A question of long term equity investment, the cost method to the equity method, needs accounting en

The new part: 4000*12%=4.8 million yuan, and the excess part of 600-480=1.2 million yuan is goodwill, which will not be adjusted.

Borrow: long-term equity investment of 6 million.

Credit: Bank deposit of 6 million.

The original investment part was obtained, and the book value of the long-term equity investment was 3 million yuan;

From the original investment to the newly acquired investment, the fair value of Company B increased by 4000-2800=1200, 3 million yuan was the net profit, and the capital reserve increased by 9 million yuan. Since the original proportion was 10%.

Borrow: Long-term equity investment 120

Credit: Surplus Reserve 3

Undistributed profit 27

Capital Reserve - Other Capital Reserve 90

The accrued amount of Luye Company's long-term equity investment in Company B is 10.2 million yuan.

1. Accounting treatment of additional investment: the investment cost is 6 million yuan, and the share of identifiable net assets of B should be 4.8 million yuan (= 40 million * 12%), and the investment cost is greater than the share that should be shared, and it will be recorded according to the investment cost

Borrow: Long-term equity investment - cost 6 million.

Credit: Bank deposit of 6 million.

2. Adjustment of the first investment: the investment cost is 3 million, and the share of B should be 2.8 million yuan (= 28 million * 10%), and the investment cost is greater than the share that should be shared, and it will be recorded according to the investment cost, so there is no need to adjust the previously recorded shares.

3. Adjustment of the share of the increase in identifiable net assets of B during the two investment periods:

The share of the increase in B's identifiable net assets during the two investment periods: (4000-2800) * 10% = 1.2 million yuan, of which 300,000 yuan (= 300 * 10%) should be adjusted due to the increase in net profit, and the remaining 900,000 yuan should be adjusted to capital reserve.

Borrow: Long-term equity investment - profit and loss adjustment 30

Long-term equity investments - changes in other equity 90

Credit: Surplus Reserve 3

Profit distribution - undistributed profit 27

Capital Reserve - Other Capital Reserve 90

After the additional investment, the long-term equity investment amount of Luye Company is 300 + 600 + 120 = 10.2 million yuan.

Individual Reports**

Debit: Bank deposit 700

Credit: Long-term equity investment 560

Investment income 140

The remaining 30% equity is regarded as the initial investment, that is, the equity method is used to account for it

Borrow: Long-term equity investments – profit and loss adjustment 15

Changed to no other comprehensive income 6

Credit: Surplus Reserve.

Profit distribution – undistributed profits.

Other comprehensive income 6

Consolidated Financial Statements Treatment:

Adjustment of the remaining equity to fair:

Borrow: Long-term equity investment 39 (300-800 30%-15-6) Loan: investment income 39

1. The equity method is used to account for the investment at the time of acquisition, so the difference is included in the non-operating income (i.e., the profit or loss for the current period);

2. Additional investment to convert the cost method into the equity method; In the cost method, when it is greater than, no treatment is made; Converted to the equity method, it is necessary to adjust the previous cost method according to the accounting treatment of the equity method, because it is used as an operating spine income, because it is before the plastic matching negotiation, so the retained earnings are adjusted.

3. Borrow: bank deposit loan, long-term equity investment - ** company investment income.

Equity Conversion Method: Borrow: Long-term Equity Investment - **Company - Profit and Loss Adjustment Loan: Surplus Reserve - Statutory Surplus Reserve.

Profit distribution - undistributed profit investment income.

Borrow: Other comprehensive income.

Credit: Investment income.

The treatment of the consolidated statements of long-term equity investment from cost method to equity method.

The circumstances in which long-term equity accounting is changed from the cost method to the pre-right benefit method include: (1) the cost method is changed to the equity method because the increase in the shareholding ratio can exert significant influence or joint control on the investee; (2) The investee is no longer controlled due to the decline in the shareholding ratio, but can exert significant influence on the investee or jointly control the hidden potatoes, which is changed from the cost method to the equity method.

Note) However, according to the new accounting standards in 2015, an enterprise's investment in an enterprise that has no control, no common control and no significant influence is calculated according to the financial instruments standard, that is, it is included in the financial assets available for **.

If the investment enterprise no longer has common control or significant influence on the investee due to the reduction of investment or other reasons, and the long-term equity investment is not in the active market and the fair value cannot be reliably measured, it shall be accounted for according to the cost method instead, and the book value of the long-term equity investment under the equity method shall be used as the initial investment cost calculated according to the cost method.

Under the cost approach, long-term equity investments are valued at the initial cost of investment and generally do not adjust their book value. Only Xiaochi should adjust the cost of long-term equity investment when receiving liquidation dividends and additional or recouped investments.

