Some questions about long term equity investing

The two questions you raised are very representative:

Question 1: The answer is 3.24 million yuan.

Analysis: The purchase of 30% of the voting shares of Company B can exert significant influence on Company B, so the equity method is applied in the accounting. During the holding period of the investment, the book value of the investment is adjusted according to the changes in the share of the ownership equity of the investee enjoyed by the investment enterprise.

So. The book balance of long-term equity investment at the end of the period = the cost recorded at the beginning of the period + the proportion of the realized net profit.

324 (10,000 yuan).

Question 2: The answer is 2.9 million yuan.

Analysis: The purchase of 10% of the voting shares of Company B indicates that it does not have significant influence. Therefore, the cost method should be used for accounting.

Under normal circumstances, the cash dividends or profits received by the investment enterprise from the investee in the year when the investment is made shall be recovered as the investment cost; In the following years, if the cumulative cash dividends or profits distributed by the investee exceed the cumulative net profit of the investee as of the end of the previous year after the investment, the part to which the investing enterprise is entitled according to the proportion of shareholding shall be recovered as the investment cost. The specific method is as follows: when the accumulation of dividends receivable after investment is greater than the accumulation of net profit due after investment, the difference is the amount of cumulative offsetting of investment costs, and then adjust the investment costs that should be written off or recovered in the current period according to the investment costs that have been accumulated and deducted in the previous period.

In the actual calculation, you can refer to the following formula:

Dividends receivable = cash dividends declared by the investee in the current period Investment shareholding ratio.

Amount of "long-term equity investment" = (accumulated profit or cash dividends distributed by the investee from the investment to the end of the current year - net profit or loss accumulated by the investee from the investment to the end of the previous year) Investment shareholding ratio - investment costs written off by the investment enterprise.

Or: Long-term equity investment" account amount = (accumulation of dividends receivable - accumulation of net profit due after investment) - investment costs that have been written off by the investment enterprise.

According to the formula, it can be obtained:

Amount of "long-term equity investment" = (accumulated profit or cash dividends distributed by the investee from the investment to the end of the current year - net profit or loss accumulated by the investee from the investment to the end of the previous year) Investment shareholding ratio - investment costs written off by the investment enterprise.

Long-term equity investment" account amount = (100-0) 10% - 0 = 10

At the end of 2008, the company's ** investment book balance = initial investment cost - the amount that can be recovered = 300-10 = 290 (10,000 yuan).

Is there an answer? If there is a master who thinks there is something wrong, it is good to teach it together.

After reviewing it again, the second question should be 290

Categories: Business Banking >> Finance & Tax.

Problem description: Company A purchased 10% of the voting shares of Company B on January 1, 2005, and actually paid the price of RMB 3 million. On April 1, Company B announced the distribution of cash dividends of 1 million yuan in 2004, and the operating profit of Company B was 2 million yuan, and what was the balance of Company A's investment book at the end of 2005? Please give the calculation steps and instructions.

Analysis: According to the relevant provisions of the Accounting Standards (System) for Business Enterprises, the question:

1. Purchase equity.

Borrow: long-term equity investment of 3 million yuan.

Credit: bank deposits and other subjects 3 million yuan.

Since the shareholding with voting rights is 10% of the shares, which is no control, no joint control, and no significant influence, the cost method should be used for the accounting of the source of trouble.

2. Declare cash dividends.

Declared cash dividend = 100 * 10% = 100,000 yuan.

Borrow: dividends receivable and other subjects of 100,000 yuan.

Loan: Long-term equity investment of 100,000 yuan.

In the case of using the cost method to account for long-term equity investment, the cash dividends declared for distribution belong to 2004, and Company A has not invested in Company B in that year, so the cash dividends obtained by Company A should be regarded as a recovery of investment costs and cannot be recognized as investment income.

Year-end liquid long-term equity investment book balance.

