of main assets. The cost of the donated fixed assets without the depreciation is not acknowledged as the income of future periods. When such objects are included for accounting purpose the records of financial account is reflected as the investments in the non-current assets (“Investments in non- current assets”) and the acknowledged as other income (“Other revenues and expenses”). If the constructions in progress objects are acquired free of charge the written off of the income of the future periods to the accounts of other income (“Other revenues and expenses”) begins simultaneously with the depreciation of these objects, i.e. after they will be finished, put into the operation and taken on discount as the fixed assets. If these objects will not be finished the income of the future periods are acknowledged as the other income when the construction in progress objects are transferred on any reason. Company acknowledges the effected payments and (or) the transfer of any property as the income of future periods if these payments and (or) property transfer is made in the unconditional procedure. If monetary assets and (or) property can be returned to the Company in case of refuse from the consumption of works and services paid by these monetary or non-monetary assets than the accounts receivable are acknowledged in the accounting instead of future periods expenses. If the volume of the returned monetary and non-monetary assets can be reduced in accordance with the contract than the amount of difference between the paid (transferred) and returned assets is viewed by the Company as the penalties for repudiation of the contract (other expenses) (account “other revenues and expenses”) . If transfer of the monetary assets and (or) the other property is made in unconditional procedure but Company refused to consume the works and services paid by these monetary and nonmonetary assets or is sure that these works and services will not be consumed on other reasons than the early acknowledged expenses of the future periods are fully acknowledged as the losses (other expenses) when the decision not to consume the works and services is made account “Other revenues and expenses”). The future periods expenses are acknowledged are the current expenses when the expenses brought the corresponding income. The future periods’ expenses are attached to the account of the current expenses proportionally to the expired period. The onetime payments for purchasing of the licenses and programs are acknowledged as the future periods’ expenses. Periodical payments is made in accordance with the contracts and connected to the usage on licenses and programs are included in the current expenses (in case of monthly payments) or separated as the independent accounting entity of the future periods’ expenses (in case of payments for the period over month – quarter, year, etc.). The period of writing off of the future period’s expenses is determined by Director on the grounds of the expert report or the other document. The future periods’ expenses are written off equally during the year they are related to. Classification of income (expense) is made on the basis of the conditions of the individual contract or the term of the asset usage (repayment liabilities). The assets and liabilities are reflected as short-term if the period of their circulation (repayment) is within 12 months after the reporting date. The long-term expenses (income) are acknowledged as short-term when the term of repayment (charging) is less than 12 months for every reporting date. The currency difference is the difference between the ruble valuation of the corresponding asset and liability in the foreign currency if the rate of currency exchange of Central Bank of the Russian Federation at the date of payment or the reporting date of accounts for the financial period and the valuation of these asset and liability in rubles counted at the rate of currency exchange of Central Bank of the Russian Federation at the date they were included for the accounting purpose in the financial period or reporting date of accounts for the previous financial period. The currency difference takes place: - In case of full or partial collection of receivables and satisfaction of accounts payable in the foreign currency if the rate of currency exchange of Central Bank of the Russian Federation at the date of payment differed from the rate of currency exchange at the date the of accounts receivable and payable were taken on discount during the financial period or from the rate of currency exchange at the accounts date for the reporting period in which the accounts receivable and payable was re-counted last time; - Converting of assets and liabilities cost in the foreign currency; - Currency units in the Company’s cash account; - Facilities on the accounts of the credit companies; - Monetary and payment documents; - Short-term forex securities (the cost of long-term forex securities is not revalued); - Float (excluding the loan obligations payments) with the legal and physical bodies (including the reporting persons); - The fund balance of the target financing received from the budget or the other foreign sources as technical or another help provided by Russian Federation in accordance with the signed agreements (contracts). The currency difference is to be added to the financial results as the other income or expenses except the case when the currency difference connected to the authorized capital stock formation (increase) is to be charged to the capital surplus. Debt is recognized as doubtful (including uncoordinated) when it is accounts receivable which is not paid within the terms defined by the agreement and is not accepted by the corresponding guarantorship (deposit, security, guarantee of payment, collateral acceptance, etc.). Company creates a reserve on doubtful debts on the results of the made up inventory of the account receivable (quarterly). The amount of the reserve is defined separately on each doubtful debt depending on the financial state (paying capacity) of the debtor and estimation of ability of paying back of debts fully or partially. The account 63 “Reserves on doubtful debts” is used for calculation of the reserve of doubtful