Why should the fair value change gains and losses be transferred to investment income when trading f

When a trading financial asset is disposed of, the fair value change gain or loss is transferred to investment income for two main purposes:

First, in order to better account for the income generated by investment, from the perspective of the entire business process, that is, from the perspective of the entire process of acquisition, subsequent measurement and disposal of trading financial assets, only the transfer of fair value change profit and loss to investment income can truly reflect the profit or loss of the business;

Second, because the fair value change profit or loss is a transitional account, the fair value change is uncertain, and there is a possibility of increase or decrease at any time, which is too unstable, and if the income is directly recognized, it is easy to cause the untruthfulness of the statement. However, after the disposal of the investment, the income generated by the investment has been determined, so the amount that has been accounted for in the transitional account "fair value change profit or loss" is transferred to the investment income, and the amount at this time is the real investment income. The "fair value change profit and loss" account and the "investment income" account are both profit and loss accounts, and the closing balance should be transferred to the "current year's profit" account, so the entries carried forward do not affect the current profit or loss.

Even so, when the trading financial assets are disposed of, the amount included in the fair value change profit or loss account during the holding period of the trading financial assets should still be transferred to the investment income account, because the "fair value change profit and loss" account and the "investment income" account are both profit and loss accounts, and the closing balance should be transferred to the "current year's profit" account. Therefore, this carry-forward entry does not affect the profit or loss for the current period.

Under the asset-liability view, it is not more practical to know how much of the unrealised investment profit or loss was realized in the current period and how much investment income was realized in the current period than it is to understand the contribution of trading financial assets to the company's net assets. Moreover, only the aggregate amount of investment income and fair value changes in trading financial assets can reflect the contribution of trading financial assets to the company's net assets. In addition, according to the provisions of China's tax law, only the actual realized investment income of an enterprise is taxed, and the unrealized income is not taxed.

Therefore, in order to reflect the contribution of trading financial assets to the owner's equity of the enterprise in each accounting period, and reflect the investment income realized in each period, and also to facilitate tax payment, this method is adopted in the accounting treatment, that is, after the first trading financial assets, the part of the fair value change profit or loss to be realized in the current period should be converted from the fair value change profit or loss to investment income.

It should be noted that for the part that was originally realized as a fair value change in the current period, the conversion from fair value change gain or loss to investment income may occur in a subsequent year when the fair value change gain or loss is recognized. In this case, even though there is no balance in the fair value account, neither debiting nor crediting the fair value change gain or loss will affect the operating profit of the fair value change profit or loss in the year in which the fair value change gain or loss is realized. Because fair value change gains and losses and investment income are both components of operating profits, debiting investment income and crediting fair value change gains and losses, or debiting fair value change gains and losses and crediting investment income, will not affect operating profits, but the actual realized gains should be reflected through investment income.

Even if the change in fair value of a tradable financial asset in a previous year is adjusted for the portion realized in the current year, there is no need to adjust the profit of the previous year. This is because under the asset-liability view, the profit and loss of the previous year and the profit and loss of the current year are not overstated or underrecorded, but the realized profit or loss (fair value change gain or loss) and the realized profit and loss (investment income) are reflected through different items in the income statement.

For example, if the fair value of a trading financial asset** is 1w, dividends are received during the period, the fair value changes, and the selling price is what is our investment income?

Investment income = (

Among them, there is no problem for investment income.

At the time of selling, the accounting entries are:

Borrow: Bank deposit.

Credit: Transactional Financial Assets – Cost 1

Change in fair value.

Investment income = (From the above, it can be seen that if the fair value change profit and loss is not included in the investment income, the investment income will only be 1w, so in order to ensure the accuracy of the investment income, the fair value change profit and loss is included in the investment income, and the following entries are available.

Debit: Fair value change gain or loss.

Credit: Investment income.

I hope it can help you, and if you have any questions, thank you!!

