Account 21 “Semi-finished products of own production” is widely used in industrial organizations to collect information about the availability and movement of manufactured inventories necessary for the production of the final product.

It is used to display inter-branch movements of workpieces between workshops of industrial holdings or companies that carry out separate display of semi-finished products.

Account 21 “Semi-finished products of own production” in accounting is a summary of information on the receipt, availability and further movement of inventories manufactured for subsequent processing during production activities.

Semi-finished products of own production include blanks obtained during the technological process, but which have not passed all the required stages of the production cycle to produce the final product. In the future, they are subject to modification or assembly into finished products. For example, these may include industrial stocks: tomato paste, starch, vegetable purees, which will be used for the manufacture of finished products.

Account 21 is active, that is, the debit shows the receipt of semi-finished products, and the credit shows a decrease in the balance (for example, transfer to production).

The costs associated with the preparation of semi-finished products are reflected in the debit of the account. 21. Their sale to third parties, putting into production for subsequent processing is reflected on the loan in correspondence with the relevant accounts.

Most manufacturing organizations, when maintaining accounting records, display blanks, which are inventories, at actual cost. But initial accounting prices can be used with their further addition to the actual cost by including transport costs when moving workpieces between specialized workshops.

Quantitative analytical analysis of semi-finished products by quantity is carried out by financially responsible persons directly at storage sites and according to individual nomenclature characteristics (grade, size, type, etc.). In a production process in which the movement of products is carried out directly between workshops (without the use of a warehouse), monitoring the movements of semi-finished products is carried out by workers.

In large industrial concerns, the movement of inventories between specialized workshops allocated to a separate balance sheet is reflected in correspondence with account 79 “On-farm settlements”.

Attention! Organizations that do not carry out separate monitoring of the semi-finished products of their own production display the produced inventories in their accounting as part of work in progress according to the account. 20.

Normative base

The use of account 21 in accounting is carried out in accordance with the current Chart of Accounts, approved by Order of the Ministry of Finance dated October 31, 2000 No. 94, PBU 5/01 “Accounting for inventories” and other legally approved documents.

Basic business operations

1. Capitalization of semi-finished products

   Dt 21 Kr 20 - own production

   Dt 21 Kr 23 - auxiliary production

   Dt 21 Kr 79 - receipt of supplies for processing received from another production workshop within the holding.

   Dt 21 Kr 91.01 - surplus identified based on inventory results

2. Transfer of blanks for further processing

   Dt 20 Kr 21 - own production

   Dt 79 Kr 21 - transfer to another production workshop allocated to a separate balance sheet

3. Reflection in expenses

   Dt 25 Kr 21 - Overhead costs

   Dt 26 Kr 21 - general business expenses

   Dt 23 Kr 21 - costs of auxiliary production

4. Disposal

   Dt 28 Kr 21 - write-off of defective inventory

   Dt 94 Kr 21 - reflection of the shortage

   Dt 90.02 Kr 21 - write-off of cost when used in core activities

   Dt 91.02 Kr 21 - reflection of the cost of sold or disposed blanks

Victor Stepanov, 2016-12-21

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Reference materials on the topic

Materials can be released for the needs of main, auxiliary or service production.

When materials are released into production, a limit intake card is drawn up (Form No. M-8). The card is used if the organization has established a restriction (limit) on the release of materials from the warehouse.

If the organization has not established a restriction (limit) on the release of materials from the warehouse, then a demand invoice is drawn up (Form No. M-11).

For the cost of materials actually released into production, make an entry to the credit of account 10:

Debit 20 (23, 29) Credit 10

Materials were written off for the needs of the main (auxiliary, service) production.

Materials are written off for production using one of three methods:

• FIFO;
• at average cost;
• at the cost of each unit.

The procedure for writing off materials should be established by your accounting policy.

For each type of material, one assessment method is used for one year.

The FIFO method assumes that materials that arrived earlier than others are transferred to production first.

When writing off valuables using the average cost method, the accountant needs to determine the average cost per unit of materials.

