International Accounting

Problems of applying valuation reserves in the systems of Russian and international standards

Vol. 20, Iss. 20, OCTOBER 2017

Received: 12 July 2017

Received in revised form: 3 September 2017

Accepted: 5 October 2017

Available online: 27 October 2017


JEL Classification: M41

Pages: 1164–1182

Druzhilovskaya T.Yu. National Research Lobachevsky State University of Nizhny Novgorod, Nizhny Novgorod, Russian Federation

Subject The article considers problems associated with the use of valuation reserves in RAS and IFRS.
Objectives The purpose of the study is to develop recommendations to address problems associated with the use of valuation reserves in accounting.
Methods The methodology of the study includes the critical analysis of modern regulation of issues related to the use of valuation reserves in accounting.
Results I present the analysis results of the use of valuation reserves to account for impairment of inventory, receivables, and financial investments in the system of Russian Accounting Standards; substantiate the shortcomings of methods of using the provision for tangible asset impairment to account for impairment of inventory. The paper gives reasons for insufficiency of regulations on application of provisions for doubtful debts and for impairment of financial investments, presents results of comparing the methods of accounting for impairment of inventory and financial assets under RAS and IFRS, offers proposals to improve the accounting treatment of impairment of inventories, receivables, and financial investments in RAS.
Conclusions The economic substance of valuation reserves is not consistent with the meaning of the word ‘reserve’ in the Russian language. It is advisable to review a number of regulations on the application of valuation reserves in system of statutory regulation.

Keywords: reserve, impairment, inventory, account receivable, financial investment


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