This article was published on the official account InvestorW
The series of articles in "Accounting" are what I saw during the review of CPA. Because the overly complex accounting standards have brought direct trouble to investors, I feel that it is necessary to organize them. Readers need to have a certain foundation when reading. It is best to read the financial statements and know the items presented in the financial report. This series of articles does not write very basic financial reports, because there are many books on the market.
This article writes about measurement of debt assets .
In the new financial standards, there is basically no problem of reclassification of equity, but there are still claims. Under normal circumstances, claims can appear in three types of financial assets.
Debt assets measured at amortized cost
- The first type of financial assets
- The abbreviation in "financial investment": Debt investment
This measurement method has always been there, and ordinary financial books can also write it. The amount reported is "amortized cost", and its "investment income" is the value calculated using "amortized cost".
I still use that classic case. At the beginning of this year, Company A spent 10 million yuan to purchase a 5-year bond (including transaction fees). The face value of the bond is 12.5 million yuan, the face value is 4.72%, and the interest is paid at the end of each year. The principal is repaid in one lump sum when the bond matures.
Company A classified it as "debtor investment". Therefore, the interest received by Company A at the end of each year is 1250×4.72%=590,000 At this time, Company A was equivalent to obtaining one. In the first four years, 590,000 cash flowed in each year, and in the last year (1250+59)=13.09 million cash flowed in assets. The next step is to solve its "actual interest rate" .
If you have learned some basic value evaluation, this "actual interest rate" is actually the "included rate of return" of the asset (IRR), which means: the present value of the outflow amount - the present value of the inflow amount = 0.
IRR is completely a characteristic of the asset itself, used to reflect the asset's ability to provide compound interest compensation. It has nothing to do with the yield of other things in the market. See the figure below:
So in mathematical principle, the "present value of inflowing cash" needs to be calculated first n terms of the sequence of equal ratios. The solution to this equation is 10%:
Since accounting standards in recent years have increasingly emphasized the concept of "time value of funds", the application of amortized costs has become increasingly strict. Now, basically for more than one year, financial tools that meet this category need to be discounted.
This is indeed more in line with the principle of accrual and traditional finance theory, but for investors, it means that it is becoming increasingly difficult to understand it, because it will cause the numbers related to the income statement to completely mismatch the cash flow, and the numbers in the notes to the statement are not the face amount. The financial statements of the above case are as follows. For the sake of simplicity, all calculations do not take decimal points and round them:
It is not difficult to find that there is an obvious feature of measuring amortized cost, that is, the "amortized cost" will gradually approach the face value. This case is a bond that buys at a discount, so the amortization cost will become larger and larger. If it is a bond purchased at a premium of , the "difference" in the figure is calculated to be negative, so the reported amount will become smaller and smaller.
Measure at the fair value of and its changes are included in other comprehensive income
- The second type of financial assets
- The abbreviation in "financial investment": other debt investment
When I first saw this name, I thought it would be more like trading financial assets . The balance sheet wrote the fair value, and the income statement "investment income" wrote the actual amount received. As a result, I found that the second half was wrong. This classification of debt is an additional adjustment to the amortized cost .
For the sake of comparison, I used the same case as above to compile financial statements. Company A designated bonds as "other debt investments".Assuming this bond is an exchange-listed bond, its "fair value" is the closing price on the balance sheet date. There are two situations during the preparation: ① Company A holds the debts due; ② Company A sells it before it expires in 2024, and the sale price is 13 million.
Debt assets measured at fair value and their changes are included in the current profit and loss
- The third type of financial assets
- The abbreviation in "financial investment": Trading financial assets
This project is very simple and has nothing to do with the amortized cost. Write as much as the bond price is. The investment income is the actual amount received.
I still use the same case. Assuming that the transaction fee at the time of purchase is 500,000, as shown in the figure below for the report:
and so on when it is sold, and so on, the amount included in the "investment income" = the selling price - the amount filled in at the beginning of the period - the transaction fee.
Overall, I think the second type is the most ugly. If listed companies have a large number of debt investments, their quotations are very active, and the "investment returns" and "other comprehensive returns" generated are mixed with other things, and the disclosure details are not high enough, I feel that for investors, there is really no way to see what is going on.
But in reality, not all assets have exchange quotes, so there are two types of fair value used, one is a public quote similar to the assets; the other is a discount on cash flows. Therefore, the price rise and fall should not bring too much "other comprehensive benefits". If this number fluctuates particularly abnormally, you need to carefully evaluate what the listed company has done. Under the sixth title of the new income statement of
, you can see other comprehensive income changes this year.
