When disposing of a long term equity investment accounted for by the equity method, why should the c

Because the capital reserve belongs to the owner's equity account, it belongs to the enterprise. So you have to transfer it out when you dispose of it. Because disposal is equivalent to not having ownership.

Long-term equity investment.

It means that the acquisition of the shares of the investee through investment is equivalent to possession, so the capital reserve of the equity part must be taken first.

If it is transferred out, if it is not transferred, this part of the capital reserve will be equivalent to the investee unit acquiring it together and losing its ownership.

When disposing of a long-term equity investment accounted for by the equity method, because the capital reserve belongs to the owner's equity account and belongs to the enterprise, it must be transferred out at the time of disposal, and the disposal is equivalent to not having ownership.

If the former is greater than the latter, the initial book value of the long-term equity investment (i.e., the initial book value of the acquired cost is taken as the initial book value), and if the former is less than the latter, the initial book value of the long-term equity investment (i.e., the fair value of the share is taken as its initial value) should be adjusted. The difference between the two shall be included in the non-operating income) The investment enterprise shall, after obtaining the equity investment, adjust the carrying amount of the investment according to the share of the net profit realized or the net loss incurred by the investee in the current year (except for the net profit that is not the investment enterprise as stipulated by laws and regulations or the articles of association), and recognize it as the investment profit or loss for the current period. The investment enterprise calculates the portion of the distribution according to the profits or cash dividends declared by the investee, and reduces the book value of the investment accordingly.

Enterprises should regularly check the carrying amount of long-term equity investments on a case-by-case basis, at least once at the end of each year. If the recoverable amount is lower than the book value of the investment due to the continuous market price** or changes in the investee's operating conditions, the difference between the recoverable amount and the book value of the long-term equity investment shall be recognized as an investment loss for the current period.

Consolidation of internal fixed asset transactions:

1. Offset the unrealized internal sales profit from the original price of fixed assets at the beginning of the period.

Borrow: Undistributed Profits - Beginning of the Year.

Credit: Fixed Assets - Original Price (Unrealized Internal Sales Profit in the Original Price of Fixed Assets at the Beginning of the Period) Second, the accumulated depreciation at the beginning of the period will be offset.

Borrow: Fixed Assets - Accumulated Depreciation (Accumulated Overdepreciation at the Beginning of the Period) Credit: Undistributed Profit - Beginning of the Year.

3. Offset the unrealized internal sales profit from the original price of the fixed assets purchased during the good dust period.

1. The goods sold by one party are purchased by the other party as fixed assets.

Borrow: operating income (income generated by internal fixed asset transactions in the current period) Credit: operating costs (cost of sales generated by internal fixed capital transactions in the current period) Fixed assets - original price (unrealized internal sales profit in the original price of fixed assets purchased in the current period) 2. The fixed assets of one party are still regarded as fixed assets after the other party is purchased by Youqiao.

Borrow: Non-operating income.

Credit: Fixed Assets - Original Price.

Fourth, the over-depreciation of the current period will be offset.

Borrow: Fixed assets - accumulated depreciation (overdepreciation in the current period).

Credit: Administrative expenses.

Whether it is a counter-current or a smooth transaction, the net profit of the investee must be adjusted, and the adjustment method is the same.

Under the equity method.

Long-term equity investment.

There are secondary detailed accounts.

Long-term equity investment – cost.

Profit and loss adjustments. Changes in Other Benefits.

So as long as any of these three are changed.

The book value of a long-term equity investment.

will change. Besides.

Provision for impairment losses on assets.

It will also affect. its book value.

Now I'll put. Four options.

Entries to you. It's more intuitive to do it.

a. The investee company achieved net profit in the current year.

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

Credit: Investment income.

b. The investee company achieved a net loss in the current year.

Borrow: Investment income.

Credit: Long-term Equity Investment - Profit and Loss Adjustment.

c. Changes in the capital reserve of the invested enterprise.

Borrow: Long-term equity investment - other equity changes.

Credit: Capital Reserve – Other Capital Reserve.

d. During the holding period, the invested enterprise declares the distribution of cash dividends.

Borrow: Dividends receivable.

Credit: Long-term Equity Investment - Profit and Loss Adjustment.

Note: Announced.

**Dividend. We don't do bookkeeping.

1. Calculate the share that should be enjoyed according to the net profit realized by the investee, which will increase the long-term equity investment.

2. Provision for impairment of long-term equity investment at the end of the period.

This will reduce long-term equity investment.

3. The invested company declares the distribution of cash dividends.

This will only result in an increase in investment income.

4. The invested enterprise withdraws surplus reserves.

For other changes in the owner's equity of the investee other than net profit or loss, the book value of the long-term equity investment shall be adjusted according to the proportion assumed, and the capital reserve - other capital reserve shall be increased or decreased.

Borrow: Long-term equity investment - other equity changes.

Credit: Capital Reserve – Other Capital Reserve.

Therefore, only the third of the above four options will not cause a change in the book value of the long-term equity investment.

When the equity method is used to account for long-term equity investment, what are the changes that affect the book value of long-term equity investment?

Asked by: isle80

Views: 2157 timesWhen the long-term equity investment is accounted for by the equity method, the changes in the book value of the long-term equity investment are (

a.The investee company achieved net profit in the current year.

b.The investee company achieved a net loss for the year.

c.Changes in the capital reserve of the invested enterprise.

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Hello, dear, very happy to you your question, capital reserve unchanged + whether there is a long-term equity investment project accounted for by the equity method, to help you find out whether the capital reserve remains unchanged + whether there is a long-term equity investment project accounted for by the equity method: long-term equity investment - other equity changes (or credit) credit: capital reserve - other capital reserve (or debit) Recognition and treatment of excess losses, I hope mine can help you.

