Accounting treatment of foreign investment in self produced products Why does it involve long term e

Because it is in line with the meaning of long-term equity investment. Equity investment in other units with its own products, as well as to control the investee through equity investment, or exert significant influence on the investee, or to establish a close relationship with the investee to diversify business risks.

In the case of a business combination under the same control, if the merging party pays cash, transfers non-cash assets or assumes debts as the consideration for the merger, the initial investment cost of the long-term equity investment shall be taken as the share of the book value of the owner's equity of the merged party on the date of the merger. The difference between the initial investment cost of a long-term equity investment and the cash paid, the non-cash assets transferred and the carrying amount of the debts assumed shall be adjusted to the capital reserve; If the capital reserve is insufficient to offset the offset, the retained earnings shall be adjusted. The merging party takes the issuance of equity** as the merger consideration.

According to the total par value of the issued shares as the share capital, the difference between the initial investment cost of the long-term equity investment and the total par value of the issued shares shall be adjusted to the capital reserve; If the capital reserve is insufficient to offset it, it shall be adjusted and retained.

In the case of a business combination that is not under the same control, the purchaser shall take the initial investment cost of the long-term equity investment as determined in accordance with the Accounting Standard for Business Enterprises No. 20 - Business Combination on the date of acquisition.

As long as it is foreign investment, long-term equity investment must be used, whether it is with products or monetary funds.

The self-produced products are used for construction in progress, and the products have not left the enterprise and the ownership has not been transferred, so although it is regarded as sales in the VAT tax law, the output VAT tax is recognized, but the income is not recognized.

Borrow: Construction in progress.

Credit: Inventory of goods.

Tax Payable - VAT Payable (Output Tax)**If a self-produced product is used for foreign investment, the ownership of the product is transferred, so the revenue is recognized at the same time as the output VAT is recognized.

Borrow: Long-term equity investment.

Credit: main business income.

Tax Payable - VAT Payable (Output Tax).

Borrow: Cost of main business.

Credit: Inventory of goods.

The long-term equity investment invested by the investor shall be evaluated in accordance with laws and regulations, and in an arm's length transaction, there is no material difference between the fair value of the long-term equity investment invested by the investor and the fair value of the liquid combustion volt of the issuance. If there is evidence that the fair value of the long-term equity investment is more reliable than the fair value of the issuance, the initial investment cost is determined on the basis of the fair value of the long-term equity investment invested by the investor.

For long-term equity investment invested by investors, the accounting treatment is: borrow: long-term equity investment, loan: paid-in capital.

An investment is an investment in the future prospects of the enterprise, so it is often inconsistent with the actual capital owned by the invested enterprise, and may be equal to, greater than or less than the capital of the invested enterprise.

FYI.

For example, if your company contributes capital at a premium, the investment amount on your book will be large, and the paid-in capital of the other party will be small (the difference is reflected in the capital reserve).

Not necessarily. The difference between the initial investment cost of long-term equity investment and the amount included in the paid-in capital of the enterprise shall be adjusted to the capital reserve (capital premium).

Company A buys the ** of a non-listed company B, with an initial investment cost of 10 million, and buys 1 million shares with a face value of 1 yuan, and the extra 9 million is the capital reserve (capital premium).

Borrow: 1000 for long investment

Credit: Paid-up capital 100

Capital reserve (capital premium) 900

Unrelated two enterprises, small business accounting standards.

The difference between the initial investment cost of a long-term equity investment and the amount included in the paid-up capital of the enterprise.

borrowing, the capital reserve (capital premium) should be adjusted

Company A buys the ** of a non-listed company B: long-term investment 1000 loan, the initial investment cost is 10 million, and the face value of 1 million shares is 1 yuan, and the extra 9 million is the capital reserve (capital premium).

Therefore, it is often inconsistent with the actual capital owned by the invested enterprise, which is greater than or less than the capital of the invested enterprise.

For reference, the outlook for the future of the enterprise can appear equal to.

For example, if your company contributes capital at a premium, the investment amount on your book will be large, and the paid-in capital of the other party will be small (the difference is reflected in the capital reserve).

The cost of the exchange: the fair value of the exchange-out - input tax + transportation and miscellaneous expenses = 62000-9000 + 1500 = 54500 yuan.

Investment income: fair value of assets surrendered - book value = 62,000 - (80,000-20,000) = 2,000 yuan.

Accounting processing. Borrow: 54500 items in stock

Debit: Tax payable - VAT payable - Input tax 9000 Borrow: Long-term investment impairment provision 20000

Credit: Long-term equity investment 80,000

Credit: Investment income 2000

Credit: Bank deposit 1500

The accounting entries in this question are made from the perspective of Company B.

Borrow: Long-term equity investment A 20 million.

Credit: Long-term equity investment C 8 million.

Investment income of 12 million.

When you encounter this kind of problem, you have to learn a kind of thinking, that is, from the perspective of Company B, what do I get? got 20 million long-term investment from Company A, what did you pay (lose)? After paying 8 million long-term investment in Company C, you get more than you pay, so you have made an investment income of 12 million.

In addition, Company B cannot control Company A because Company B holds only 30% of the shares, and if it is not controlled, goodwill will not be recognized.

Goodwill is recognized on the consolidated statements only under control.

In the case of a joint venture or joint venture, if the investment cost is greater than the fair value share of the investee's net assets, it will not be treated in accounting, and when the investment cost is less than the investee's share of the fair value of the net assets, the long-term investment cost and non-operating income will be added. (This passage is the original sentence under the model of significant influence and common control, there is no such thing as goodwill in it, you can understand it as "goodwill", but there will be no such thing in the accounting entries, so don't dwell on it).

Finally: Dude, you think this example is good, but it will not happen in practice, because this is a conspiracy by Company A and Company B to create fake profits. If this happens, Company B will increase its net profit by 12 million that year, which is obviously fraudulent.

Disposal of long-term equity investmentThe difference between the carrying amount of the long-term equity investment and the actual price obtained shall be calculated as the profit or loss for the current period. If a long-term equity investment accounted for by the equity method is included in the owner's equity due to other changes in the owner's equity of the investee other than the net profit or loss, the part originally included in the owner's equity shall be transferred to the profit or loss for the current period in the corresponding proportion when the investment is disposed of.

1) For a long-term equity investment obtained by paying cash, the initial investment cost of the long-term equity investment shall be based on the purchase price actually paid, including necessary expenses such as handling fees paid during the purchase process, but excluding the dividends or profits of the cash paid by the investee.

2) The cost of a long-term equity investment obtained by way of issuing equity** is the fair value of the equity** issued. The handling fees and commissions paid for the issuance of equity** shall be deducted from the premium issuance income of equity**, and if the premium income is insufficient, the surplus reserve and undistributed profits shall be deducted.

3) The long-term equity investment invested by the investor shall be based on the value agreed in the investment contract or agreement as the initial investment cost, unless the value agreed in the contract or agreement is unfair.

The long-term equity investment invested by the investor refers to the investment enterprise in which the investor invests in a third party, and the enterprise receiving the investment shall, in principle, take the value agreed by the parties to the investment as its initial investment cost when determining the cost of the long-term equity investment obtained. The exception is that if the value agreed by the parties in the investment contract or agreement is significantly higher or lower than the fair value of the investment in the bad lot, the fair value shall be used as the initial investment cost of the long-term equity investment, and the difference between the part of the paid-in capital (or share capital) constituted by the capital contribution and the initial investment cost of the equity investment in the Changdongbu period shall be adjusted accordingly.

4) Determination of the initial investment cost of long-term equity investment obtained by means of non-monetary asset exchange, debt restructuring, etc.