One day without book Pepsi Barren
1. Transactional financial assets converted to cost method (under non-same control)
Debit: Long-term equity investment [Reverse/Fair value of the original equity investment + fair value of the new investment payment consideration]
Dividend receivable [Recently holding the shares corresponding to the declared but not yet issued cash dividends]
Credit: Trading financial assets [book value of the original equity investment]
Investment income [The difference between the book value and fair value of the original equity investment]
Bank deposits, etc. [The fair value of the consideration that should be paid for new investment]
Note:
(1) The cumulative amount originally included in the profit and loss of fair value changes will no longer be transferred to the investment income.
(2) Fair value of the payment consideration = fair value of the exchanged assets + liabilities assumed
2. Transactional financial assets to cost method (under the same control)
borrow: long-term equity investment [Relative to the final controller's net asset share, if there is goodwill, add goodwill]
Dividends receivable [Cash dividends that have been declared but not yet issued for increased holdings]
Credit: Trading financial assets [book value of the original equity investment]
Bank deposits, etc. [book value of the consideration that should be paid for new investment]
If a credit difference occurs, it will be included in the "capital reserve-capital (share) capital premium"; if a debit difference occurs, the "capital reserve-capital (share) capital premium" and retained income will be offset in turn.
Note:
(1) The accumulated amount originally included in the profit and loss of fair value changes will no longer be transferred to investment income.
(2) Book value of the payment consideration = book value of the exchanged assets + liabilities borne
3. Other equity instrument investments are converted into cost method (under non-same control)
Debit: Long-term equity investment - investment cost [Reverse/Fair value of the original holding equity investment + fair value of the new investment payment consideration]
Credit: Other equity instrument investment [Book value of the original holding equity investment]
Retained income [Difference between the fair value of the original holding equity investment and the book value]
Bank deposits, etc. [Fair value of the consideration to be paid for new investment]
At the same time, the amount of other comprehensive income was previously included in the previous carry forward to the retained income.
Debit: Other comprehensive income
Credit: Retained income (or opposite entry)
4. Convert other equity instrument investment into cost method (under the same control)
Debit: Long-term equity investment - investment cost [Relative to the final controller's book net asset share, if there is goodwill, add goodwill]
Credit: Other equity instrument investment [book value of the original equity investment]
Bank deposits, etc. [book value of the consideration that should be paid for new investment]
If a credit difference occurs, it will be included in the "capital reserve-capital (share) capital premium"; if a debit difference occurs, the "capital reserve-capital (share) capital premium" and retained income will be reduced in turn.
Note: The amount of other comprehensive income previously included is not carried forward for the time being. When long-term equity investment is disposed of in the future, it will be carried forward in proportion (after disposal, the remaining shares will still be subject to long-term equity investment accounting) or in full (after disposal, the remaining shares will be subject to financial assets accounting).
[Example] Oriental Company's investment business information for 2020 and 2021 is as follows:
(1) On August 1, 2020, Oriental Company purchased 10 million shares of the listed company's Western Company at a price of 5 yuan per share, and thus held 5% of the equity of the Western Company. Oriental Company and Western Company do not have an affiliate relationship. Oriental will classify Western company stocks into trading financial assets for accounting based on its business model for managing Western company stocks and the contract cash flow characteristics of Western company stocks. The closing price of the stock on December 31, 2020 was RMB 7 per share.The accounting treatment of Oriental Company is as follows:
Debit: Trading financial assets - cost 5 000
Credit: Bank deposit 5 000
Debit: Trading financial assets - changes in fair value 2 000
Credit: Changes in fair value 2 000
Credit: Profit and loss Assuming that Oriental Company’s purchase of 5% of the equity of Western companies and subsequent purchase of 55% of the equity does not constitute a "package transaction", the date on which Oriental Company acquires control of the Western companies is May 1, 2021, the fair value of the original 5% equity is RMB 96 million. The impact of relevant taxes and other factors is not considered. The accounting treatment of Oriental Company is as follows:
① The initial investment cost of the subsidiary calculated on the purchase date according to the cost method = the fair value of the original financial assets before the purchase date 9,600 + the fair value of the consideration to be paid for the additional investment = 105,600 RMB = 115,200 (million yuan)
② Impacting the investment income of individual financial statements in 2021 = the fair value of the original 5% equity holding 9,600 - the book value of the original 5% equity holding 7,000 = 2,600 (million yuan).
Debit: Long-term equity investment He has worked in or presided over financial work in Korean and American-funded enterprises. He has successively won the first prize of teaching achievements of provincial business vocational colleges, the first prize of Ningbo Institute of Educational Sciences, the third prize of the National Essay Competition of the China Taxation Association, the first prize of the accounting paper of Zhejiang Accounting Society, the third prize of the outstanding scientific research achievements of the Provincial Business Economics Society, the outstanding instructor of the National College Entrepreneurship Competition, the third prize of the Zhejiang Vocational Education Institute of Education, the principal's award fund, the advanced individual and outstanding individual in the college. He edited and published many textbooks such as "Tax Practice", "Tsinghua University Press's "Forecasting and Exquisite Lectures on Intermediate Accounting Practice Examination Points", and "Cost Accounting Practice" by China Human Resources and Social Security Press; published more than 40 articles in multiple journals such as "China Accounting News", "Accountant", and "Certified Tax Accountant". He presided over or participated in many scientific research projects in institutions such as Ningbo Social Sciences, Zhejiang Accounting Society of Zhejiang Association of Certified Public Accountants, and Zhejiang Vocational Education Institute. He teaches long-term courses in series of courses such as certified public accountant, tax accountant, asset appraiser, and accounting professional titles; he teaches accounting standards, tax-related business and other internal financial and taxation courses.