The book balance of long-term equity investment at the end of 2005 = 300 - 10 = 2.9 million yuan.

In the case of using the cost method to account for long-term equity investment, the net profit realized by the invested enterprise is not recognized by the investment enterprise.

1) The main differences between long-term equity investment and financial assets are:

The holding period is different, and long-term equity investment focuses on the long-term;

The purpose is different, long-term equity investment focuses on control or significant impact, and financial assets focus on profit;

In addition to the existence of an active market**, long-term equity investment also includes equity investment that has not been active in the market**, and the financing assets of gold and liquid flushing are all active in the market** or relatively fixed**.

2) The possibility of conversion of long-term equity investment and available financial assets and trading financial assets. Mitigation.

Borrow: Shanzhao Changtou.

Credit: Bank deposits.

Debit: Interest receivable.

Credit: Investment income.

Borrow: Receivables are used to make the rent a mess.

Credit: Investment income.

Cost method, that's it.

In doubt, if the equity previously held is classified as a financial asset available for **, and the fair value and book value are inconsistent at the date of purchase, then whether the fair value or book value is included in the cost of long-term equity investment in individual statements.

This is very easy to understand, and in layman's terms, it is equivalent to putting the original "available financial assets" on the purchase date. Because the cost of the merger of a business combination that is not under the same control is "fair consideration paid", it can be used for the fairness of the financial assets on the date of purchase. Because the financial assets available for ** are fair value measurement attributes, there is no difference between book and fair.

The difference between the book and the fair is because in the actual work directly when the adjustment entry has not had time to be made, that is: debit: available for ** financial assets - fair value changes, credit:

Other comprehensive income. Therefore, the difference can be directly included in the "investment income". In addition, the "other comprehensive income" and "impairment provisions" that can be recognized for the financial assets in previous periods are carried forward to investment income.

2. The confirmation of capital reserve is the difference between the initial investment cost and the book value of the original long-term equity investment plus the sum of the fair value of the consideration paid for the acquisition of new shares on the merger date, and the capital reserve is adjusted.

In fact, this problem has been mentioned by Mr. Zhang Zhifeng in the Dongao courseware. In his opinion, it is more reasonable to use the book value, because the same control is the book of recognition. The teacher said that he would avoid the exam.

As for how to avoid it, I think it will definitely be the same fair value and book value at that time, and so on. So there is no need to dwell on this problem, as long as the ideas and methods are mastered, it is OK.

Long-term equity investment refers to the acquisition of shares of the investee through investment. An enterprise's equity investment in other entities is usually regarded as long-term holding, and through equity investment to achieve control over the investee, or exert significant influence on the investee, or to establish a close relationship with the investee, so as to diversify the operational risk.

Hello, parsing:

After the annual capital increase and share expansion, Company C has essentially become a subsidiary of Company A, so Company C is a long-term equity investment of Company A!

The annual transfer of Company C is the transfer of assets! That is, the long-term equity investment in Company C should be derecognized.

3. Accounting treatment of transfer company C:

Borrow: Bank deposit.

Credit: Long-term equity investment - C company.

Investment income (which may also be on the debit side) If you still have questions, you can continue to ask me questions by "hi"!!

1. A has inventory, the cost is 6 million, and it is sold to B for 10 million, but in fact, AB as a whole still has so much inventory, but now there is 4 million more on the books, isn't it? Inflated means that things are still just the same things, but the books have increased.

2. When A prepares the consolidated statements, because the consolidated statements require everything to return to the original original state, and the entry of A in 1 is, assuming that B's book net profit is 10 million, assuming that it is 30% equity, A does not have takeaway inventory, and does not consider income tax

Borrow: Long-term investment - profit and loss adjustment 1000*30%=300

Credit: Investment income 300

Borrow: Investment income 120 counter-current transactions offset 400*30% (profit inflated by 4 million).

