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1、On the long-term equity investments under the new standard cost methodAbstract Under the new standard, the cost of long-term equity investment law gave a detailed accounting of the provisions of the investee enterprise declares distribution of profits or cash dividends, are also divided into investm
2、ent and investment in the year after the year is given a specific method, but In practice, the method difficult to grasp the understanding, therefore, in conjunction with their teaching, put forward its own views. Key words long-term equity investment cost method investment income First, the long-te
3、rm equity investments under the new guidelines the cost of the relevant provisions of the Law Old Investment Guidelines: invested enterprise does not have control, joint control or significant influence of the long-term equity investment is used as Accounting Law. In February 2006, the Ministry of F
4、inance of the Accounting Standards for Enterprises - investment has been revised again, according to Accounting Standards for Enterprises No. 2 - long-term equity investment, the following long-term equity investments should be accounted for using the cost method: (1 ) invested enterprises have been
5、 able to invest in units in the control of long-term equity investments; (2) invested enterprises invested units do not have a common control or significant influence, and there is no active market quotations, fair value can not be reliably measured long-term equity investments. Under the new guidel
6、ines, the initial investment or additional investment, in accordance with the initial investment or additional investment when the initial investment costs as the book value of long-term equity investments; been declared to be distributed investment profits or cash dividends, invested enterprises sh
7、all enjoy by part of investment income recognized as current period, but the invested enterprise recognized investment income is limited to the amount received from the investee arising after the acceptance of the cumulative net investment in the sub-quota obtained by the investee enterprise declare
8、s distribution of profits or cash dividends over the investee arising after the recipient part of the accumulated net profits, as the recovery of the initial investment cost be offset against the carrying amount of investments. Second, if the investee enterprise declares the distribution of profits
9、or cash dividends treatment Specific processing, can be declared to be distributed this year by investing the profits or cash dividends last year invested enterprises with investment in investment units held by the month to achieve the net profit or loss is the difference, and seek to be recorded as
10、 a reduction or reversal of the initial investment costs, then under the borrowing level equal principle, an investment enterprises should enjoy the return on investment. According to this year has been declared to be distributed investment profits or cash dividends and last year invested enterprise
11、s invest in investment units held by the month was a net profit or loss of the relationship between sub-Specific Analysis for the following three conditions: 1. Declared to be distributed this year by investing the profits or cash dividends greater than last year invested enterprises to invest in in
12、vestment units held by the month was a net gain or loss (hereinafter referred to as case 1) According to this year, the investee enterprise declares cash dividend distribution of profits or investments held a year-invested enterprises invest in units in the month was the difference between the reali
13、zation of the net profit or loss is obtained should be recorded as a reduction of the initial investment cost. According to the same lending principles, should be recognized in investment income and dividends receivable is equal to the initial investment cost may be reduced the difference. 2. This y
14、ear, the investee enterprise declares cash dividend distribution of profits or investments held less than last year invested enterprises invest in units of the month was a net gain or loss (hereinafter referred to as case 2) Investments held by year-invested enterprises invest in units of the month
15、was a net investment gains and losses and this year has been declared to be distributed for profit or the difference between the cash dividend is obtained should be returned have been recorded as a reduction of the initial investment costs, but should be back to a few limit the number of the origina
16、l write-downs. According to the same principles of borrowing should be recognized in investment income is equal to dividends receivable and the actual reversal of the initial investment costs combined. 3. This year, the investee enterprise declares dividend distribution of profits or cash equal to l
