abstract

The revised long-term equity investment standard (CAS2) not only concentrates on the relevant contents of long-term equity investment scattered in the original standard, reference guide, explanation and explanation, but also cancels the initial confirmation of the equity investment held by the investing enterprise that has no control over the invested enterprise, has no quotation in the active market, and its fair value cannot be reliably measured, thus leading to the initial confirmation and confirmation of long-term equity investment.

Keywords: long-term equity investment available-for-sale financial assets cost method equity method

In order to meet the needs of the development of socialist market economy and improve the quality of enterprise financial statements and the transparency of accounting information, the Ministry of Finance revised the Accounting Standards for Business Enterprises No.2-Long-term Equity Investment (CAS2), which was implemented in all enterprises implementing the Accounting Standards for Business Enterprises from July 14 to June 1 2004, and encouraged overseas listed enterprises to implement them in advance. The old Accounting Standards for Enterprises No.2-Long-term Equity Investment issued on February 6, 2006 shall be abolished at the same time. This time CAS2 mainly revised the accounting scope of long-term equity investment. This change has affected the initial confirmation, subsequent treatment and measurement of long-term equity investment, and caused some new problems. This paper will analyze and discuss this and put forward corresponding accounting treatment suggestions.

I. Initial confirmation of long-term equity investment before and after revision

The original CAS2 pointed out that when obtaining equity investment, it can be initially recognized as long-term equity investment, including the following four situations: in addition to the three situations that the investing enterprise can achieve control, * * joint control and significant influence (that is, the shareholding ratio is high), it also includes the situation that the investing enterprise has no control, * * joint control or significant influence on the invested enterprise (that is, the shareholding ratio is low), there is no quotation in the active market, and the fair value cannot be reliably measured.

The revised CAS2 cancels the fourth type of equity investment as the initial recognition of long-term equity investment, but deals with it according to the Accounting Standards for Enterprises No.22-Recognition and Measurement of Financial Assets (CAS 22). The author thinks that this modification result is very reasonable.

(A) the revised "Practice Basis" and "Guide" are coordinated.

It is reasonable to initially recognize the equity investment with low shareholding ratio (without control, with control or significant influence) but without fair value as long-term equity investment in the original CAS2.

First, even if the investment enterprise holds a low proportion of the shares of the invested enterprise, but the equity investment has no fair value and cannot be traded in the open market, it can be reasonably inferred that the purpose of holding the shares of the investment enterprise is not to earn the price difference, but to add investment after long-term holding, which has great influence and is controlled or controlled.

Secondly, the equity investment whose fair value cannot be reliably measured in the Accounting Standards for Business Enterprises implemented in 2007 cannot be recognized as trading financial assets or available-for-sale financial assets, because the measurement attributes of both trading financial assets and available-for-sale financial assets are based on fair value. Even if this kind of investment is initially recognized as trading financial assets or available-for-sale financial assets, it cannot be measured subsequently because it has no fair value.

However, the problem arising from the above provisions in practice is that if the fair value of the fourth type of equity investment can be reliably measured during the holding period after it is initially recognized as a long-term equity investment and no longer meets the cost measurement requirements, its classification and measurement methods should be changed. However, due to the lack of guidance of relevant standards and norms, the accounting treatment in practice is very different, which leads to the impact on the quality of report information.

For this kind of equity investment, Paragraph (3) of Article 46 of International Accounting Standard No.39-Financial Instruments: Recognition and Measurement (IAS39) stipulates that "……(3) The investment in equity instruments with no active market price and whose fair value cannot be reliably measured, as well as the investment in derivative instruments linked to the unmarked equity instruments that must be settled by delivery of the equity instruments, shall be measured at cost.

Therefore, the revised CAS2 can reasonably assume that the fourth type of equity investment is available-for-sale financial assets, which can solve the above problems, and it is no longer necessary to carry out subsequent conversion of this type of equity investment. On the one hand, it simplifies the accounting treatment, on the other hand, it avoids the information quality damage in the process of conversion, which is consistent with the relevant provisions of international accounting standards.

(two) to deal with the follow-up problems and suggestions of the revision.

1. What kind of financial assets should be initially recognized for the original Class IV equity investment? According to the specific provisions of CAS22, because investment is equity, it can neither be classified as held-to-maturity investment (liabilities) nor as loans and receivables. Only financial assets and available-for-sale financial assets that are measured at fair value and whose changes are included in current profits and losses can be selected. Since the equity investment has no fair value, it can be reasonably presumed that it was initially recognized as an available-for-sale financial asset.

2. Whether the fair value of the fourth type of equity investment can be reliably measured in the holding process. Of course, the revised CAS2 excludes the equity investment with low shareholding ratio, regardless of its fair value, from the long-term equity investment, which can not be achieved only by modifying this criterion. The adjustment of initial recognition also involves subsequent issues, such as the subsequent measurement of available-for-sale financial assets with no fair value. Since the subsequent measurement basis of available-for-sale financial assets in CAS22 is fair value, what should be done with equity investment without fair value? There are no relevant provisions in the existing guidelines.

The author thinks that paragraph 46 of IAS39 can solve the problem that the subsequent measurement of available-for-sale financial assets has no fair value, that is, it is measured at cost, regardless of changes in fair value. If the fair value of available-for-sale financial assets without fair value can be reliably measured during its holding period, according to paragraph 55 of IAS39, "the gains or losses arising from changes in the fair value of financial assets or financial liabilities that are not part of the hedging relationship shall be recognized in accordance with the following provisions: … (2) The gains or losses arising from available-for-sale financial assets shall be recognized as other comprehensive gains except impairment losses and exchange gains or losses until the financial assets are derecognized."

Therefore, CAS22 should be revised accordingly, that is, available-for-sale financial assets should include two types, one is fair value, the other is equity instruments with low shareholding ratio and no quotation in active markets, and derivative instruments linked to such unmarked equity instruments that must be settled through delivery of the equity instruments. Moreover, for the latter, these investments and derivatives should be measured at cost. In the subsequent measurement process, if their fair values can be obtained reliably, the changes in their fair values should be included in the owners' equity.

Two. Follow-up measurement of long-term equity investment before and after revision

(A) the impact of the revision

1. The scope of application of the cost method is narrowed, and the equity method remains unchanged. Subsequent measurement methods of long-term equity investment include cost method and equity method. Before the revision of CAS2, the scope of application of the cost method is two: first, the enterprise can control the invested unit; Second, the fourth kind of equity investment. Since the second situation has been excluded from the initial recognition of long-term equity investment, the application of the revised CAS2 cost method is only "control". The scope of application of the equity law remains unchanged before and after the revision of CAS2, which is divided into two types: first, enterprises have the same control over the invested units; Second, enterprises have a great influence on the invested units.

2. The conversion range of accounting methods for long-term equity investment has been narrowed. Due to the revised Accounting Standards for Business Enterprises No.2, the scope of application of the cost method has narrowed, and the basic situation and accounting treatment of the conversion between the cost method and the equity method have also changed.

(1) The cost method is converted into the equity method. Before the revision of CAS2, the accounting of long-term equity investment was changed from cost method to equity method, including two situations: ① additional investment. The fourth type of equity investment originally held, due to the increase in shareholding ratio due to additional investment, can exert significant influence on the invested entity or implement * * * simultaneous control, and should be changed from the cost method to the equity method. Retroactively adjust the original equity investment during the original holding period. ② Investment disposal. If the original long-term equity investment that has control over the investee changes from control to significant influence due to the disposal of the investment, or it is jointly controlled with other investors, the cost method should be changed to equity method due to the decrease of shareholding ratio. The remaining equity investment after retrospective adjustment and disposal during the original holding period.

Because the revised CAS2 cancels the initial recognition of the fourth type of equity investment, the accounting method of long-term equity investment is changed from cost method to equity method, and only one case of disposal investment is reserved.

(2) The equity method is converted into the cost method. Before the revision of CAS2, the accounting of long-term equity investment was changed from equity method to cost method, including two situations: ① additional investment. If the long-term equity investment that originally had control or exerted significant influence on the investee increased due to additional investment and can control the investee, it should be changed from the equity method to the cost method. There is no need to retroactively adjust the original equity investment during the original holding period. ② Investment disposal. Long-term equity investment that was originally held and exercised * * * joint control or significant influence on the investee, due to the disposal of the investment, the influence on the investee changed from having significant influence on other investors or exercising * * * joint control to having no control, * * joint control or significant influence, and the fair value cannot be reliably measured. Due to the decrease in shareholding ratio, the equity method should be changed to the cost method. There is no need for retrospective adjustment of the remaining equity investment after disposal during the original holding period.

As mentioned above, because the revised CAS2 cancels the initial confirmation of the fourth type of equity investment, the accounting of long-term equity investment is changed from equity method to cost method, leaving only one case of additional investment.

(b) New problems that may arise from the revised Guideline 2 and suggestions to deal with them.