Under the cost approach, long-term equity investments should be measured at the cost of the initial investment. The cost of the long-term equity investment should be adjusted for the additional or recouped investment. The cash dividends or profits declared by the investee shall be recognized as investment income for the current period, regardless of whether the distribution of profits is a distribution of the net profits realized by the investee before or after the investment is obtained.

Individual Reports**

Debit: Bank deposit 700

Credit: Long-term equity investment 560

Investment income 140

The remaining 30% equity is regarded as the initial investment, that is, the equity method is used to account for it

Borrow: Long-term equity investments – profit and loss adjustment 15

Other comprehensive income 6

Credit: Surplus Reserve.

Profit distribution – undistributed profits.

Other comprehensive income 6

Consolidated Financial Statements Treatment:

Adjustment of the remaining equity to fair:

Borrow: Long-term equity investment 39 (300-800 30%-15-6) Loan: investment income 39

Long-term equity investment is divided into two types of accounting: cost method and equity method, and the accounting is as follows:

The accounting treatment under the cost method is:

At the time of purchase: borrowing: long-term equity investment.

Credit: Bank deposits.

During the equity holding period, the enterprise shall recognize the investment income when the investee declares the payment of cash dividends or profits

Borrow: Bank deposit.

Credit: Investment income.

Accounting treatment under the equity method:

At the time of purchase: borrowing: long-term equity investment.

Credit: Bank deposits.

The part of the cash dividends or profits declared and distributed according to the investee that belongs to the part that should be enjoyed by the enterprise: dividends receivable.

Credit: Investment income.

When cash dividends or profits are received.

Borrow: Bank deposit.

Credit: Dividends receivable.

During the equity holding period, the enterprise shall, at the end of each accounting period, adjust the book balance of the long-term equity investment according to the share of the net profit or net loss realized by the investee in the current year. If the investee realizes net profit, the enterprise shall borrow: long-term equity investment according to the share it should have.

Credit: Investment income.

When cash dividends or profits are actually shared.

Borrow: Bank deposit.

Credit: Dividends receivable.

When the long-term equity investment is converted from the cost method to the equity method of accounting, it needs to be retrospectively adjusted, that is, the remaining 40% of the equity is deemed to be accounted for according to the equity method at the beginning.

Because in the period from the acquisition of investment to the time of disposal, the long-term equity investment to be increased = 5000 * 40% = 2000 (10,000 yuan). However, this is limited to the disposal of the portion of the net profit realized during the year. For those who have crossed the year, the number of investment income cannot be directly adjusted, but the corresponding retained income.

Since the net profit of 10 million yuan is the current year, the investment income can be directly adjusted. Among them, the net profit of 40 million yuan is across the year, and the investment income cannot be directly adjusted, but the number of retained earnings = 4000 * 40% = 1600. Hence the following entry:

Borrow: Long-term equity investment 2000

Credit: Investment income 400

Profit distribution – undistributed profit 1440 (1600*90%)

Surplus reserve 160 (1600*10%)

50 million is the net profit realized by Company B from the time Company A obtained the long-term equity investment in Company B to the time before the partial disposal investment, and the 40 million 40 million is the net profit realized from the date of investment by Company A to the beginning of 2009. At the same time, it also shows that unit A is in between, and the net profit of company B is 10 million.

Accounting treatment of conversion from cost method to equity method:

For example: a company invested 50 million shares of 10% at the beginning of 07, the fair value of the investee's identifiable net assets was 480 million, dividends of 10 million were issued in 07, and the net profit was 40 million, and dividends of 20 million were issued at the beginning of 08, and then an additional investment of 80 million was made to obtain 15% of the shares, and the fair value of the investee's identifiable net assets was 500 million. Adjusting entries that require the cost method to be converted to the equity method of accounting.

Analysis: Equity method retrospective adjustment for the share of fair value change between two investments = (50000 48000) 10% = 200 to be recognized as retrospective adjustment: net profit and loss impact = (4000 1000 2000) 10% = 1000 10% = 100, and the remaining part of 1 million as "capital reserve and other capital reserve" retrospective adjustment.

The treatment of two cash dividends under the equity method is as follows: the dividend of 1 million received in 07 belongs to the dividend of the previous year of investment, so the investment cost of long-term equity investment is reduced; After receiving the second year's dividend of 200, the cumulative dividend received = 300, after the investment to the previous year, the investee should enjoy the share of net profit realized by the investee = 4000 10% = 4 million, and the cumulative dividend is less than the net profit share, so the dividends received for the second time are all written off as profit and loss adjustment details.

