Confirmation of investment real estate. Enterprises should confirm investment real estate in accordance with the Accounting Standards for Business Enterprises No. 3 - Investment Real Estate (Cai Kuai 2006 No. 3, hereinafter referred to as the Investment Real Estate Standards) and other relevant regulations, according to the definition, characteristics, scope and recognition conditions of investment real estate. Investment real estate should be able to be measured separately and **.
There are two subsequent measurement models for investment real estate: the cost model and the fair value model. Under the cost model, investment properties are measured at the cost of their purchase. If the cost model was used before, it can be changed to the fair value model, but if the fair value model was used before, it cannot be changed to the cost model.
In the fair value measurement model, investment real estate is measured at market value, which takes into account not only real-time changes in the market, but also future impacts. However, in practice, whether fair value can be obtained consistently and reliably is a major challenge for many enterprises.
It should be noted that the same enterprise can only use one model for the subsequent measurement of all investment properties, and two measurement models cannot be used at the same time. When choosing a measurement model, enterprises need to make decisions based on their own business conditions and market environment.
Subsequent measurement of investment real estate. Enterprises shall, in accordance with the relevant provisions of the Investment Real Estate Guidelines, adopt the cost model or fair value model for subsequent measurement of investment real estate, and once the measurement model is determined, it shall not be changed at will.
Large-scale impairment provision for real estate enterprises is a common financial statement operation to reflect the decrease in the value of the company's assets. This decrease may be due to the downside of the market, lower expectations, etc. Judging from the public financial report data, a number of listed real estate companies have made large asset impairment provisions, ranging from hundreds of millions of yuan to tens of billions of yuan, and the scale of provision has increased significantly.
Specifically, the types of impairment mainly include provisions for credit losses, inventory depreciation, investment real estate and long-term equity investments. For example, the provision for impairment of completed development products and the provision for impairment of development products under construction are the main components. In addition, the failure of sales of some real estate projects** to meet expectations is also one of the reasons for the impairment.
However, this large-scale impairment has had a direct impact on the profits of real estate companies, and has even become the main reason for the performance losses of some real estate companies last year. At the same time, this has also attracted the attention of the exchange, and a number of A-share listed real estate companies have received inquiry letters on the reasonableness of asset impairment provisions and large performance losses. Therefore, for real estate enterprises, how to reasonably carry out asset impairment provision and balance profits and risks is a problem that needs to be pondered.
*: Feng Shan Finance.
Author: Fengshan Finance.
*Editor: Mulin Financial News.