Notes To Accounting Statements In Real Estate Accounting Practice

In addition to providing regular accounting statements to provide users with accounting information, the real estate development enterprises should also be guided by the principle of full disclosure.

In addition to accounting statements, annotated ways are used to make necessary explanations for the items in the report by text, so as to help the users understand the contents of the accounting statements.

The contents of the annotations of the accounting statements are mainly in the following aspects: 1.

In order to make the users of the report correctly evaluate the financial status and operating results of the enterprise, when preparing the accounting statements, the enterprises should explain the main accounting treatment methods and their changes.

For example, the short-term investment of the company should indicate the valuation method of its final term: at the cost or at the lowest cost or market price.

Accounts receivable should be used to explain whether the direct write off method is used for bad debts or the reserve method is used. If the reserve method is used, the percentage of accounts receivable or the age analysis method should be adopted.

The stock should be priced according to the planned price or the actual cost. If the actual cost is calculated, the first in first out method or the last in first out method should be used.

Moving average method and monthly weighted average depreciation of fixed assets should indicate whether the depreciation is based on the average age depreciation method, or the double declining balance depreciation method and the annual total depreciation method.

Long term equity investment should be explained by the cost method, or by the equity method, or which long-term equity investment is accounted for by the cost method, and the long-term equity investment control rights and interests method.

The intangible assets and deferred assets should be defined as the basis for determining their cost and amortization period.

The real estate business income, including land pfer income, sales of commercial housing, sales of ancillary facilities, settlement income of agent construction projects, rental income of rental housing and rental income of rental land, should be explained.

The income tax should be described as the method of calculating the cost of current income tax by the method of tax payable, or the accounting method of tax payment as the method of calculating the current income tax expenses.

The consistency principle in accounting requires enterprises to adopt the same accounting treatment method in different accounting periods. Otherwise, accounting information reflected in accounting statements of different periods can not be compared.

However, adhering to the principle of consistency does not mean that the accounting treatments before and after each phase can never be changed.

In order to adapt to changes in the economic environment, accounting work must make changes in the accounting treatment method. It should explain the reasons for the change in the notes to the accounting statements and its impact on the financial status and operating results of the enterprises.

Of course, such changes should also be within the permitted scope of enterprise accounting standards.

Two, the detailed list of important items in the report is listed in detail, and some important items in the accounting statements can not be listed in detail in the form of statements. Detailed information should be listed in the annotations.

Such as: short term investment, list the cost price and market price according to all kinds of investment.

Accounts receivable and other receivables are shown in age classification and indicate the amount owed by the company with a certain equity interest (such as more than 5% of the investment).

Inventory is listed in the inventory account.

The enterprises that prepare the inventory depreciation reserve should also list the net realizable value of all kinds of stock.

If the cost is large, it should be itemized.

In the long term investment, it will list the book balance and the investment income in the current year according to bond investment, stock investment, other creditor's rights investment and other equity investments.

The original price, accumulated depreciation and net value of the fixed assets are listed by category.

Expenditure on purchase and construction of fixed assets is shown in terms of the number of budgets, the number of initial periods, the increase in the current period, the current turnover, the end of the period, the progress of the project and the source of funds.

The intangible assets include the number of initial periods, the increase in the current period, the amortization period and the end of the period.

The deferred assets or long term deferred charges shall be classified according to the categories, the increase in the current period, the amortization period and the end of the period.

Short term loans and long-term loans show the creditor's rights of each loan, the amount of loan, the date of departure, the interest rate and the terms of the loan.

Enterprises with foreign currency loans should also list the amount of foreign currency and the rate of conversion.

The operating income and operating costs of the company are listed in terms of land pfer, sales of commercial housing, sales of supporting facilities, settlement of agent construction projects, rental housing and rental land.

Other business profits, such as the larger amount, are listed according to the business category.

Business income and extra business expenses, such as larger amounts, are shown in terms of income and expenditure items.

Three, the description of profit and loss of non recurring items. Non recurring items profit and loss refers to the loss or profit that enterprises do not often occur in real estate development and operation activities.

For example, the pfer of fixed assets should be explained by the net proceeds from the pfer of income over the book value and the relevant taxes and fees, or less than the net loss after the book value and the relevant taxes and fees.

To recover long-term investments, it should be noted that the recovery of long-term investments is greater than that of book investments or less than that of book investments.

The loss of the assets should be explained by the net book loss of various assets due to natural causes such as natural disasters, and the net loss after the insurance compensation and salvage value, as well as the various clean-up costs.

The profits and losses of other large non recurring items should be disclosed in the notes to the accounting statements.

Four, contingencies and the disclosure of profits and losses, or contingencies refer to matters that have existed on the date of preparation of accounting statements, whether it can enable enterprises to gain profits or losses, depends on the occurrence or non occurrence of one or more events in the future, and has great uncertainty.

There are three ways to deal with the possibility of the occurrence of a contingency, the probability of occurrence and the reasonable estimation of the amount of income or loss.

The possibility of occurrence of contingencies is divided into three cases: very likely, possible and rarely possible.

The amount of income or loss arising from contingencies is divided into two cases: reasonable estimation and unreasonable estimation.

The disclosure of profit or loss should be handled according to the principle of prudence and the principle of revenue realization.

The loss should be treated according to the principle of prudence and the principle of full disclosure.