Wishing you good health and a happy mood!

The capital reserve remains unchanged + whether there are long-term equity investment projects accounted for by the equity method.

Hello, dear, very happy for your question, capital reserve unchanged + whether there is a long-term equity investment project accounted for by the equity method, to help you find out that the capital reserve remains unchanged + whether there is a long-term equity investment project accounted for by the equity method: long-term equity investment - its mining of other equity changes (or credit) credit: capital reserve - other capital reserve (or debit) Recognition and treatment of excess losses, I hope mine can help you to disperse.

Wishing you good health and a happy mood!

Kiss. Capital reserve unchanged + whether there are long-term equity investment projects accounted for by the equity method: long-term equity investment - changes in other equity (or credit to the party) Credit: capital reserve - other capital reserve (or pretend to be a borrower) Recognition and treatment of excess losses.

Kiss. The core of the long-term equity investment equity method is to understand the long-term equity investment as the net assets owned by the investor in the investee, and the investee's net profit, loss, late destruction of cash shares, and changes in the fair value of the financial assets available will cause corresponding changes in the net assets of the investor. Long-term equity investments in which the investment enterprise has common control or significant influence over the investee shall be accounted for by the equity method.

Kiss. Accounting methods for long-term equity investment using the cost method:1

In determining the initial investment cost of a long-term equity investment, except for the long-term equity investment formed by a business combination, the initial investment cost of a long-term equity investment obtained by paying cash shall be based on the purchase price actually paid. Expenses, taxes and other necessary expenses incurred by the enterprise directly related to the acquisition of long-term equity investment shall be included in the initial investment cost of long-term equity investment. Absolute God 2

When obtaining a long-term equity investment, the valuation shall be based on the initial investment cost. 3.During the holding period of long-term equity investment, when the investee declares the issuance of cash dividends or profits during the holding period of long-term equity investment, the enterprise shall be recognized as investment income according to the part it should enjoy.

Long-term equity investment - other equity changes in the early treatment does not involve investment income, if the long-term equity investment is more sensitive to rollover, that is, long-term equity investment - other equity changes are debited, the accounting treatment is:

Borrow: Long-term equity investment - other equity changes.

Credit: Capital Reserve – Other Capital Reserve.

At the time of disposal, the capital reserve is reduced and transferred to investment income, and the accounting treatment is as follows:

Borrow: Capital Reserve - Other Capital Reserve.

Credit: Investment income.

If the investee realizes a profit in a subsequent period, after deducting the unrecognized loss share, it shall be treated in the reverse order of the above-mentioned order, and the book balance of the recognized projected liabilities, the restoration of other long-term rights and interests and the book value of the long-term equity investment shall be written down, and the investment income shall be recognized at the same time.

Handle the procedures for capital increase through legal procedures. The enterprise extracts from the profits realized over the years or retains the internal accumulation of the enterprise, including surplus reserve and undistributed profits. Surplus reserve refers to the accumulated funds withdrawn from the net profit of the enterprise in accordance with the relevant regulations.

The surplus reserve of a corporate enterprise includes the statutory surplus reserve and the discretionary surplus reserve.

Statutory surplus reserve refers to the surplus reserve withdrawn from the net profit of the enterprise in accordance with the prescribed proportion. Discretionary surplus reserve refers to the surplus reserve withdrawn by the enterprise in accordance with the resolution of the shareholders' meeting or the general meeting of shareholders.

1. Fair value measurement is converted to equity method.

Fair Value Fair Value.

1. The difference between the carrying amount and the fair value of the original investment is included in "investment income" or "retained earnings".

2. The change in the fair value of the original investment is included in "other comprehensive income" and transferred to "retained earnings".

2. The equity method is converted to the cost method.

1. Individual reports.

Original Carrying Value of Investment The fair value of the new investment.

2. Consolidated statements.

The original investment is adjusted to fair value.

Fair Value of Original Investment The fair value of the new investment.

The difference between the carrying amount and the fair value of the original investment is included in "investment income";

The "other pre-comprehensive differential income" of long-term equity investment under the original equity method is transferred to "investment income".

3. Conversion of the fair value method to the cost method.

1. The carrying amount of the original investment is added to the fair value.

2. Consolidated statements.

The fair value of the original investment in individual statements is equal to the book value of the bent leather and does not need to be adjusted.

Fourth, the cost method is converted to the equity method.

1. Individual reports.

The remaining investment is retrospectively adjusted to book value under the equity method.

The profit or loss of the investment is recognized at the time of sale;

The remaining investment is retrospectively adjusted to the book value of the equity method.

2. Consolidated statements.

The remaining investment is adjusted to fair value (equivalent to a wholesale sale).

1) The difference between the book value and the fair value is recognized as "investment income";

2) Adjustments to the vesting period of partial disposal of investment income in individual financial statements (write-off of investment income);

3) Transfer "other comprehensive income" and "other changes in owners' equity" related to the remaining investment to "investment income".

5. Conversion of the equity method to fair value.

The remaining investment is adjusted to fair value.

1. Profit or loss on the part sold;

2. When the remaining investment is adjusted to fair value, it is also necessary to recognize profit or loss.

3. "Other comprehensive income" and "capital reserve-other capital reserve" under the equity method are transferred to "investment income".

6. Conversion of the cost method to fair value measurement.

The remaining investment is adjusted to fair value.

1. Profit or loss on the part sold;

2. The remaining investment is adjusted to fair value and the profit or loss is recognized.