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**Part of the investment leads to no longer control, from the cost method to equity method accounting, the remaining 40% of the equity is deemed to be accounted for according to the equity method at the beginning, that is, the remaining 40% of the investment should be adjusted retrospectively.

The so-called retrospective adjustment is to make up for what has not been done under the cost method under the equity method, and under the equity method, it is necessary to adjust the long-term equity investment according to the changes in the net assets of the investee.

During the period from the acquisition of investment to the time of disposal, Company B achieved a net profit of 50 million yuan, that is, the long-term equity investment to be increased = 5000 * 40% = 2000 (10,000 yuan).

Accounting entries under normal circumstances are definitely :

Borrow: Long-term equity investment 2000

Credit: Investment income 2000

However, this situation is limited to the part of the net profit realized in the current year.

For those who have crossed the year, although it is essentially investment income, this investment income is finally transferred to the retained income at the end of that year, so the number of investment income cannot be directly adjusted, but the corresponding retained income.

Among them, the net profit of 10 million yuan is the current year, and the number of investment income can be directly adjusted = 1000 * 40% = 400;The net profit of 40 million yuan is across the year, and the investment income cannot be adjusted directly, but the number of retained earnings is adjusted = 4000 * 40% = 1600.

That's why we have this entry:

Borrow: Long-term equity investment 2000

Credit: Investment income 400

Profit distribution – undistributed profit 1440 (1600*90%)

Surplus reserve 160 (1600*10%)

1. The equity method is used to account for the investment at the time of acquisition, so the difference is included in the non-operating income (i.e., the profit or loss for the current period);

2. Additional investment to convert the cost method into the equity method; In the cost method, when it is greater than, no treatment is made; Converted to the equity method, the cost method before the adjustment must be treated according to the equity method, because it is regarded as non-operating income, because it is before the plastic, so the retained earnings are adjusted.

3. Borrow: bank deposit loan long-term equity investment - ** company investment income to equity method:

Borrow: Long-term equity investment - ** company - profit and loss adjustment.

Credit: Surplus Reserve - Statutory Surplus Reserve.

Profit distribution - undistributed profit investment income.

Borrow: Other comprehensive income.

Credit: Investment income.

1.Goodwill does not need to be reflected in the entries regardless of whether it is the cost method or the equity method, so when the cost method is converted to the equity method, the goodwill does not need to be adjusted. Why is it the question of adjusting retained earnings, retained earnings refer to surplus reserves and undistributed profits, because at the beginning, if it was not accounted for by the cost method, but by the equity method, then there would be (borrow:

Long-term investment, credit: non-operating income This entry, because the conversion date and the initial entry date are already in different accounting periods. This non-operating income has already been (borrowed:

Non-operating income Credit: Profit for the current year and the profit for the current year will be retained earnings or dividends payable after distribution. (Borrow:.)

Profit for the current year Credit: retained earnings, etc.) dividends payable cannot be adjusted again. I will now retroactively trace this entry for the current year, and the non-operating income of the current year has finally flowed into the retained earnings, so I can only adjust the retained earnings, and furthermore, if you convert the non-operating income now, it will affect the profit of the current year, and the accounting does not allow you to do so.

2.If it is a retroactive distribution of dividends to the investee. For example, last year, A owned 5% of B's shares, which was fair and unmeasurable, and B was accounted for using the cost method. If B intends to pay a dividend of 100 at the end of the year, B will receive a dividend of 100 * 5% = 5, and A will make entries on the account as follows:

Borrow: Dividends receivable 5

Credit: Investment income 5--- entry 1 (dividend treatment under the cost method).

However, if A's shareholding ratio rises this year and the cost method is converted to the equity method, this entry must be retrospective, and B's net profit is 100 at the beginning

Entries under the equity method should be:

Borrow: Dividends receivable 5

Credit: Long-term equity investment 5--- Entry 2 (Dividends under the equity method).

To adjust the result of entry 1 to entry 2, simply add an adjustment entry to.

Borrow: Investment income 5

Credit: Long-term equity investment 5

In the same way, since this investment income is last year, the investment income has also entered this year's profits, and is finally distributed into retained earnings. So the adjustment entry becomes.

Borrow: surplus reserve.

Profit distribution – undistributed profits.

Credit: Long-term equity investment 5

Similarly, if the investee's profits are traced back and no entries are made under the cost method, the equity method should recognize the investment income accordingly.

Borrow: Long-term equity investment.

Credit: Investment income.

If now it's retroactive. Investment income should also be converted into retained earnings.

So your problem is that if you want to adjust the previous profit and loss, and the previous profit and loss has entered the retained earnings, you can't adjust it, you can only adjust the retained earnings, and adjust the current period, you can adjust the profit and loss normally.

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