Generally speaking, it is not possible to make an estimate of the proceeds of a contingency that is likely to be paid, but it should be disclosed in the notes to the accounting statements.

It is especially prudent to disclose whether the income is possible or not, and whether it should be disclosed in the notes to the accounting statements.

It is not necessary to disclose the items that are likely to be paid off in the notes to the accounting statements.

If a person can estimate the amount of loss, he or she may estimate the loss and liabilities at the same time. If the amount of loss can not be estimated, it should be fully disclosed in the notes to the accounting statements.

Losses and liabilities may not be accounted for for any contingencies that may be incurred, but should be disclosed in the notes to the accounting statements.

In general, it should also be disclosed in the notes to the accounting statement.

In respect of the following matters, the company should estimate the amount of proceeds or losses that may occur, and indicate the possible impact on future results: the guarantee provided by the company for the debts of other enterprises; the obligations undertaken by the company as a result of the discounting of bills; the other responsibilities undertaken by the company; and the reliable evidence or benefits of the company.

Five, the disclosure of related party relationships and pactions, the pactions of related parties will often affect the business income, operating costs and other business profits of enterprises, and have an impact on the authenticity of business results. Therefore, they should also be disclosed in the notes to the accounting statements.

The affiliated party referred to in accounting refers to the parties in a financial and business decision making party that have the ability to directly or indirectly control, jointly control the other party, or exert significant influence on the other party, and the two party or the parties controlled by one party.

The affiliated party relationship mainly refers to: (1) directly or indirectly controlling other enterprises or controlled by other enterprises, and two or more enterprises controlled by an enterprise (such as parent company, subsidiary company, the subsidiary company controlled by the same parent company); (2) joint venture; (3) joint venture; (4) major investors, individuals, key managers or their close family members; (5) other enterprises directly controlled by the main investors, key managers or family members closely related to them.

In the case of a control relationship, if the associated party is an enterprise, whether or not there is a paction between them, the following items should be disclosed in the notes to the accounting statements: (L) the nature or type, name, legal representative, registered capital and changes of the enterprise's economy; (2) the business of the enterprise; and (3) the shares or interests and their changes.

The related party paction refers to the pfer of resources or obligations between related parties, regardless of whether the price is charged.

It mainly includes: (L) pfer of land use rights; (2) contracting out projects; (3) buying or selling commodities; (4) buying or selling other assets other than commodities; (5) providing or receiving services; (6) agents; (7) leasing; (8) providing funds (including cash or physical loans or equity funds); (9) guarantees and mortgages; (10) management contracts; (11) pfer of research and development projects; (12) licensing agreements; (key) management of key remuneration.

In the case of pactions between enterprises and related parties, enterprises should disclose the nature, types of pactions and paction elements of related party relations in the annotations of accounting statements.

These elements generally include: (1) the amount or proportion of pactions; (2) the amount or corresponding proportion of unsettled items; (3) pricing policy (including pactions with no amount or nominal amount).

Related party pactions should be disclosed separately from related parties and types of pactions.

The same type of related party pactions can be combined and disclosed without affecting the correct understanding of readers of accounting statements.

It should also be stated in the notes to the accounting statements: the name of the subsidiary company, the business quality and the proportion of all kinds of equity held by the parent company in the consolidated financial statements; the changes in the subsidiary companies incorporated into the consolidated accounting statements; the names and shareholding ratios of the subsidiaries that have not been incorporated into the consolidated accounting statements, the reasons for their failure to incorporate into the consolidated financial statements and their financial and operating results, as well as the methods of handling the investments in the consolidated financial statements of the subsidiaries not incorporated into the merger scope; the names of the non subsidiaries (other invested companies) incorporated in the consolidated accounting statements, the ownership ratio of the parent companies and the reasons for incorporating the consolidated accounting statements. Six, consolidated statement of accounting statements, such as the preparation of consolidated financial statements, except for notes in the accounting statements.

When handling the accounting policies inconsistent with the parent company, the handling method in the consolidated financial statements.

When a consolidated accounting statement is directly prepared without adjustment, it should explain its handling method in the consolidated financial statements. It should include the relevant balance sheet and profit and loss statement of the subsidiary company with the merger scope of the consolidated financial statement and the difference between the business and the parent company's business.

Seven, statement of events after balance sheet date.

It refers to the events that occur between the balance sheet date and the accounting statements.

It is divided into adjusting items and non adjusting items according to whether or not the accounting statements should be adjusted.

The adjustment item refers to the new evidence that is available after the balance sheet date, which helps to make a new confirmation of the amount of the project on the balance sheet date, and to adjust the accounting statement.

It usually includes: impairment of the assets that have been certified; compensation that has been obtained or paid; fraud and accounting errors found on or before or after the balance sheet date; found that the accounting treatments made before the balance sheet date do not conform to the accounting standards of enterprises; and the changes in the tax rate have changed the tax and profits before and after the balance sheet date.

The term "non adjustment" refers to the matter that occurs after the balance sheet date and does not affect the existence of the balance sheet date, and does not require adjustments to the accounting statements.

But matters that will have a significant impact on the future financial position and business results of an enterprise.

For example, the holding investment of other enterprises, significant financing behavior, loss of major natural disasters, significant loss of business, debts that are not related to the debts of the enterprises, the debt restructuring and the reorganization of assets should be disclosed in the annotations of the accounting statements.