Because a tradable financial asset is a financial asset purchased for trading, and it is measured at fair value, the change in fair value represents the change in the market price of the tradable financial asset, that is, a loss or a gain, and the loss of a financial asset is naturally included in the investment income.

My own understanding should be about the same.

The classification of financial assets in the new standard is basically entirely based on the International Accounting Standards. The treatment of various financial assets in international standards also fully reflects the characteristics of various financial assets, or the characteristics of different financial assets determine that their accounting treatment is also different.

Putting ** investments into the "Hold to Maturity Investments" category is generally based on a long-term investment strategy, while investing in "Tradable Financial Assets" is mainly focused on earning short-term trading returns. The investment strategy of "available financial assets" can be understood simply as something in between. In other words, a trading financial asset is an investment made by an enterprise for short-term profits, so its fair value must be included in the current profit or loss. The financial assets available for holding are not for short-term profits, but are subsequently measured at fair value, so their normal fair value changes are allowed to be included in equity first, and only when disposed of will they affect profit or loss; However, if the fair value does not affect the profit or loss significantly, it will mislead investors, so the standard stipulates that an impairment provision should be made at this time and included in the profit or loss; Since the "held-to-maturity investment" is intended to be held by the enterprise for a long time, the short-term increase or decrease in its value is not of much significance to the enterprise, so it is not reflected.

To sum up, it can be seen that the characteristics of the financial assets available determine that their accounting treatment is different from that of trading financial assets, so it is understandable that the fair value changes are included in equity.

If the investment income item is not transferred to the disposal year, it is not the amount actually incurred. Here's how I understand this question:1

Look at the arrangement of items in the income statement, and then consider the changes in the items in the two accounting periods before and after disposal. 2.First of all, in the year of non-disposal, if the fair value increases, the fair value change profit or loss account (income statement item) is on the credit side, so the income statement is reflected as an increase in profit, but it is not realized, and because it is not realized, there is no change in the investment income item.

3.Next, in the disposal year, the fair value change profit and loss account (income statement item) should be transferred to the debit side, reducing the profit, which is the figure already listed in the income statement of the previous year; As a result of the disposal of assets during the year, the profit has been realized, and the profit has also increased by the investment income item, which is the sum of the profit carried forward from the previous year and the realized profit of the current year. 4.

In the current year's income statement, the reduced profit (fair value change profit or loss debit) and the increased profit (investment income credit) are offset in the current year's statement (the fair value change profit or loss and investment income of the income statement are offset by the upper and lower lines), and the figures that have been realized for the year are left on the income statement. 5.In this comparison, it will be found that the realized profit (credit of the fair value change profit or loss account) of the previous year is left in the income statement of the previous year, and although the fair value change profit and loss is carried forward at the disposal of this year (but reflected on the debit side of the fair value change profit or loss account), and the investment income (credit) item reflects the profit of the two accounting periods, but because it is debited from the fair value change profit and loss of the previous line of the statement, although the fair value change profit or loss has been carried forward once in the previous period, it has to be carried forward again this year. In this way, there will be no problem of over-recording profits.

I hope my understanding will make sense.

Changes in the fair value of trading financial assets are included in the "fair value change gain or loss" because:

1) Fair value change profit or loss refers to the gain or loss that should be included in the current profit or loss formed by the fair value change of various assets, such as investment real estate, debt restructuring, non-monetary exchange, trading financial assets, etc. That is, the difference between the fair value and the book balance. This item reflects gains or losses due to changes in fair value of assets during the holding period.

Also an item on the new income statement"Fair value change gain"Fill in the basis.

2) By presenting the fair value change profit and loss, the income statement comprehensively reflects the income of the enterprise, which is divided into operating income and non-operating income. Investors can understand the profit or loss of a company due to changes in fair value and its proportion of total earnings, so as to make better analysis and decision-making. In addition, under the original system, the income generated by some special businesses was included in the owner's equity of the balance sheet but not reflected in the income statement, such as asset appraisal appreciation and debt restructuring gains, etc., there will be some problems in bypassing the income statement and directly included in the balance sheet, so that the balance sheet and the income statement lose their internal logical connection.