debts. Forming of the reserves of doubtful debts (including calculation of charge, usage and debiting of unused part of the reserve) is made according to the place of debt accounting for reservation In the process of disposal (paying) of accounts receivable the corresponding amount from the reserve is made. Debiting of the amount of the reserve is recognized as other expenses; As the doubtful debts which has the reserve is acknowledged as hopeless the sum of this debt is written off from the balance-sheet for the decrease of reserve (record about the decrease of balance of the account “Reserves on doubtful debts” and the corresponding decrease of accounts receivable) . If during the financial year the accounts receivable with no reserve are acknowledged as the hopeless debt the reserve of doubtful debts is not added and the sum of hopeless debt is qualified as the other expenses (account “Other revenues and expenses”). If the sum of hopeless debt is over the sum of reserve of hopeless debts of these accounts receivable the reserve is not added and the excess amount is reflected as the other expenses. If at the end of the financial year following the year the reserve for the doubtful debts was made this reserve is not used in any part than the unspent sums are added at the end of the financial year to the income as the other income. The writing off to the loss as the result of insolvency of debtor is not equal to the debt forgiveness. This debt should be reflected in the accounting balance-sheet during five years from the moment it was written off to observe the opportunity to recover the debt in case the property status of debtor changed. The payment with the independent subdivisions separated to the individual balance-sheet is made on the account “ Intra-organizational settlements” by analytic grouping. The data collation about the intra-organizational settlements reflected in the accounting record is made monthly between the Accounting and Reporting Departments of the Branches and Accounting and Reporting Department of the Company. The data agreed in such a way later is compared with the figures of the intra-organizational settlements reflected in the accounting. The recording made on the grounds of the results of business activities taken on discount in the forms of the accounting reporting of the branches, monthly, quarterly and annually are presented to the accounting and reporting department in the terms set for delivering of the accounting reporting. The Chief Accountants of the Branch bears the responsibility for the reliability of presented reporting. All types of intra-organizational settlements between branches are made through the Department of Financial Accounting and Reporting. 159. As financial investments are recognized assets without a tangible form which are able to carry economic benefits (income) in future in the form of interest, dividend or increase of their value (in the form of a difference between the selling price (redemption) and the purchase price) in the result of their exchange, usage in the process of redemption, increase of their market value. To the financial investments are referred: securities (state, municipal, securities of other organizations, including obligations and bills of exchange); contributions to charter (share) capitals of other organizations (including branch organizations and affiliates); deposits under simple partnership contracts (cooperation); deposits in credit organizations; accounts receivable, acquired on the basis of assignment of receivables, etc. 160. Bills of exchange issued to buyers of goods, works or services of enterprises which the issuer passes to the Company as a settle for these goods, works or services are not recognized as financial investments and are reflected in the reporting and accounting as accounts receivable of buyers and customers secured by the received bills of exchange. 161. Financial investments are divided into individually defined and indefinable. As individually defined are recognized investments the unit of which has own identifying feature: a series and number of a security, details of the organization to the charter capital of which contributions were made by the Company, details of contracts of a simple partnership, a loan, a deposit, acquisition of a right of receivables, etc. As indefinable investments are recognized those the unit of which has not individual but stem identifying features – details of issue of uncertified shares, etc. 162. The units of financial investments are: for individually defined financial investments – a separate contribution (a security, a contribution to the charter capital of a separate organization, a separate contract of a simple partnership, a loan or a deposit confirmed by a separate contract, assignment of receivables, received by a separate contract, etc.); for individually indefinable financial investments – a block of securities. The block of securities is defined as a complex of securities of one issue (and, consequently, of the same emitter, type, circulation period, nominal value, etc.) received in the result of one transaction. 163. Analytical account of financial investments is made with a breakdown into short- range and long-range financial investments. To long-range financial investments are referred those which are made with the intention to get incomes within a period of more than one year. Other financial investments are recognized as short-range. 