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
- 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 *
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EXAMPLE
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).
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2.- The investment support is recognized as income for the amount corresponding to the year when executing the depreciation program (Trx. AFAB)
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3.- Subsequently a manual reclassification of accounts 94* 84*
into account 13* is necessary.
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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.