Credit: Long-term investment - profit and loss adjustment 120

Take a look at step 2, in fact, what you want to offset is the inflated investment income and inventory, but the offset in step 2 is the investment income and profit and loss adjustment, so here a book should be restored to the original state, that is, to increase the profit and loss adjustment and reduce the inventory, that is.

Debit: Profit and loss adjustments.

Credit: Inventory. In fact, because of a provision (I don't know the calculable provision), which is to offset the internal unrealized gains, are all using profit and loss adjustments and investment income, so the credit profit and loss adjustment in step 2 is according to the regulations and not logically, so here it is necessary to adjust...

It's a loss that you're asking about the countercurrent.,I really don't know what to say if you go downstream.。。。

Accounting Standards for Business Enterprises No. 36 - Disclosure of Related Parties (2006) Article 3 Where one party controls, jointly controls or exerts significant influence on the other party, and two or more parties are controlled, jointly controlled or significantly influenced by one party, it constitutes a related party.

Control refers to the right to determine the financial and operational policies of an enterprise and to obtain benefits from the business activities of the enterprise.

Joint control refers to the joint control of an economic activity in accordance with the contract, which only exists when the investors who share control are required to make important financial and operational decisions related to the economic activity.

Significant influence refers to having the power to participate in the decision-making of an enterprise's financial and operational policies, but not being able to control or jointly control the formulation of these policies with other parties.

Article 4 The following parties constitute the related parties of the enterprise:

a) The parent company of the enterprise.

2) Subsidiaries of the enterprise.

3) Other enterprises controlled by the same parent company as the enterprise.

4) Investors exercising joint control over the enterprise.

5) Investors who exert significant influence on the enterprise.

A has a significant impact on Company B, so it is necessary to prepare consolidated statements. You see for yourself how the consolidated statements are prepared.

First of all, you have to really understand this part, unless you have to understand it now after you have learned the consolidated statements and business combination, I think it can be understood in this way, A has a significant impact on B, which is a long-term equity investment in the equity method to account, B to A to sell inventory, this is called counter-current trading in accounting, right? Why is it called an inflated sale of B to A, because they are equivalent to an internal unit, that is, before A sells the inventory to a third party, the inventory is only equivalent to a transfer within them, and the difference caused by the transfer of inventory is equivalent to the dividend distributed by A from B. Therefore, before A** inventory, the part of the profit or loss arising from the transaction should not be recognized.

As for the entries in the consolidated statements, why the credit is inventory is easy to understand, that is, A wants to merge with its own subsidiary, and the excess in the account is the inflated inventory of Company B that has not been sold, and the principle of this part of the adjustment is what is more, what is adjusted. This part will be understood when you learn the part of the consolidated report, so you don't need to be in a hurry. Hope it helps you a little.

Analysis: This investment is a business combination not under the same control, which should be accounted for by the cost method, and the investment cost is recorded at the fair value of the consideration actually paid as the initial investment

Borrow: Long-term equity investment 14,360,000

Credit: main business income 8000000

Tax Payable - VAT Payable (Output Tax) 1,360,000

Bank deposit 50000000

Borrow: The cost of main business is 7000000

Credit: 7,000,000 goods in stock

If you still have questions, you can continue to ask me questions using "hi!!

Borrow: Long-term equity investment 14,360,000

Credit: main business income 8000000

Tax Payable - VAT Payable (Output Tax) 1,360,000

Bank deposit 50000000

Borrow: The cost of main business is 7000000

Credit: 7,000,000 goods in stock

The accounting standards stipulate that the equity acquired by the Xinfu purchase equity method not under the same control shall be credited with "non-operating income" or debited "non-operating expenses" according to the difference between its book value and cost. This is because the income from the rolling of assets is not regarded as operating income, and no company relies on the sale of assets as its daily business activities, so it can only be used as non-operating income.

In this question, you can see it as a long-term equity investment of the enterprise to buy discounted assets and obtain income, so it is a surplus income from non-operating income.