164. In the accounting reports financial investments should be reflected with a division into long-range and short-range depending on the circulation period (redemption). When there are 365 days left before redemption of securities or repayment of loans given by the enterprise the transfer of long-range financial investments into short-range ones is made. 165. For the purpose of the further estimation financial investments are divided into two groups: financial investments by which the current market value is defined; financial investments by which the current market value is not defined. Financial investments into securities circulating on the stock market (stock exchange, auction) which quotation is regularly published are referred to financial investments by which the current market value may be defined. Others are referred to financial investments by which the current market value is not defined. Financial investments by which the current market value may be defined in the stated order are reflected in the reporting at the end of the reporting year with the current market value by correction of their estimated value on the previous reporting date. The correction mentioned is made quarterly. The difference between financial investments estimation on the current market value on the reporting date and the previous estimation of financial investments is recognized as other incomes and expenditures. Consequently the increase of the market value of investments is reflected on the debit side of the account “Financial Investments” and the credit side of the account “Other Incomes and Expenditures”, decrease – on the debit side of the account “Other Incomes and Expenditures” and the credit of the account “Financial Investments”. In case the current market value on the reporting date of the subject of financial investments which has been estimated on the current market value is not defined, such subject of financial investments is reflected in the reporting on the value of its last estimation. 166. Financial investments on which the current market value is not defined are reflected in accounting on its primary value. 167. When assets which are reflected in the reporting as financial investments and on which the current market value is defined retire their value is defined on the basis of the previous estimation. When assets on which the current market value is defined retire their value is defined as follows: contributions to charter capitals of other organizations (excluding stock company securities), loans given to other organizations, deposits in other organizations, accounts receivable, acquired on the basis of assignment of receivables are estimated on the primary value of every mentioned retired units of financial investments; securities (stocks, obligations) if retired are estimated on the average value which is defined on each type of securities; purchase bills of exchange if retired (when paying for the work done (goods, works, services)) are estimated on the prime cost of the unit; other financial investments – on the initial prime cost of each unit retired. 168. Incomes on financial investments are recognized as other credits (other incomes). 169. Expenditure connected with extending loan to other organizations, servicing financial investments, payment of bank services and/or a depository for saving financial investments, providing securities account statement, etc.) are recognized as other expenditures. 170. A contribute to a simple partnership is recognized in reporting as financial investments. The property deposited on the account on the contract of cooperation (the contract of a simple partnership) is included by the partner organization to the number of financial investments on the book value to the date coming of the contract into effect. 171. Confirmation of the fact of receipt of the property deposit for the partner organization is the notification (payment advice note) about acceptance of the property for accounting by the partner running common business or a primary accounting document of receipt of the property ( a transfer and acceptance act, invoice, payment documents, etc.). 173. When forming a financial result every partner organization includes to the number of other incomes and expenditures its share of incomes and expenditures which are to be paid out in the result of cooperation. 174. Property receivable by each partner organization in the result of division in compliance with art.1050 of the Civil Code of the Russian Federation after termination of cooperation is reflected as redemption of contributions accounted within financial investments. If there is a difference between the cost estimate of the contribution accounted within financial investments and the value of the assets received after termination of cooperation it if included into other incomes and expenditures when forming a financial result. Assets received by a partner organization after termination of cooperation are accounted in estimation which is registered on a separate balance to the date of making a resolution on termination of cooperation. 175. Owner capital includes: charter capital: reserve capital; additional capital; net (unshared) profit; other reserves. 176. The Company does not decrease the amount of the charter capital reflected in its reporting on the amount of the capital unpaid: the charter capital and the actual debt of founders on contributions into the charter capital are reflected in the accounting report separately. 177. All changes of the amount of the charter capital (including redeployment of the additional capital to increase of the charter capital) are reflected in the reporting of the company only after making corresponding changes into its articles of association. 178. Company forms the surplus reserve from its income on the grounds of Documents of Association and Reclusion of the founders (shareholders) of the Company. The aim of surplus reserve is to cover the possible losses and redeem the stock if Company has no other funds. 179. The Companies’ added capital consists of the property increase in value resulted from its revaluation and share premium reserve. The added capital is spent separately. The sums of revaluation surplus are used to mark down the property assets which early fall under the increase in value but only within the sums accumulated for every inventory object. When the objects were written off from the accounting (on different grounds) the sums of accumulated increase in value for it are written off from the account of non-distributed income. The emission income is used according to the Resolution of Shareholders (at the end of the year) as the recourse to cover the supposed losses resulting from the Company activity. 