Evaluation of Non-current Assets according to Russian and International Standards

Currently in Russia accountants face the additional challenges caused by the fundamental changes in the Russian accounting system. Since the Government Decree №283 has been passed, the number of differences between National Accounting Principles and International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS) have decreased. Furthermore, some experts assume that in the future all Russian Standards would be replaced by IAS. It is evidently that the transition to the new Principles could not but affect the measurement (evaluation), one of the most important elements of an accounting method. That is why it poses an interest to analyze this problem.This comparative study linked with non-current assets evaluation according to the Russian and International Principles is intended to facilitate understanding the approaches to measurement in accounting and aids Russian practitioners in making a decision whether it seems reasonable to prepare financial reports under IAS/IFRS. The general purpose of this paper is to systemize the approaches to the evaluation, compare features of fixed assets evaluation under IAS and Russian Principles and also to examine the impact of applied Standards on the figures in financial reports and the financial ratios. To achieve these goals we advanced the definition for the term “evaluation” with the help of the linguistic method, matched IAS and Russian Standards using the comparative approach, considered the project of the new Russian Principles linked with property, plant and equipment measurement employing the SWOT-analysis and gave some specific examples of the fixed assets accounting in OJSC Nizhpharm. We also determined how the value of non-current assets and such financial ratios as the current ratio, return on equity, return on assets and equity ratio have changed when Russian companies applied IAS.Tо obtain comparable financial information on the fixed assets value and the financial ratios we used consolidated financial reports of large Russian firms. Employing Wilcoxon test and t-test we checked the hypothesis that there is no significant impact on the values of non-current assets and the financial coefficients when transition to IAS occurs. Firstly in our study we identified that on the one hand, evaluation in accounting is a specific procedure of determining the value of objects and events. On the other hand, it is the precise value of the objects under the accounting observation.Secondly we prepared some schemes illustrating the differences between Russian and International Principles, tied with the fixed assets measurement.Thirdly we compared the accounting of non-current assets according to Russian Standards and IAS in OJSC Nizhpharm and gave some recommendations for this company.Moreover, we showed that for Russian firms the value of intangible and long–term financial assets is significantly higher under Russian Accounting Principles than under IAS/IFRS while the value of property and plants is noticeably lower. The conclusion can also be drawn that transferring reports to IAS large Russian companies faced deterioration in their financial positions because they seem to be less liquid. As for return on equity, return on assets and equity ratio there are no significant changes in these coefficients in the moment of IAS adoption.