When handled according to the revised CAS2, in practice, when the equity investment with low shareholding ratio (uncontrolled, * * jointly controlled or significantly influenced) is initially recognized as a financial asset measured at fair value and its changes are included in the current profit and loss or available-for-sale financial assets, if the financial asset is reclassified due to further additional investment, the revised CAS2 will not give corresponding explanation. Therefore, the author tries to analyze the accounting treatment of reclassification in this case.

1. Accounting treatment of financial assets initially recognized as fair value and whose changes are included in current profits and losses (taking transactional financial assets as an example) reclassified as long-term equity investments due to additional investments.

The first problem to be solved is whether tradable financial assets can be reclassified as long-term equity investment due to the significant influence of additional investment and the control or control of the same investment. Article 19 of Accounting Standards for Business Enterprises No.22 stipulates that financial assets that are measured at fair value and whose changes are included in current profits and losses cannot be reclassified as other types of financial assets. Article 4 of Accounting Standards for Business Enterprises No.22 also stipulates that the long-term equity investment regulated in Accounting Standards for Business Enterprises No.2 is applicable to Accounting Standards for Business Enterprises No.2.. Therefore, different standards apply to financial assets measured at fair value and whose changes are included in current profits and losses and long-term equity investments. Moreover, if a financial asset is recognized as being measured at fair value and its changes are included in the current profits and losses, one of the conditions is the purpose and intention of the manager. If the additional investment of the enterprise has a significant impact on the invested enterprise, it means that the purpose and intention of the enterprise manager to hold the financial asset have changed. To sum up, financial assets measured at fair value and whose changes are included in current profits and losses can be reclassified as long-term equity investments.

Example 1:20 14 In July, Company A acquired 5% equity of listed company B for 20 million yuan, which did not have a significant impact on Company B. The fair value of the equity of listed company can be reliably measured, and Company A classified it as a trading financial asset according to the company's investment intention. On August 1 day, 2065438, Company A spent10.50 billion yuan to buy another 35% equity of Company B from Company C. Since then, Company A has had a great influence on Company C. On July 3 1 4, Company A originally held 5% equity of Company B.

Trading day: Borrow: long-term equity investment-Company B/KLOC-0 175000000；; Loans: transactional financial assets-cost 20 million,-fair value change 5 million, bank deposit150 million.

At the same time of re-classification, the author thinks it is unnecessary to consider whether to transfer the changes in fair value of trading financial assets held before additional investment into investment income. Because the purpose of transferring gains and losses from changes in fair value to investment income is to transfer changes in fair value during the holding period to disposal gains and losses, since the equity investment has not been disposed of, it is not necessary to carry it forward on the day of reclassification, and the relevant gains and losses from changes in fair value will be transferred to investment income when disposing of the equity investment.

2. The accounting treatment that the equity investment initially recognized as available-for-sale financial assets is reclassified as long-term equity investment due to additional investment.

Example 2: Company A acquired 5% equity of listed company B for 20 million yuan on 201July 10, which had no significant impact on Company B. The fair value of equity of listed company can be reliably measured, and Company A was initially confirmed as available-for-sale financial assets according to the company's investment intention. On August 1 day, 2065438, Company A spent10.50 billion yuan to buy another 35% equity of Company B from Company C. Since then, Company A has had a great influence on Company C. On July 3 1 4, Company A held 5% of Company B. There is no related party relationship between Company A and Company C. ..

Trading day: Borrow: long-term equity investment-Company B/KLOC-0 175000000；; Loans: Available-for-sale financial assets-cost 20,000,000,-changes in fair value of 5,000,000, and bank deposits of 6,543.8+0.5 billion.

According to the original CAS2, other comprehensive income (i.e. capital reserve-other capital reserve) generated during the original equity investment period does not need to be carried forward on this reclassification date, and other comprehensive income related to it is transferred to investment income when the investment is disposed of.

3. The accounting treatment of equity investment that is initially recognized as available-for-sale financial assets and has no market price and its fair value cannot be reliably measured is reclassified as long-term equity investment due to additional investment.

Example 3: Company A acquired 5% equity of Company B for 20 million yuan on August 20 1 year (after the implementation of revised case 2), which has no significant impact on Company B, and its equity has no market value, so its fair value cannot be reliably measured. Company A initially confirmed it as an available-for-sale financial asset according to the revised case 2. On September 20 14 1 day, Company A bought another 35% equity of Company B from Company C ... Since then, Company A has had a great influence on Company B. ..

The original 5% equity of Company B held by Company A has no fair value. At present, the Accounting Standards for Business Enterprises No.22 does not provide for the subsequent measurement of available-for-sale financial assets with no fair value. According to paragraph 46 of IAS39, the fair value has not changed, so it can be measured at cost.