To determine the cost of materials, which is subject to write-off, the average unit cost is multiplied by the total amount of written-off materials.

Example

The repair company Zenit LLC bought M-150 brick to carry out repair work. Bricks were bought in three lots of 10,000 pieces each.

25,000 bricks were written off for repair work.

The work was carried out in March.

Let's determine the cost of the brick, which the accountant should write off as the cost of repair work.

When using the FIFO method, the accountant must write off:

— 10,000 bricks from the first batch worth 35,000 rubles;

— 10,000 bricks from the second batch worth 36,667 rubles;

— 5000 bricks from the third batch worth:

RUB 39,167 x 5000 pcs.

: 10,000 pcs. = 19,584 rub.

The total cost of bricks to be written off will be:

35,000 + 36,667 + 19,584 = 91,251 rubles.

Debit 20 Credit 10

RUB 91,251 - the brick was written off for repair work.

AVERAGE COST

When using this method, the accountant needs to determine the average cost per unit of materials (one brick). It will be:

(35,000 rub. + 36,667 rub. + 39,167 rub.) : (10,000 pcs. + 10,000 pcs. + 10,000 pcs.) = 3.69 rub.

The cost of bricks to be written off will be:

RUB 3.69 x 25,000 pcs. = 92,250 rub.

When decommissioning a brick, it is necessary to make the following wiring:

Debit 20 Credit 10

RUB 92,250 - the brick was written off for repair work.

COST OF EACH UNIT

This method is convenient for companies that have a small range of materials. Each unit is accounted for separately.

Also, this write-off method evaluates special materials: precious and rare metals, precious stones, etc.

A unit of such materials, as a rule, is unique, that is, there is a single copy. In most cases, such materials are expensive.

The division of the production cycle into several stages leads to the need to introduce a separate segment into accounting - a reflection of the movement of semi-finished products manufactured in-house. To do this, it is necessary to determine the cost of intermediate products.

The concept of semi-finished products of own production in accounting

Home-made products are recognized as semi-finished products if they do not have the characteristics of finished goods and are necessary for the implementation of subsequent technological cycles. Semi-finished products are characterized by the fact that they require mandatory modification and cannot be used as an independent asset.

FOR EXAMPLE! Semi-finished products include glue and raw rubber, which are used in the rubber industry, various types of yarn in textile companies, wine and juice materials, and parts for children's toys.

For accounting purposes, semi-finished products are defined as products that have gone through a full production cycle, in the absence of characteristics of absolute readiness. Semi-finished products are supposed to be used as a component at the next stages of the main technological cycle or as a component of goods ready for sale. The economic essence of manufacturing semi-finished products comes down to their identification with work in progress.

Accounting and tax accounting

Reflection of semi-finished products in accounting can be organized in two ways:

• separately from other products;
• as a component of the cost of work in progress.

In the first case, account 21 must be used, which is active. It accumulates the cost of all semi-finished products manufactured at the enterprise.
When applying the second method, account 20 is used in accounting. The choice of recording method is influenced by the accounting policy for accounting for expense transactions.

If delivery of semi-finished products is required, the money spent on transportation should be shown as part of the cost price. Quantitative accounting is organized by storage location. The responsibility for its maintenance is assigned to financially responsible persons. If the production cycle does not involve intermediate transfer of semi-finished products to warehouses, records are maintained by personnel of production departments.

With the cross-distribution method in material-intensive industries, the following can be used:

1. A non-semi-finished scheme, which involves accounting for the amounts of costs incurred broken down into stages. A valuation system is not used for semi-finished products; they are entered into accounting data only based on quantitative indicators. There is no need to calculate costs.
2. The semi-finished scheme records the quantitative volume of intermediate products produced and the cost estimate of each product. Cost calculation is a mandatory element. The technique is characterized by a high level of labor costs, but allows for effective monitoring of the safety of semi-finished products and assessing the level of profitability of producing this type of product on its own.

