Accounting monograph on stock exchange transactions

Short-term financial investments are recorded in the accounts in the accounts of group 508 “Short-term investments”.

Short-term financial investments include:

– shares held in affiliated entities, and

– other short-term investments representing bonds issued and repurchased, bonds purchased and other securities purchased in order to make a profit in the short term.


Short-term investment evaluation

Initial evaluation. Upon entering the entity, short-term investments are valued at the acquisition cost, which means the purchase price or the value established according to the contracts.

In the case of short-term securities admitted to trading on a regulated market, the acquisition cost does not include the transaction costs directly attributable to their acquisition, these costs being recorded in the corresponding expense accounts.

Valuation at the balance sheet date. Short-term securities (shares and other financial investments) admitted to trading on a regulated market are valued at the quoted value on the last trading day, and those not traded – at historical cost, less any adjustments for impairment.

Any favorable or unfavorable differences resulting from their valuation are recorded in financial income or expenses, through account 768 or 668, as the case may be.

Evaluation on leaving the entity. Upon termination of short-term investments, the provisions of point 131 of the Accounting Regulations compliant with the Fourth Directive of the European Economic Communities, approved by the Order of the Minister of Public Finance no. 1802/2014, respectively one of the following methods is used:

– FIFO – first in-first out method;

– LIFO – last-in-first-out method;

– CMP – weighted average cost method.

Operations recorded in accounting

Securities are acquired through a brokerage firm.

The client makes available to him an agreed amount of money, which he will invest according to the client’s orders or on his own initiative.

Periodically, the investment company shall provide the investor with an account statement showing the amounts invested, the securities in which the investments were made, the sale and purchase operations carried out, as well as the commission of the investment company.

  1. Placing an order to purchase securities with an intermediary and purchasing securities:

508 “Other investment securities” = 5092 “Payments to be made for other short term investments”

  1. Depositing amounts into the intermediary’s account:

5092 “Payments to be made for other short-term investments” = 5121 “Bank accounts in lei”

  1. 3. Sale of shares for profit

461 “Miscellaneous debtors” =%

508 “Other investment securities”

7642 “Return on short-term investment gains”

  1. 4. Sale of shares at a loss

% = 5081 ″ Other investment securities ”

461 ″ Miscellaneous debtors ”

6642 “Losses on short-term investments transferred”

The output value of the securities stock is determined by one of the FIFO, LIFO, CMP methods similar to the stock outputs.

  1. 5. Withholding of commissions due to the broker:

622 “Expenses on commissions and fees” = 461 “Miscellaneous debtors”

  1. Collection of the amounts from the broker’s account, representing the net profit from sales (amounts collected – retained commissions) or upon liquidation of the account:

5121 “Bank accounts in lei” = 461 ″ Miscellaneous debtors ”

  1. 7. The valuation of the securities at the balance sheet date is made during the last trading day.

– recording the positive difference in the valuation (the stock value of the stock is higher than the inventory value determined by one of the FIFO, LIFO, CMP methods.

668 “Other financial expenses” = 508 “Other investment securities”

– Recording the negative difference in valuation (the stock value of the stock is higher than the inventory value determined by one of the FIFO, LIFO, CMP methods.

508 “Other investment securities” = 768 “Other financial income”

Tax treatment

When calculating the taxable profit, the provisions of Law no. 571/2003 on the Fiscal Code, with subsequent amendments and completions.

Thus, art. 21 stipulates that for the determination of the taxable profit, only the expenses incurred for the purpose of achieving taxable income are considered deductible expenses, including those regulated by normative acts in force.

Revenues resulting from the sale of securities, as well as those from favorable differences resulting from the valuation are taxable income.

Expenses resulting from the sale of securities, as well as those resulting from unfavorable differences resulting from the valuation, are deductible expenses