Trading Day: Borrow: Long-term equity investment-Company B 270,000,000; Loan: Available-for-sale financial assets-cost 20,000,000, bank deposit 25,000,000.

As the available-for-sale financial assets measured at cost will not generate other comprehensive income (i.e. capital reserve-other capital reserve), there is no need to consider the carry-over of other comprehensive income.

4. According to the revised Accounting Standards for Business Enterprises No.2, in practice, the long-term equity investment under the original equity method may be converted into available-for-sale financial assets due to the decrease in the shareholding ratio due to the disposal of the investment, and it can be divided into two situations based on fair value and cost according to whether the fair value can be reliably measured. Therefore, the author tries to analyze the accounting treatment of long-term equity investment reclassification under the original equity method when the investment disposal is uncontrolled, * * has control or significant influence. The specific analysis is as follows:

(1) After the disposal of this investment, the remaining equity investment cannot achieve significant impact and there is no active market, so the fair value cannot be measured reliably.

Example 4: Company A invested in Company B in June 20 14, accounting for 30% of the registered capital of Company B, which can exert great influence on Company B. By August 3, 2065438, the book value of Company A's investment in Company B was 4 million yuan, of which the investment cost was 3 million yuan, and the profit and loss was adjusted to/kloc-0. 2065438+On September 2, 2004, Company A transferred half of the equity of Company B to the outside world. After the transfer, it can no longer exert significant influence on Company B. There is no active market for this investment, and its fair value cannot be measured reliably. During the transfer, RMB 2,654.38 million was withdrawn and deposited in the bank. The accounting treatment that Company A should carry out on the asset disposal date is as follows:

I. Confirming disposal gains and losses: by: bank deposit 2100,000; Loans: long-term equity investment-Company B (investment cost) 65,438+0,500,000, Company B (profit and loss adjustment) 500,000, and investment income 65,438+0,000,000.

Secondly, the remaining equity investments that cannot exert significant influence, have no active market and cannot be reliably measured in fair value can only be converted into available-for-sale financial assets: from: available-for-sale financial assets of 2,000,000; Loans: long-term equity investment-Company B (investment cost)10.5 million, and Company B (profit and loss adjustment) 500.000.

(2) After the disposal of the investment, the residual equity investment cannot achieve significant impact, but the fair value can be measured reliably. The accounting treatment of profit and loss is the same as above. The key lies in whether the remaining equity investments that cannot exert significant influence but whose fair value can be reliably measured should be transferred to financial assets measured at fair value and whose changes are included in current profits and losses or available-for-sale financial assets. It can be judged according to the purpose and intention of the management of the investment enterprise, but in order to avoid profit manipulation, the author suggests that it can only be transferred to available-for-sale financial assets.

Third, the convergence of the old and new CAS2 standards.

Due to the revision of the standards, the equity investment with low shareholding ratio (without control, with control or significant influence) is reclassified from long-term equity investment to available-for-sale financial assets, which is accounted by the cost method, which is a change required by laws, administrative regulations or the national unified accounting system. Therefore, the reclassification of equity investment originally recognized as long-term equity investment as available-for-sale financial assets belongs to the change of accounting principles, so the change belongs to the change of accounting policies.

There are two ways to deal with accounting policy changes: retrospective adjustment method and future use method. The specific method is selected according to Article 6 of Accounting Standards for Enterprises No.28-Accounting Policies, Changes in Accounting Estimates and Error Correction (CAS28). Where an enterprise changes its accounting policy according to laws, administrative regulations or the unified accounting system of the state, it shall implement it in accordance with the relevant accounting system of the state. According to the provisions of Article 19 of the revised Accounting Standards for Business Enterprises No.2, enterprises that have implemented the Accounting Standards for Business Enterprises before the implementation date of these Standards shall make retrospective adjustments in accordance with these Standards, except that retrospective adjustments are not feasible. Therefore, when the original shareholding ratio is low (without control, * * with the same control or significant influence), the equity investment is reclassified from long-term equity investment to available-for-sale financial assets according to the criteria, and the retrospective adjustment method is adopted when the cumulative influence number is feasible; When the cumulative impact number is not feasible, the future use method is adopted.

Note: This paper is a phased achievement of the soft science research project of Henan Science and Technology Department (No.:142400410915).

Main references

1. Ministry of Finance. Notice on printing and revising the Accounting Standards for Enterprises No.2-Long-term Equity Investment. Caishui [20 14]No. 14, 20 14- 13.

2. Ministry of Finance. Accounting standards for enterprises in 2006. Beijing: Economic Science Press, 2006.