Evaluation of semi-finished products is carried out according to general rules using one of the following methods:

• by the size of the cost of raw materials and material resources;
• by the volume of direct costs that were incurred by the company in the process of manufacturing the semi-finished product;
• according to the actual generated cost (relevant for small production capacity and a small list of semi-finished products);
• according to the standard cost indicator (used by enterprises engaged in mass production of semi-finished products).

In the second case, direct expenses will include expenses for the purchase of material assets for production, depreciation charges for equipment involved in the technological cycle, and the amount of accrued wages for personnel with insurance contributions. A complete list of expenses that an organization can attribute to direct costs must be recorded in internal regulations.

Features of the non-semi-finished accounting method

Manufactured products of intermediate production links are not identified as a separate element of cost accounting. Their transfer for further technological processing is reflected in the documentation only in physical terms. Costly transactions are subject to reflection as part of turnover in account 20. Expenses that are directly related to the ongoing production process are shown in debit turnover.

General production expenses should be recorded on account 25 in debit. At the next stage, accumulated expenses are transferred from credit 25 of the account to debit 20 for main production. General business types of costs can be attributed to the main production if they are not immediately included in the cost price and are not written off to the sales account.

When finished products based on semi-finished products are received, from account 20 it is necessary to write off their cost to account 40 or 43. The balance on the 20th account indicates the presence of work in progress.

FOR YOUR INFORMATION! The non-semi-finished method of reflecting technological stages is attractive due to its minimal labor costs. The disadvantage is the inability to provide full control over the movement of semi-finished products and the lack of a basis for determining the profitability of their production.

Semi-finished accounting scheme

For the semi-finished option, all semi-finished products must have a cost estimate in the accounting data. In accounting documentation they are carried out in both natural and monetary measures. Such detailing is necessary to include the cost of semi-finished elements in the cost price. Accounting is carried out separately; a separate account is allocated for this.

Key points of tax accounting

With the accrual method on the general taxation system, the amount of indirect costs for the production of semi-finished products must be written off in the period to which they actually relate. The direct type of costs must be allocated. If at the reporting date there are balances remaining in the cost of semi-finished products that have not been transferred for technological processing, they are recognized as work in progress.

REMEMBER! If manufactured semi-finished products were sold to third parties, the proceeds are subject to VAT.

When selling semi-finished products using the simplified tax system, income from sales will affect the amount of tax. Income must be recognized in the period of payment for goods sold. With UTII, the sale of semi-finished products does not affect the amount of taxes paid.

Accounting and standard correspondence

To separately reflect data on produced semi-finished products in accounting, active account 21 is used. The use of this synthetic account must be recorded in the accounting policy. If there is no such link in internal documentation, then accounting must be organized on account 20.

According to the debit of account 21, semi-finished products are capitalized. Credit turnover indicates a write-off for further use in main production, completion of finished products or for sale as a separate product.

The receipt and write-off of semi-finished products produced in-house to workshops is carried out using a demand invoice. Based on this document, record D21 - K20 is formed. At the time of transfer of semi-finished products to production workshops, the products are written off from the warehouse using posting D20 - K21.

When selling semi-finished products to third parties, the products acquire the properties of finished goods. Sales operations are shown by correspondence:

• D62 – K90.1– record of revenue recognition;
• D90.3 – K68– reflects the amount of VAT on proceeds;
• D90.2 – K21– shows the cost of semi-finished products sold to third parties.

When reflecting payments within the enterprise for the semi-finished products provided, account 79 is used. With the participation of 21 accounts, the following postings can be made:

• D21 – K91– if there is a surplus based on the results of inventory activities that must be capitalized;
• D28 – K21— when using semi-finished products to correct detected defects;
• D76 – K21– write-off of losses received in the amount of the cost of semi-finished products as a result of a natural disaster (provided that an insurance agreement was previously concluded for this case);
• D91 – K21– when transferring semi-finished products without payment;
• D94 – K21– when shortages are detected;
• D99 – K21– part of the manufactured semi-finished products was lost as a result of a natural disaster.

Analytics in accounting should be carried out in the context of names, types, sizes of semi-finished products.