180. Non-distributed income is spent by the Company for the following aims: To mark-down the price of non-current assets over the amount of the added capital (the accumulated increase in value of this inventory object); The aims stated by the founders (shareholders) of the Company including the dividends payment, finance support of production development and other similar activities devoted to purchase (make) the new equipment, etc. The authorized managers can make the decision to reflect (account) the other income of the Company within the limits approved by the budget if the is no means laid out from the pure income (funds) for the social expenses. 181. The Company admits debts as liabilities which are the result of the activity or inactivity towards the other person (creditor) and connected to the demands to deliver the monetary funds, property, perform the works or services, another action for the benefit of this person (creditor) originated under the contract, law, another legal norms or tradition of business practice. The liabilities are divided into: Debt to suppliers of goods, works, services; Taxes liabilities and debt to extra-budgetary funds; Wages payable to the employees; Debt to customers for advances received; Loan (credits and borrowings) indebtedness; Other indebtedness. 182. The accounts payable to suppliers of goods, works and services are taken on discount at equal to the sum of accounts accepted for payment and the amount of accrued liabilities according to the accounting documents. 183. The accounts payable for unbilled supplies are taken on account equal to the sum of received values calculated taking into account the prices and conditions provided by the contracts. 184. Company acknowledges the loan indebtedness (borrowings and credits) as the separate type of liabilities taken on discount on the independent accounts. The loan and credits indebtedness in divided into: Long-term and short-term: Short-term indebtedness is the loan and credits indebtedness with the pay back within 12 months according to the contract. Long-term indebtedness is the loan and credits indebtedness with the pay back over 12 months according to the contract; Future and past-due indebtedness: Future indebtedness is loan and credits indebtedness the with the future or extended (prolonged) pay back in the articles of association order according to the contract; Past-due indebtedness is the loan and credits indebtedness with the expired pay back according to the contract. If the Company concludes the additional agreement to the contract the short-term indebtedness will be turned to the long-term. 185. Until the expiration time the Company takes on discount the borrowing costs at its disposal with the pay back over 12 months according to the loan or credit contact within the long-term indebtedness. 186. Loan and credits indebtedness is valued taking into account the interests payable at the end of financial period according to the contract. 187. The expenses connected to the obtaining of loans or credits (interests on loans and credits, per cents, bills of exchange and obligations discount, additional expenses connected to the loans and credits, and current differences of payable loans and credits interests) are acknowledged as other expenses of the corresponding financial period. The exception is the expenses for the loans and credits which are to be included in the cost of investment assets or the cost of other property. 188. Loans and credits expenses attracted to purchase the fixed and nonmaterial assets which could not be acknowledged as the investment assets are reflected in the general expenses. 189. The additional loans and credits expenses are: Sum payable for informational and consulting services; Sums payable for the contract examination (credit contract); Other expenses directly connected to loans (credits) obtaining; If the additional expenses within the expenses connected to obtaining and usage on loans and credits are not resulted in the increase the investment asset than these additional expenses are included in the other costs in the financial period when they were made (without preliminary accounting as the accounts receivable and equal writing off as the other expenses during the pay-back period of loan liabilities). The accounts payable in case of increase of the borrowed funds by issuing of the Company own bill are formed in the following way: Company attracts the borrowed funds by issuing of its own interest-bearing note which provides the calculation of interests in the sum of really received means that equal to the sum of bill of exchange. 190. When the bill of exchange (obligations) is issued to obtain the loan in monetary means the interests or discount payable to the bill of exchange holder are included in the other expenses .These expenses are acknowledged when they are charged. The interests payable for the expired month are charged in the last working day of every month. These expenses are viewed as the expenses of future periods. 191. Other discount expenses and bills of exchange interests are acknowledged at the moment they are charged. Company does not consider these expenses as the expenses of the future periods. The sum of discount payable is included in the other expenses when the bill of exchange is given to the remittee (first bill of exchange holder). The interests payable for the expired month are charged in the last working day of every month. 192. The generation of information about the tax on income calculation in the accounting and order of its disclosure in the accounting reporting is set by Accounting Regulations 18/02 “The accounting of tax on income calculation”. The amount of current tax on income is calculated on the grounds of the accounting reporting information. At the same time the amount of current tax on income should correspond to the sum of calculated tax on income reflected in the tax return of the tax on income. The difference between the accounting income (loss) and taxable income (loss) of the financial period formed as the result of usage of different rules of income and expenses recognition which were set in the accounting regulations and in the Russian Federation Tax and Revenues legislation consists of permanent and temporary differences. 