Accounting monograph on the contribution in kind to the share capital

The company Acviv SRL is a Romanian legal entity, established according to Law 31/1990 on companies. It is registered on 05.08.2015, having as contribution to the share capital 200 lei deposited in cash and a building worth 100,000 lei according to the evaluation performed by an authorized appraiser.

Law no. 31/1990 on companies allows the contribution in kind provided that there is also a cash contribution, so that the value of both subscriptions is higher than the minimum share capital provided by law.

From an accounting point of view, the contribution in kind is made at fair value, usually established by an authorized appraiser.

Upon registration of the company, the following accounting registrations will be made:

456 ”Settlements with associations in terms of capital” = 1011 „Subscribed and not paid in share capital” with the amount of 200 lei

5121 „ Bank accounts in lei”= 456 ”Settlements with associations in terms of capital” with the amount of 200 lei

212 „ Buildings” = 456 ”Settlements with associations in terms of capital” with the amount of 100.000 lei

456 ”Settlements with associations in terms of capital” = 1011 „Subscribed and not paid in share capital” with the amount of 100.000 lei

1011 ”Subscribed and not paid in share capital” = 1012 „ Subscribed and paid in capital” with the amount of 100.200 lei, on the date of the court decision to register the company

If after the contribution in kind it is decided to sell the property at a price lower than the purchase price, there is no obligation to reduce the share capital according to art. 414 para. (5) of ordinance of the Finance Ministry (OMFP) no. 1802/2014 on accounting as follows:

“The removal from the records of an asset that constituted a contribution to the share capital does not change the share capital, except for the situations provided by the legislation in force. In all cases of modification of the share capital, it is carried out based on the decision of the general meeting of shareholders, in compliance with the legislation in force ”.