Account 21 “Semi-finished products of own production” is widely used in industrial organizations to collect information about the availability and movement of manufactured inventories necessary for the production of the final product. It is used to display inter-branch movements of workpieces between workshops of industrial holdings or companies that carry out separate display of semi-finished products.

 

Account 21 “Semi-finished products of own production” in accounting is a summary of information on the receipt, availability and further movement of inventories manufactured for subsequent processing during production activities.

Semi-finished products of own production include blanks obtained during the technological process, but which have not passed all the required stages of the production cycle to produce the final product. In the future, they are subject to modification or assembly into finished products. For example, these may include industrial stocks: tomato paste, starch, vegetable purees, which will be used for the manufacture of finished products.

Account 21 is active, that is, the debit shows the receipt of semi-finished products, and the credit shows a decrease in the balance (for example, transfer to production).

The costs associated with the preparation of semi-finished products are reflected in the debit of the account. 21. Their sale to third parties, putting into production for subsequent processing is reflected on the loan in correspondence with the relevant accounts.

Accounting for semi-finished products

Most manufacturing organizations, when maintaining accounting records, display blanks, which are inventories, at actual cost. But initial accounting prices can be used with their further addition to the actual cost by including transport costs when moving workpieces between specialized workshops.

Quantitative analytical analysis of semi-finished products by quantity is carried out by financially responsible persons directly at storage sites and according to individual nomenclature characteristics (grade, size, type, etc.). In a production process in which the movement of products is carried out directly between workshops (without the use of a warehouse), monitoring the movements of semi-finished products is carried out by workers.

In large industrial concerns, the movement of inventories between specialized workshops allocated to a separate balance sheet is reflected in correspondence with account 79 “On-farm settlements”.

Attention! Organizations that do not carry out separate monitoring of the semi-finished products of their own production display the produced inventories in their accounting as part of work in progress according to the account. 20.

Normative base

The use of account 21 in accounting is carried out in accordance with the current Chart of Accounts, approved by Order of the Ministry of Finance dated October 31, 2000 No. 94, PBU 5/01 “Accounting for inventories” and other legally approved documents.

Basic business operations

1. Capitalization of semi-finished products

   Dt 21 Kr 20 - own production

   Dt 21 Kr 23 - auxiliary production

   Dt 21 Kr 79 - receipt of supplies for processing received from another production workshop within the holding.

   Dt 21 Kr 91.01 - surplus identified based on inventory results

2. Transfer of blanks for further processing

   Dt 20 Kr 21 - own production

   Dt 79 Kr 21 - transfer to another production workshop allocated to a separate balance sheet

3. Reflection in expenses

   Dt 25 Kr 21 - Overhead costs

   Dt 26 Kr 21 - general business expenses

   Dt 23 Kr 21 - costs of auxiliary production

4. Disposal

   Dt 28 Kr 21 - write-off of defective inventory

   Dt 94 Kr 21 - reflection of the shortage

   Dt 90.02 Kr 21 - write-off of cost when used in core activities

   Dt 91.02 Kr 21 - reflection of the cost of sold or disposed blanks

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Using account 21

Account 21 is used in organizations that independently produce semi-finished products needed in production and keep separate records of them.

If you do not keep separate records of semi-finished products of your own production, reflect their cost on account 20 “Main production”.

Production of semi-finished products

Costs for the production of semi-finished products are recorded in the debit of account 21.

Write off the amount of costs of the main or auxiliary production for the production of semi-finished products by posting:

DEBIT 21 CREDIT 20 (23)

Semi-finished products of our own production were capitalized.

Example. Production of semi-finished products of our own production

The furniture plant "Interior" independently produces particle boards (chipboards). Subsequently, the chipboard is subjected to additional processing (painting, varnishing) and used to assemble furniture.

For the production of chipboard, wood was purchased in the amount of 120,000 rubles. (including VAT - 20,000 rubles). The expenses of the main production for the production of chipboards (workers' wages, social insurance contributions, etc.) amounted to 30,000 rubles.

