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Investment support in the new spanish accounting regulation

From 1st January 2008, the New Chart of Accounts in Spain has  come into effect. Like the previous one, it is made up of  five parts: “Marco Conceptual” (Concept Frame) “Registration and  Valuation Regulations”; “Yearly Accounts”; “Chart of Accounts” and “Definitions and Posting Relationship”.                                      
Using the standard tools you can make the necessary changes to adapt  the new plan referring to the Conceptual Frame,  Registration and Valuation Regulations and Definitions and Posting  Relationship. 

To do this, you need to carry out the appropriate changes in the  settings (new types of assets, changes of the account determination due to differences of foreign currencies that have not been carried out, account master data creation for the closing of income accounts and  different expenses on account of the 129, etc.), the creation of new  accounts and the blocking of others, re-classification of fixed assets and the corresponding transfers, manual balance carry forward for those accounts which disappear in the new General Plan  (Provision for  big repairs, First Establishment expenses, Setting up expenses, Deferred Expenses and incomes  etc.).                                                    
One of the accounting processes in which this new regulation has impacted is the treatment of the investment support. The scope of this blog is not to provide and explanation on how to manage investment support in general but the changes to be done  to adapt existing investment support to the new Spanish regulation.

Basically the differences can be synthesized as follows:

  • PGC 90

Investment support and depreciation of the investment posts in same account (130)

  • PGC 07

Investment support and depreciation of investment support are allocated to the shareholder’s equity (patrimino neto) by posting trough accounts of the group 8 and  9.

This new accounting logic will request the creation  of new accounts and the modification of the existing account determination.

The new accounts to be created will be:

(940…. Ingresos de subvenciones oficiales de capital)
(840…. Transferencias de subvenciones oficiales de capital)

This accounts must be created as balance sheet reconciliation accounts and set in the relevant account determination

Spec.reserves acct (inv.supp. on liab.)    94*                           
Val.adj.acct – inv.supp. write-off         84 *    



Asset with APC 5.000 EUR and Useful life = 10 years
An investment support is granted for 3.000 EUR
1.-The investment support is granted (Trx. ABIF).

2.- The investment  support is recognized as income for the amount corresponding to the year when executing the depreciation program (Trx. AFAB)

3.- Subsequently a manual reclassification of accounts  94* 84*              
into account 13* is necessary.   

If this requires too much manual activity, this can be avoided           
by creating your own program which reads the balances of the             
accounts 94* 84* at the end of the year and post the transfer            
by calling transaction ABF1.    

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