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Analysis:

When non-investment real estate is converted into investment real estate, especially when it is converted into investment real estate measured at fair value, as a general principle, the difference between the two at the time of conversion should be included in the current profit and loss (profit and loss from changes in fair value), but there is a special case here: when non-investment real estate is converted into investment real estate measured at fair value, the fair value is greater than its book value, but the difference is recorded. " Of course there is a reason for this!

The reasons are as follows:

China is a socialist public ownership country, especially land public ownership, which is the main reason for making this provision. Due to the historical background of public ownership of land, a considerable number of enterprises in China are transformed or restructured from state-owned enterprises, and when these enterprises belong to state-owned enterprises, they all have a large area of land resources. The acquisition of these land use rights is free of charge, "white" (no accounting), and then buildings such as factories and office buildings are built on it. After decades of wind and rain, these factories and office buildings are now. Judging from the accounts of its fixed assets, it may really be worthless and has already been fully depreciated. It's really a broken factory, but this broken factory is actually very valuable. Why? That's because there is a large area of land under it. On the enterprise's book, it may be 1 10,000 to 20,000 yuan, but this land can be more than 50 million. This is the root of the problem. When this is converted into investment real estate measured at fair value, its fair value changes by nearly 50 million. Good boy, what effect will it be if this is recorded in the current profit and loss at one time? The current profits are frightening. Is this the right treatment? Is this the profit of its operation? Obviously not, so this kind of treatment is not appropriate. Therefore, in order to avoid this unreasonable phenomenon and prevent malicious adjustment of profits, accounting standards stipulate that the difference between fair value and book value should be recorded in "capital reserve-other capital reserve" in the above-mentioned type of conversion to prevent it from affecting the realization of profits. Give a rule and benchmark!

That's why we have to deal with this!

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