193. Permanent difference (PD) – is the income and expenses forming the accounting income (loss) of the financial period and excluded from the calculation of the tax base of both the financial and future periods. The PD leads to formation of the permanent tax liability (PTL) which is the product of the permanent difference appeared in the financial period by the income tax rate. The following permanent differences are accepted for generation of the accounting and taxable income: Labour payment expenses incurred above the expenses restricted by the RF Tax Code (article 225) and the expenses which are not taken into discount for the purpose of taxation in accordance with the article 270 of RF Tax Code; Voluntary insurance expenses incurred above the expenses restricted by the articles 255 and 263 of the RF Tax Code. Non-government pension provision expenses incurred above the expenses restricted by the articles 255 of the RF Tax Code. Interests on debenture paid above the acknowledged interests for the purpose of taxation (article 269 of the RF Tax Code). The limiting value of interests acknowledged as the expenses is accepted as the equal to refinancing rate of Central Bank of Russian Federation increased by 1,1 if liabilities are issued in rubles, and equal to 15 per cents – if liabilities are issued in foreign currency. The expenses connected to transfer of property (goods, works, services)without compensation equal to the cost of property and expenses connected to their transfer (paragraph 16 article 270 of the RF Tax Code). Hospitality expenses made above the expenses restricted by the article 264 of the RF Tax Code; Advertising expenses incurred above the expenses restricted by the article 264 of the RF Tax Code. The usage of different order of income acknowledgement from receiving of the property without compensation for the accounting purpose and taxation (subparagraph 1 paragraph 4 article 271 of RF Tax Code); to the charter capital of the other company and the cost of this property reflected in Income (loss) connected to the difference between the property assessed value when it was included the accounting balance-sheet of the transmitting party (paragraph 1 article 277 of the RF Tax Code); Income in the form of the accounts receivable from the budgets of different levels written off or reduces in accordance to the RF legislation (subparagraph 21 paragraph 1 article 251 of the RF Tax Code); Other expenses connected to the production and purchasing, other expenses incurred above the norms restricted by the chapter 25 of the RF Tax Code. The information to reflect in the accounting reporting of the permanent differences is formed on the grounds on the basic documents and tax legers. 194. The temporary differences - are the income and expenses forming the accounting income (loss) in the one financial period and the taxation base of the tax on income– in the other or the others tax periods. Temporary periods depending on the character of their influence on the tax on income are divided into: Deductible temporary differences (DTD); Taxable temporary differences (TTD). 195. The deductible temporary differences (DTD) led to the deferred income tax formation (deferred tax asset - DTA) which should reduce the sum of tax on income payable in the budget of the future financial periods. The following deductible temporary differences are accepted for the purpose of accounting and tax income formation: The usage of different rules of acknowledgement of the fixed assets remaining book value in case of purchasing of the fixed assets (paragraph 3 article 268 of the RF Tax Code). an overpaid income tax the sum of which is not returned but accepted for account when forming of the taxable income in the following after the reporting period or in other reporting periods; the loss transferred for the future which was not used for decrease of the income tax in the reporting period but which will be accepted for taxation in other reporting periods; other similar differences. Information for reflecting in the accounting of deductible temporary differences is formed on the basis of supporting primary documentation and tax ledgers. 196. Taxable temporary differences (TTD) lead to formation of a deferred income tax (deferred tax liability – DTL) which is to increase the amount of the income tax payable to the budget in the following reporting periods. For the purposes of forming of accounting and tax income the following deductible temporary differences are accepted: the difference formed during buildup of the value of main assets for accounting and tax reporting (currency differences, registration of property and other expenditures which are not take into account when forming of the value of amortizable assets for taxation); usage of different orders of recognition in accounting and tax reporting on special clothes, operating life of which is more than 12 months according to allowance. Information for reflecting of deductible temporary differences in the accounting reporting is formed on the basis of supporting primary documentation and tax ledgers. 197. Initial information for the purpose of buildup of data with a breakdown of reportable segments the information is accepted on geographical segments as the main risks and incomes are connected with the activity in geographical regions. Secondary information is connected with operational segments. 198. To the number of geographical segments are included: -Saratov region (segment A); -Samara region (segment B); -Ulyanovsk region (segment C); -Orenburg region (D); -Penza region (F); -Republic of Mordovia (M); -Chuvash Republic (H); Operational segments: -services on transfer and electric energy distribution; -services on operation of subjects of the Unified National Grid System; -services on technologic attachment of power receivers to network systems; -demise; -repair of devices (electrical indicators; -other works (services), products, goods. 199. Profit (incomes) of the segments is formed in the result of operations with external customers. 200. Income on the segment is defined as a difference between the profit (income) on the segment reflected in the report on incomes and expenditures. 201. Expenditures on the income tax and other similar compulsory payments, due interest and interest receivable, interest on participating in other organizations and other incomes and expenditures are not included to the calculation of profit (expenditure) of the segment. 