17、ast year invested enterprises to invest in investment units held by the month was a net gain or loss (hereinafter referred to as case 3) This case, neither the write-down the initial investment cost, nor have been recorded as a reduction back to the initial investment cost. According to the same pri
18、nciples of lending, investment income is equal to dividends receivable. Example: B Company July 1, 2000 to bank deposits, the company acquired 10% stake in the East and prepare a long-term holding, the actual investment cost of 250,000 yuan. Orients net profit in the year to achieve next year in Feb
19、ruary declared cash dividends paid. In 2000 net profit of 300,000 yuan Eastern Company, in February 2001 declared cash dividend distribution of 200 thousand yuan; in 2001 net profit of 400,000 yuan Eastern Company, in February 2002 declared cash dividend distribution of 360 thousand yuan; in 2002 th
20、e East Company achieved net profit of 350,000 yuan, in February 2003 declared cash dividend distribution of 350 thousand yuan; in 2003 the Easts loss of 5 million, in February 2004 declared cash dividend distribution of 50 thousand yuan; in 2004 the company achieved net profit of 500,000 yuan Easter
21、n , declared in February 2005 distributed 350,000 yuan. Reposted elsewhere in the paper for free download http:/ (1) July 1, 2000 investment By: Long-term equity investment - A Company 2500000 Credit: bank deposits 2500000 (2) February 2001 Eastern Company declared a cash dividend paid during the ye
22、ar 2000 By: dividends receivable 20000 Credit: Long-term equity investments 50 00 Investment income 150 00 Analysis: the East this year, the company declared a cash dividend distribution of 20 million yuan, a year A business investment company held by the Oriental month net profit of 150,000 yuan to
23、 achieve (30 * 6 12), can be seen that this type of economic business case case 1. The initial investment cost may be reduced to 0.5 million (20-15) * 10%, according to loan balance principle, should recognize investment income of 1.5 million (20 * 10% -0.5). February 2002 Eastern Company declared a
24、 cash dividend paid during the year 2001 By: dividends receivable 36000 Long-term equity investments 40 00 Credit: Investment income 40000 Analysis: the East this year, the company declared a cash dividend distribution of 36 million yuan, a year A month in the East business investment holding compan
25、ys net income was 40 million, can be seen that this type of an economic business case 2. Should be returned have been recorded as a reduction of the initial investment cost of 04,000 yuan (40-36) * 10%, according to the same lending principles, should recognize the return on investment of 4 million
26、(36 * 10% 0.4). February 2003 Eastern Company declared cash dividends paid during the year 2002 By: dividends receivable 35000 Credit: Investment income 35000 Analysis: the East this year, the company declared cash dividend distribution of 35 million yuan, a year A month in the East business investm
27、ent holding companys net income was 35 million, can be seen that this type of an economic business case 3. Not dilutive to the initial investment cost, or back to the initial investment cost has been recorded as a reduction, according to the same lending principles, should recognize investment incom
28、e is 3.5 million (35 * 10%). February 2004 Eastern Company declared a cash dividend paid in 2003, when By: dividends receivable 50 00 Investment income 50 00 Credit: Long-term equity investment 100 00 Analysis: the East this year, the company declared cash dividend distribution of 50 million yuan, a
29、 year A month in the East business investment company held by a loss of 5 million, can be seen that this type of business is the economic situation of one. The initial investment cost may be reduced to 10,000 yuan (55) * 10%, according to the same principles of borrowing, investment income should be
30、 recorded as a reduction of 0.5 million (5 * 10% -1). In February 2005 C Company declared cash dividends paid in 2004, when By: dividends receivable 35000 Long-term equity investments 110 00 Credit: Investment income 46000 Analysis: the East this year, the company declared cash dividend distribution
31、 of 350 thousand yuan, a year A month in the East business investment holding companys net income 500,000 yuan, we can see, this type of an economic business case 2. Should be returned have been recorded as a reduction of the initial investment cost of 11,000 yuan (50-30) * 10% = 1.5 million, but th
32、e number can not be larger than the original write-down back to the number of 11,000 yuan (0.5-0.44 1), According to the same lending principles, should recognize investment income was 4.6 million (35 * 10% 1.1). References: 1 in a small compact. New Enterprise Practice guidelines and explain the accounting standards. 2 Li Xinxin. Long-term equity investments under the new guidelines the cost of Frances easy to operate. Store modernization, 2008, (14). Reposted elsewhere in the paper for free download http:/
