Accounting for subsidies to compensate for lost income (Using the example of organizations involved in aviation activities)

The purpose of this paper is to examine the specifics of accounting for subsidies to compensate for lost income. The key research question is whether PBU 13/2000 is applicable to accounting for subsidies to compensate for lost income. The paper distinguishes between the concepts of ‘lost income,’ ‘lost revenue,’ ‘financial support for costs,’ and ‘compensation for losses/costs’ from the perspective of budgetary and accounting legislation. An analysis of the practice of disclosing information in the accounting (financial) reports of aviation industry organisations is carried out in terms of explanations related to the accounting of subsidies for compensation for lost income. The methodological features of accounting for subsidies to compensate for lost income are characterised using the example of two Russian airports. The scientific novelty of the research lies in the following. First, it provides justification for why the terminology of RAS (Russian accounting standard) 13/2000 differs from budgetary legislation. The relationship between the accounting and legal aspects of the concepts of ‘lost income,’ ‘unearned income,’ ‘financial support for expenses,’ and ‘reimbursement (compensation) of losses/expenses’ is defined. The problem of inconsistency between the terminology of budget legislation and accounting terminology is identified. Secondly, an analysis of the practice of accounting for subsidies to compensate for lost income is carried out using the example of Russian organisations involved in aviation activities. A number of problems were identified in terms of disclosure of information in the notes to the accounting (financial) statements; classification and valuation of subsidies for compensation of lost income. The paper presents arguments in support of the approach whereby subsidies for compensation for lost income are classified as ‘income’ rather than ‘state aid’, and therefore the requirements of RAS 9/99 apply. Prospects for further research in this area include resolving issues related to the disclosure of information on subsidies that do not fall within the scope of RAS 13/2000, as well as harmonising the terminology of RAS 13/2000 with the Russian legal system, since many of the standard's formulations are outdated.