The conversion between financial assets and long-term equity investments (equity method) includes the following scenarios (equity ratio is hypothetical):
5 (Financial Assets) 20 (Equity Method), 20 (Equity Method) 5 (Financial Assets);
If yesincreaseEquity makes the financial assets converted into long-term equity investmentsLong-term equity investmentThe initial investment costtoThe fair value of the paymentMeasurement (original financial assetsFair value+ New payoutsFair value
If yesReduceEquity and make long-term equity investments converted into financial assets, thenFinancial assetsThe recorded value is based onFair valueMeasure.
The basic idea: both conversions are equivalent to toFair valueSell all the shares, and then toFair valueNew Equity.
Example 1(5 20): On January 1 of the first year, A obtained 5% equity of Company B for 500,000 yuan (designated as).Investments in other equity instrumentsOn March 31, the fair value of the equity was 800,000 yuan, and on that day, it obtained 15% of the equity of Company B from another non-related party for 2.4 million yuan, totaling 20% of the equity, which had a significant impact on Company B, and the fair value of Company B's identifiable net assets on that day was 20 million yuan. Seek relevant accounting treatment.
January 1:
Borrow:Investments in other equity instruments- Cost 50
Credit: Bank deposit 50
Interpretation: Take money to buy equity, an asset (Investments in other equity instruments) increases, debited, and decreases in an asset (bank deposits), credited.
March 31:
Borrow: Investment in other equity instrumentsChange in fair value
Credit:Other comprehensive income
Interpretation: Investments in other equity instruments are included in "other comprehensive income" when their fair value changes.
March 31, 5 (financial assets) and 20 (equity method).
Borrow: Long-term equity investment – investment cost 320
Credit: Investments in other equity instruments – cost 50
Change in fair value 30
Bank Deposit 240
Interpretation: On March 31, after continuing to purchase 15% of the shares, the equity became 20% (5 20) and had a significant impact (accounting using the equity method), which alsoEquivalent toSell 5% at fair value and then get a new oneTotalFair value**20%. Long-term equity investmentInitial investment costThe fair value of the paymentThe fair value of the equity10,000 yuan + new purchaseEquity paid10,000 yuan =10,000 yuan =
Other comprehensive income transferred to retained earnings:
Borrow: Other comprehensive income 30
Credit: Surplus Reserve 3
Profit distribution – undistributed profit 27
InterpretationAlthough the 5% stake was not sold, because the 5% stake and the newly acquired 15% stake were combined to form a 20% stake, it had a significant impact and was accounted for using the equity method and should be included in the "long-term equity investment".No, you can'tIt's included in "other equity instrument investments", so it's stillEquivalent toWhen the 5% equity is disposed of, and the financial asset of "investment in other equity instruments" is disposed of, the amount (30) that was previously included in the "other comprehensive income" needs to be carried forward to the "retained earnings", that is, the "surplus reserve" = 30 10% = 30,000 yuan on the credit side, and the "profit distribution - undistributed profit" = 30-3 = 270,000 yuan.
Adjust the initial crediting amount of long-term equity investment.
Borrow: Long-term equity investment – investment cost 80
Credit:Non-operating income
Interpretation: Under the equity method, the initial investment cost of a long-term equity investment (320) also needs to be entitled to the fair value of the investee's identifiable net assetsShares20% = 400) if the former (320).Less thanThe latter (400) also needs to adjust the long-term equity investmentInitial investment cost, increase by 400-320 = 800,000 yuan, after the adjustment, long-term equity investment - the initial amount of investment costs = 320 + 80 = 4 million yuan. Gains (320 spent, 400 gained, 80 earned) are credited in accordance with the guidelines".Non-operating income"Subjects.
Example 2(20 5): A held 20% of the equity of company B on January 1, the first year (with significant influence, accounting by equity method), and the book value of the long-term equity investment on that day was 4.8 million yuan (in the 4 secondary detailed accounts:Investment costsProfit and loss adjustments80, which can be reclassified into profit or lossOther comprehensive incomeChanges in Other Benefits40), on the same day, **15% equity, received 6 million yuan, and the fair value of the remaining 5% equity ("trading financial assets") was 2 million yuan. Seek relevant accounting treatment.
Disposal of 15% equity interest (priced at 6 million yuan).
Debit: Bank deposit 600
Credit: Long-term equity investment – cost of investment 210
Profit and loss adjustment 60
Other comprehensive income 60
Changes in other interests 30
Investment income
Interpretation: Book of 15% disposal of equity = 480= 3.6 million yuan, sold 6 million yuan, earned 600-360 = 2.4 million yuan, counted".Investment income”。The balance of each account of long-term equity investment is in accordance with(15% 20%).
The remaining 5% equity is accounted for as financial assets.
Borrow:Tradable financial assets
Credit: Long-term equity investment – investment cost 70
Profit and loss adjustment 20
Other comprehensive income 20
Changes in other benefits 10
Return on investment 80
Interpretation: The fair value of the remaining 5% equity is 2 million yuan, which is equivalent to selling the remaining 5% equity (book value = 480 5% 20% = 120) and selling 2 million yuan (earning 200-120 = 80, included in".Investment incomeThereforeNo, you can'tincluded in the "fair value change profit or loss"), and then bought back the 5% equity for 2 million yuan, and replaced it with ".Tradable financial assets"Measure.
Other comprehensive income and capital reserve that were originally accounted for by the equity method shall be transferred to the profit or loss for the current period when the equity method of accounting is terminated.
Borrow:Other comprehensive income
Capital Reserve – Other capital reserves
Credit:Investment income
Interpretation: Disposal of 15% equity, termination of equity method accounting (equivalent to the disposal of all 20% equity), the original "other comprehensive income" (80) and "capital reserve - other capital reserve" (40) measured under the equity method need to be carried forward to the current profit or loss "investment income". Because the detailed account "other comprehensive income" of long-term equity investment under the equity method is 80, and the "change in other equity" is 40, it is possibleInferredThe amount included in "Other Comprehensive Income" is 80, and the amount included in "Capital Reserve - Other Capital Reserve" is 40.