Financial assets and financial liabilities (IV)
Accounting processing for reclassification between financial assets
1. Equity tools shall not be reclassified.
equity instrument investments are two types: one is included in the current profit and loss of equity, and the other is included in other comprehensive income. The standards are based on anti-profit manipulation, which prevents some companies from manipulating profits, so equity-based financial assets are not allowed to be reclassified. For example, when the stock price rises, it is reclassified as "financial assets measured at fair value and whose changes are included in the current profit and loss", inflated profits, and when the stock price falls, it is reclassified as "financial assets measured at fair value and whose changes are included in other comprehensive income", avoiding the situation of decline in profits.
2. Bond financial assets can be reclassified.
The debt-type financial instrument investment of basic financial instruments is confirmed and classified according to the business model. Therefore, the business model of enterprises can be reclassified after it has changed.
3. Financial assets formed by derivative instruments shall not be reclassified.
reclassification is caused by changes in business model. Why are derivative instruments not allowed to form transactional financial assets reclassification? Because there is no possibility of changing from the "transaction motivation" business model to the "contract cash flow" business model in terms of business model, so derivative instruments cannot be reclassified.
Bond type financial assets reclassification:
When an enterprise changes its business model to manage financial assets, it should reclassify all affected related financial assets. If the business model has not changed, enterprises shall not reclassify relevant financial assets. When an enterprise reclassifies financial assets, it shall adopt future applicable laws to conduct relevant accounting treatments from the date of reclassification, and shall not make retroactive adjustments to previously recognized gains, losses (including impairment losses or gains) or interest. The reclassification date refers to the first day of the first reporting period after the business model that causes the enterprise to reclassify financial assets.
Classification of bond financial assets:
1. Financial assets measured at amortized cost.
2. Financial assets measured at fair value and whose changes are included in other comprehensive income
3. Financial assets measured at fair value and whose changes are included in current profit and loss.
reclassification is the reclassification between the three. The first reclassification is 2 and 3; the second reclassification is 1 and 3; the third reclassification is 1 and 2.
1. Reclassification of financial assets measured at amortized cost.
(1) The enterprise reclassifies a financial asset measured at amortized cost into a financial asset measured at fair value and its changes are included in the current profit and loss, and shall be measured at the fair value of the asset on the reclassification date. The difference between the original book value and the fair value is included in the current profit and loss. 1 reclassification is 3.
Accounting processing:
Debit: Trading financial assets---cost (fair value on the reclassification date)
Debt investment impairment provision
Fair value changes profit and loss (squeeze, can be borrowed or loaned)
Credit: Debt investment—cost
—interest adjustment
—accumulated interest
(2) If an enterprise reclassifies a financial asset measured at amortized cost into a financial asset measured at fair value and its changes are included in other comprehensive income, it shall be measured at the fair value of the financial asset on the reclassification date. The difference between the original book value and the fair value is included in other comprehensive income. The reclassification of financial assets does not affect the measurement of their actual interest rates and expected credit losses.1 reclassification is 2.
Account processing:
Debit: Other debt investments - cost (fair value on the reclassification date)
Other comprehensive income - change in fair value of other debt investments (squeeze, can be borrowed or loaned)
Credit: Debit investments - cost
- interest adjustment
- accrued interest
At the same time: Debit: Debit investments - impairment provisions
Credit: Other comprehensive income - credit impairment provisions
2. Reclassification of financial assets measured at fair value and whose changes are included in other comprehensive income
(1) If an enterprise reclassifies a financial assets measured at fair value and whose changes are included in other comprehensive income into financial assets measured at amortized cost, it shall transfer the accumulated gains or losses previously included in other comprehensive income, adjust the fair value of the financial assets on the reclassification date, and use the adjusted amount as the new book value, that is, it is deemed that the financial assets have been measured at amortized cost. The reclassification of financial assets does not affect the measurement of their actual interest rates and expected credit losses. 2 Reclassification is 1.
Accounting processing: 1 in three steps
① Debit: Debt investment - cost
—interest adjustment
Credit: Other debt investment - cost
—interest adjustment
② Reversal of the accumulated gains or losses included in other comprehensive income before reclassification (fair value is not recognized)
Debit: Other comprehensive income - changes in fair value of other debt investment (resale)
Credit: Other debt investment - changes in fair value (resale)
or the opposite entry
③ If the financial asset has expected credit losses before reclassification and the loss provision is set up, carry forward the asset impairment provision. (Recognition of impairment provision)
Debit: Other comprehensive income - Credit impairment provision
Credit: Debt investment impairment provision
(2) The enterprise reclassifies a financial asset measured at fair value and its changes are included in other comprehensive income into a financial asset measured at fair value and its changes are included in the current profit and loss. It shall continue to measure the asset at fair value. At the same time, the enterprise shall transfer the accumulated gains and losses previously included in other comprehensive income from other comprehensive income to the current profit and loss. 2 reclassification is 3.
Accounting processing:
① Debit: Trading financial assets - Cost (fair value)
Credit: Other debt investments - Cost
- Changes in fair value
- Interest adjustment
② Debit: Fair value changes profit and loss (squeeze)
Other comprehensive income - Credit impairment provision (resale)
Credit: Other comprehensive income - Changes in fair value of other debt investments (or borrow, transfer to profit and loss)
3. Reclassification of financial assets measured at fair value and whose changes are included in the current profit and loss.
(1) If an enterprise reclassifies a financial asset measured at fair value and its changes are included in the current profit and loss as a financial asset measured at amortized cost, its fair value on the date of reclassification shall be used as the new book balance. 3 reclassification is 1.
Accounting processing:
Debit: Debt investment-cost
Credit: Trading financial assets-cost
-Fair value changes
(2) The enterprise reclassifies a financial asset measured at fair value and its changes are included in the current profit and loss as a financial asset measured at fair value and its changes are included in other comprehensive income, and the financial asset should continue to measure the financial asset at fair value. 3-fold classification is 2.
Account processing:
Debit: Other debt investments - cost
Credit: Trading financial assets - cost
-fair value changes
[Example] Company A purchased a bond investment portfolio with a bank deposit of 500,000 yuan, with a book balance of 500,000 yuan, and was classified as financial assets. On January 1, 2018, the business model of bond management was changed and reclassified into other financial assets. The fair value of the bond portfolio on the date of reclassification was RMB 490,000. The original financial assets have been confirmed to have a loss provision of 6,000 yuan.
Below is a classification explanation of the six types of financial assets reclassification accounting treatments.
① Financial assets measured at amortized cost are reclassified as financial assets measured at fair value and whose changes are included in the current profit and loss
Debit: Trading financial assets 49
0.4
� 0.6
� 0.6
Credit: Profit and loss of fair value 0.6
(5) Financial assets measured at fair value and whose changes are included in the current profit and loss are reclassified as financial assets measured at amortized cost
Debit: Debt investment 49
� 49
: Trading financial assets 49
Creation impairment loss 0.6
�
