The Accounting of Financial Investment as Key Asset of Business Entities in Business Management

Abstract

The article highlights specifics of recording data about investment processes, in particular ones on attracted foreign investment required for financing economic transformations in Ukraine, which is possible only given full trust and active cooperation between the entities involved in the investment process and providing them with accessible, operational and reliable data generated by the accounting system. The main obstacle to the use of external and internal investment resources remains insufficient coverage of data on investment processes in accounting and financial reports, which is a characteristic feature of the national accounting practice. Reorganization of the accounting and financial reporting system in accordance with the provisions of IFRS is an integral part of the processes aimed at the formation and development of market relations. However, the international methodology for estimating the fair value of financial investments cannot be easily applied in Ukraine due poor performance of the security market characterized by inadequate capitalization, poor attractiveness for foreign investors, high inflation, and macroeconomic instability. A favorable environment for foreign investment cannot be created unless the national methodology for accounting of financial investments is adapted to the international standards. The global practice of accounting of financial investment is largely based on current transactions with securities on the stock market. However, this approach is complicated by poor performance of the domestic stock market. In order to increase the transparency and reliability of accounting data, it is necessary to strengthen the state control over compliance with established accounting norms and standards in the business enterprise sector, and to impose sanctions for their violation. Special emphasis needs to be placed on the regulation of procedures for valuation and revaluation of investment, and on the employment of methods accounting for the investor’s share in the investment object’s capital.