By presenting the fair value change profit or loss item, the income statement fully reflects this income and provides a way to reconcile the relationship between the balance sheet and the income statement.

Hello, the determination of the fair value change is the fair value of the asset in the previous period, that is, the difference between the book value or book balance and the fair value of the current period, the fair value of the previous period, that is, the book balance or book value is 2550, and the current period has risen to 2580, this increase in the amount, and the two differences 1280-1250 = 30, is not the rise? This is formed because of the rise in fair value, so this is the fair value change, that is, the book balance of the current period is greater than the book balance of the previous period, in how much, the big 30 under the problem of fair value decline, the principle is the same, that is, the fair value of the current period, that is to say, the book balance or book value is 2560, and the previous period is 2580, this time it is down, the decline = 2580-2560 = 20

Therefore, the book value or book balance or fair value of the current period is less than that of the previous period, which is 20 smaller.

Finally, the fair value change profit and loss is a profit and loss account in the accounting account classification, and when this type of account increases, it should be credited, and when it decreases, it will be credited.

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The division of financial assets is based on the holding intent of the corporate authorities.

This can't be changed casually.

If it is allowed to change at will.

Businesses will use this to regulate profits.

Misleading investors.

As a result, the rules governing the classification of financial assets are strict.

Reclassification of other financial assets is prohibited except for held-to-maturity investments and available** financial assets that can be reclassified under extremely harsh conditions.

A tradable financial asset is an investment made by an enterprise for short-term profits, so its fair value must be included in the current profit or loss.

The financial assets that are available to be held are not for short-term profit.

A normal change in fair value is allowed to be included in equity first.

The profit and loss is only affected when it is disposed of.

However, if the fair value is substantially **.

Not affecting profit or loss would be misleading to investors.

The standard provides for an impairment provision at this time.

and included in profit or loss for the current period.

Please read Chapter 3 of the CPA textbook on financial assets, and the treatment of the reversal of impairment provisions for the knowledge of financial assets available for ** should also be different.

During the investment period, the rise and fall of a trading financial asset is not a real investment income, so in order to distinguish investment income, the rise and fall are included in the fair value change profit or loss. Therefore, changes in fair value are transferred to investment income when the investment is disposed of.

It is part of a portfolio of identifiable financial instruments that is centrally managed in accordance with the Accounting Standards for the Recognition and Measurement of Financial Instruments, and there is objective evidence that the portfolio has recently been managed by the company on a short-term profit-making basis. For example, if the company purchases a batch of ** for short-term profit, the portfolio should be used as a trading financial asset.

Fair value to lead sliding profit or loss refers to the gains or losses that should be included in the profit or loss for the current period arising from changes in the fair value of various assets, such as investment real estate, debt restructuring, non-monetary exchange, trading financial assets, etc. When trading financial assets are disposed of, the fair value change profit or loss does not need to be carried forward separately, and the fair value change profit or loss will be carried forward to the profit of the current year together with income and profit at the end of the period. State late.

Summary. Dear, no, because every time the fair value changes, it has been carried forward from the entries of the trading financial assets.

Dear, no, because every time the fair value changes, it has been carried forward from the entries of the trading financial assets.

The specific reasons are.

I don't understand, I don't understand, question and answer questions.

For example, if the current value is higher than the original purchase value, then we have already transferred the excess increased value to the account of trading financial assets when we write the entry, and there is already a change in one loan and one loan, so we do not need to carry forward it again when we dispose of it.

Some say that it can be carried forward or not.

If the entries have already been processed in the current period of the change, there is no need for them.

The reason why it can be carried forward is that no entries have been processed in the current period.

Tradable financial assets are held for a short period of time and can be traded at any time, and they were intended to be at any time, for the purpose of earning the price difference, which is included in the investment income, from which it can be seen whether the loss or the surplus.

Yes, because your excess value or reduced value has not been withdrawn, so if you don't carry it over, you need it.