202. Assets of the segment include: main assets, intangible assets, inventories, accounts receivable, cash assets and other assets. To the compulsory assets are referred: short-range liabilities, excluding obligations to the budget on the income tax and debt and loan obligations received for financing of the Company’s activity on general. 203. Expenditures on scientific and research, design and experimental and technologic works are to be attributed to expenditures on ordinary activities from the first day of the month following the month in which the actual use in the production of outputs of the results received from the fulfillment of the works mentioned was started (fulfillment of works, rendering a service) or for management needs of the organization. The amount of expenditures on each separate work is taken as an accounting unit and an inventory item. 204. Write-off of expenses on every fulfilled scientific and research, design and experimental work is stated by a specially created committee on the assumption of the expected service of the received results of scientific and research, design and experimental work within which the receipt of the economic profit (income) is expected, but no more than 3 years. 206. While reorganization in the form of merger, takeover and transformation providing conversion of stocks of the organization reorganized into the stocks of the organizations created or organizations to which the merge is fulfilled, value of the stocks received by the shareholders of the organization reorganized, created organizations or an organization to which the merge is fulfilled is equal to the value of the converted stocks of the reorganized organization according to the data from of the tax accounting by the date of fulfillment of reorganization (by the date of making an entry in the Unified State Register of Legal Entities on termination of activity of each merged legal entity – if reorganized in the form of merger). 207. Account 97 “Expenditures of Future Periods” is kept in the part of: -mastery of new production; -expenditures on purchasing a license; -expenditures on purchasing software for PC the right of property for which does go to IDGC of Volga, JSC; -expenditures on vacation pay of future periods; -expenditures on compulsory and voluntary insurance; -quality certificates; -expenditures on inspection checkup; -other similar expenditures. Write-off to expenditures (or relevant sources) is performed evenly within the period which they refer to. 208. Expenditures on subscription for a periodical are accounted before the moment of receipt of the periodicals as issued subsists. 209. Vacation and award reserve by results of work for the year are not formed. Expenditures on vacations and awards by results of work for the year are reflected in reporting in the amount of actual accruals in the period of accruals. 210. The event after the reporting date is recognized the economic event which has influenced or may influence financial state, cash flows or results of the company’s activity and happened between the reporting date and the date of signing of the accounting reporting for the reporting year. The event after the reporting date is announcement of annual dividends in the stated order by the results for the reporting year. Consequences of the events after the reporting date are revealed in the schedule. 211. The company reflects in the accounting report after the reporting date events which has influenced or will influence financial state, cash flows or the results of the company’s activity which took place in the period before the reporting date and the date of signing of the accounting reporting for the reporting period. 212. The event after the reporting date is reflected in the accounting reporting by ascertaining data about relevant assets, obligations, capital, incomes and expenditures of the Company with disclosure of information in the schedule. 213. For estimation in the monetary value after the reporting period ids the calculation and documenting of the calculation. The calculation is made by the service to which the event refers in compliance with the functions fulfilled. 214. Information about related parties and transactions with the parties is disclosed in the schedule to the annual report. Information is provided by the non-financial capital department in the written form for buildup of the schedule within the period no later than February 20 of the year following the reporting one. To the related parties are referred: 1. Affiliated people 2. Key management personnel: -Director General; -First Deputy Director General; -Deputy Director General on Technical Questions – Principal Engineer; -Deputy Director General on Economics and Finance; -Deputy Director General on Corporate Management; -Deputy Director General on Capital Development; -Deputy Director General on Development and Services Realization; -Deputy Director General – Branch Director 215. Materiality guideline: more than 5% of the value of property (obligations) of the corresponding balance sheet line; more than 5% of the sales revenue for forms No.2 “Report on Incomes and Expenditures” or the corresponding balance sheet line No.2. In the accounting reporting are reflected contingencies concerning consequences and possibility of appearance of which there is uncertainty. 217. To the contingencies are referred: -abortive trials for the reporting date; -abortive disagreements with taxing authorities on payments to the budget; -warranties and other types of securing of obligations issued in the favor of third parties the deadline for the fulfillment of which has not matured; -discounted bill of exchange the deadline for repayment of which has not matured; -other similar facts. 218. Contingent losses are reflected through allowance of future expenditures in synthetic and analytical accounting as a final roll before affirmation of the annual accounting report. 219. Calculation of the income (expenditure) is fulfilled in compliance with recommendations enunciated in the Statute on accounting reporting “Contingencies of Economic Operations” (PBU 8/01). The calculation is made by the department which the economic event in compliance with the functions fulfilled refers to.
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