The Interior accountant must make the following entries:

DEBIT 10 CREDIT 60

100,000 rub. (120,000 - 20,000) - the wood necessary for the production of chipboards was capitalized;

DEBIT 19 CREDIT 60

20,000 rub. - VAT included;

DEBIT 60 CREDIT 51

120,000 rub. - the wood was paid to the supplier;

DEBIT 68 subaccount “VAT calculations” CREDIT 19

20,000 rub. - tax deduction has been made;

DEBIT 20 CREDIT 10

100,000 rub. - wood was written off for chipboard production;

DEBIT 20 CREDIT 70 (69, …)

30,000 rub. - the costs of the main production for the production of chipboards are reflected;

DEBIT 21 CREDIT 20

130,000 rub. (100,000 + 30,000) - semi-finished products of own production (chipboard) were capitalized.

Use of semi-finished products

The cost of semi-finished products transferred for processing into finished products is reflected in the debit of account 20:

DEBIT 20 CREDIT 21

Semi-finished products were transferred for further processing to the main production.

If semi-finished products are transferred for processing to auxiliary production, write off their cost by posting:

DEBIT 23 CREDIT 21

Semi-finished products were transferred for further processing to auxiliary production.

Semi-finished products of our own production can be used to correct defects. In this case, write off the cost of semi-finished products as follows:

DEBIT 28 CREDIT 21

Self-produced semi-finished products used to correct defects were written off.

The same posting is used to write off the cost of rejected semi-finished products.

Sale of semi-finished products

Semi-finished products of own production can be sold to another organization.

After shipment and transfer of ownership of semi-finished products, make the following posting:

DEBIT 62 CREDIT 90-1

Revenue from the sale of semi-finished products of own production is reflected.

Then write off the cost of semi-finished products sold:

DEBIT 90-2 CREDIT 21

The actual cost of semi-finished products sold was written off

and charge value added tax:

VAT is charged on proceeds from the sale of semi-finished products.

At the end of the month, determine the financial result from the sale of semi-finished products:

DEBIT 90-9 CREDIT 99

Profit from the sale of semi-finished products is reflected

DEBIT 99 CREDIT 90-9

The loss from the sale of semi-finished products is reflected.

Example. Sale of semi-finished products

The auxiliary workshop of the textile mill produced a semi-finished product - yarn - for the needs of the main production. The following materials were used in the manufacture of yarn:

• wool with a cost of 50,000 rubles;
• lavsan with a cost of 30,000 rubles.

The remuneration of workers involved in the production of yarn, including contributions to extra-budgetary funds, amounted to 10,000 rubles.

DEBIT 23 CREDIT 10

80,000 rub. (50,000 + 30,000) - materials for yarn production were written off;

DEBIT 23 CREDIT 70 (69)

10,000 rub. - the wages of workers engaged in the production of yarn and contributions to extra-budgetary funds are reflected;

DEBIT 21 CREDIT 23

90,000 rub. (80,000 + 10,000) - yarn produced by the mill’s auxiliary workshop was capitalized.

Yarn worth a total of 70,000 rubles was sent for further processing to the main production. The balance of yarn with a cost of 20,000 rubles. was sold to a third party. The selling price of yarn was 35,400 rubles. (including VAT - 5400 rubles).

The plant accountant must make the following entries:

DEBIT 20 CREDIT 21

70,000 rub. - the manufactured yarn was transferred for further processing;

DEBIT 62 CREDIT 90-1

36,000 rub. - revenue from the sale of yarn to third parties is reflected;

DEBIT 90-2 CREDIT 21

20,000 rub. - the cost of yarn sold is written off;

DEBIT 90-3 CREDIT 68 subaccount “VAT calculations”

6000 rub. - VAT charged;

DEBIT 51 CREDIT 62

36 00 rub. - money was received from the buyer to pay for the yarn.

At the end of the month, the accountant must make the following entry:

DEBIT 90-9 CREDIT 99

10,000 rub. (36,000 - 20,000 - 6000) - profit from the sale of yarn is reflected.