Expenditures, Deferred

expenditures incurred during the reporting and preceding periods that are to be included in production and overhead costs during subsequent reporting periods. A distinction by time periods of expenditures incurred by enterprises in the USSR is essential for correctly calculating output costs and for reflecting overheads, profits, and losses.

In industry, deferred expenditures include expenditures for preparatory mining work and mining operations; the makeup of the work is determined by the instructions of the appropriate branch of industry. Deferred expenditures also include expenditures for routine repair of fixed assets when amounts exceed the previously formed reserve for forthcoming expenditures. In addition, they take in expenditures for prepaid rent and subscriptions to periodicals. In the seasonal sectors of industry, deferred expenditures include the general off-season overheads. In aviation, shipbuilding, and other industrial sectors, deferred expenditures take in expenditures used to develop new production methods. This includes expenditures to design and plan models of new articles, develop manufacturing methods, redesign shops and retooling, develop expenditure standards, and compile estimate calculations. The expenditures also cover the difference between the estimated prime cost of the first experimental sample or the first experimental batch of new articles and the planned cost of lot production of the articles.

Construction organizations include in deferred expenditures the value of temporary (nonitemized) devices and units and expenditures for mass recruitment of workers when production is organized or expanded.

Deferred expenditures are part of the normed circulating capital. At the moment the expenditures are made, they are entered under this head in the accounts, and later they are written off in parts against the corresponding items of production or overhead costs. Thus, expenditures for starting up production of new types of output are written off in keeping with the output of the product against the production costs, generally during a period of two years; the writing off is done in certain shares per unit of output and is included in the prime cost of this output as a separate item. The expenditures for preparatory mining work and stripping are written off against the mineral extraction costs in certain shares (per ton of ore or coal extracted, per cubic meter of clay or sand). The deferred expenditures are paid out of individual circulating capital; expenditures of a seasonal character are credited by the State Bank of the USSR (Gosbank).